An ex-Rite Aid compliance executive agreed to pay a civil penalty of $305,129 to settle insider trading allegations involving the sale of company stock.
Friday, the U.S. District Court for the Middle District of Pennsylvania issued a final judgement against Steven Sheinfeld, vice president of internal assurance services at Rite Aid until April 2017 when he resigned. Sheinfeld, who was accused by the Securities and Exchange Commission (SEC) in September 2020, decided to pay his penalties in three payments and relinquished his right to appeal. He neither admitted nor denied the claims.
The SEC stated that Sheinfeld traded Rite Aid shares for himself and two family members after discovering in confidence via his employment that the projected merger between Rite Aid and Walgreens Boots Alliance would not be consummated by the approaching deadline. According to the SEC, in response, Sheinfeld sold all of his exercisable Rite Aid employee stock options. In addition, the agency's lawsuit said that Sheinfeld sold Rite Aid shares belonging to his sister-in-law and adult daughter.
According to the SEC, the stock sales likely saved him and his family $155,000 in losses.
While performing compliance-related duties for the Integration Management Office, the SEC asserted Sheinfeld got substantial nonpublic information about the transaction (IMO). The IMO was founded in 2015 by Rite Aid and Walgreens workers with the purpose of preparing for the businesses' merger. All information generated by the IMO was considered confidential, and personnel who received it were instructed not to disclose it.
“Sheinfeld knew, or was reckless in not knowing, that he had a duty not to trade Rite Aid securities on the basis of confidential information about the planned merger, including information about [Federal Trade Commission] approval of the planned merger and the likely timing of the planned merger,” the SEC said in its complaint.
By fLEXI tEAM