Two Minnesota men and their friend have been charged with using private business information to make stock purchases and profit off of a Medtronic acquisition.
Federal authorities say 66-year-old Doron Tavlin, of Minneapolis, 55-year-old Afshin Farahan, of Los Angeles, and 56-year-old David Gantman, of Mendota Heights, used nonpublic information to make more than $500,000 off of Medtronic’s acquisition of Mazor Robotics in 2018.
The three are charged both criminally and civilly for their actions. The Securities and Exchange Commission (SEC) charged them with violating anti-fraud provisions and is asking a court to force the three to give up all the money they made from insider trading and pay a civil penalty. Meanwhile, the US Attorney’s Office has charged them with conspiracy to engage in insider trading, securities fraud, and aiding and abetting securities fraud.
Court documents allege that Tavlin, who was a Mazor executive in 2018, tipped off Farahan about Medtronic’s plan to buy Mazor and told Farahan to buy Mazor stock on their behalf. Farahan then told his friend, Gantman, the same thing.
Over the next several weeks, Farahan and Gantman bought Mazor stock and call options several times. A month after Tavlin’s tip, Medtronic announced the planned acquisition and Mazor’s stock price rose by 10% the next day, the SEC complaint states, making Farahan and Gantman around $502,000 in profits. Farahan later gave Tavlin $25,000 for the tip.
Federal authorities also allege the trio tried to cover up their actions in the following months, and Tavlin passed along news that they were being investigated by the Financial Industry Regulatory Authority (FINRA). Prosecutors say Tavlin falsely denied knowing Farahan and Gantman when he was investigated by FINRA.
Tavlin and Gantman made their first court appearances on the criminal charges on Wednesday. Farahan has yet to make his first appearance.
The SEC says Tavlin consulted for Medtronic from 2016 until October 2017, when he left his role to become the vice president of business development at Mazor.