Risk & Compliance

Cosmetics Ex-CFO Comes Clean with SEC

Allegedly traded in the company's stock in the week before its acquisition was made public.
Dave Cook and Stephen TaubMarch 15, 2007

The former chief financial officer of Del Laboratories has agreed to settle insider trading charges with the Securities and Exchange Commission.

According to the SEC, Melvyn Charles Goldstein was the CFO of Del — which manufactures cosmetics and over-the-counter pharmaceuticals under brand names including Sally Hansen, LaCross, and Orajel — from 1982 until his retirement in 1997. Between June 1999 and June 2004 he was a consultant in the company’s finance department, where he learned of a definitive agreement by two companies to acquire Del.

Kelso, a private equity firm, and C & D, a consumer goods company whose products include Arm & Hammer baking soda, announced the deal on July 2, 2004. C&D later withdrew, and Kelso completed the acquisition alone.

The SEC alleged that Goldstein traded in Del’s stock while in possession of material non-public information one week prior to the announcement of the acquisition. According to the commission, he stood to profit by $38,308.

Without admitting or denying the allegations, Goldstein will pay $81,498.31, which includes disgorgement, prejudgment interest, and a civil penalty. He also agreed to a permanent officer-and-director ban.

“Mr. Goldstein voluntarily cooperated with the SEC from the outset of this investigation and is relieved to have the matter behind him,” said his lawyer, Eric Tirschwell, in a statement, according to the Associated Press.