SEC Loses Bid to Admit Statements In Insider Suit Over Pending Merger

Statements made by counsel to one of two insider trading defendants in the course of settlement negotiations with the Securities and Exchange Commission are inadmissible against both defendants, the U.S. District Court for the Northern District of Georgia concludedMay 19 (SEC v. Arrowood).

According to Judge Richard W. Story, the lawyer’s statements are inadmissible hearsay—and even if they were not, the probative value of the evidence “is substantially outweighed by a danger of unfair prejudice.”

In early 2012, the SEC alleged that former Matria Healthcare Inc. Chairman and Chief Executive Officer Parker Petit tipped his friend Earl ...