The U.S. Securities and Exchange Commission has dropped a civil complaint against Parker “Pete” Petit that accused the prominent Atlanta biotech entrepreneur and philanthropist of providing insider information in 2007 to a friend that allowed the other man to profit from two stock trades.
The friend, Earl Arrowood, a retired Delta Air Lines pilot, settled with the securities enforcement agency, according to its Atlanta office. The SEC said Arrowood, who neither admitted or denied the allegations, must pay $22,593.19. Arrowood’s attorney, Tony Cochran, said the agency had sought $376,000 from his client.
“The settlement requires the trader to surrender his profits and pay a financial penalty, and is an appropriate resolution of our insider trading case based on the evidence available to us,” SEC Enforcement Director Andrew Ceresney said in a statement to The Atlanta Journal-Constitution.
In a statement through his attorney, Arrowood said he was pleased with the settlement, which he said was reached May 14, and repeated that he did not admit to any wrongdoing.
Petit suggested the complaint should never have been brought.
“I very much appreciate the role the SEC plays in policing the markets and protecting the public from unscrupulous practices,” Petit said in a statement. “I am also pleased the SEC has decided to dismiss the case against me, and I obviously believe the Commission made the right decision. However, I think this action should have occurred much sooner.”
Petit is chairman and chief executive officer of MiMedx Group, a developer, processor, and marketer of regenerative biomaterials and bioimplants.
When the SEC complaint was filed in 2012, the agency said Petit passed non-public information to Arrowood, indicating that Matria Healthcare was actively looking to be acquired. At the time, Petit was chairman and CEO of Matria.
Arrowood, who previously had never made an equity trade, invested $420,000, half of his net worth, in Matria stock through two purchases, bringing him a $94,000 profit, according to the government. Arrowood’s attorney, Tony Cochran, said at the time Arrowood made less than $10,000 on the sale. Inverness Medical Innovations acquired Matria in May 2008.
Petit and Arrowood, both of whom denied the charges, faced one count of fraud in the complaint filed in U.S. District Court in Atlanta.
Petit maintained he didn’t know about Arrowood’s stock purchases and that the two only talked about the purchase of a new airplane. The complaint did not accuse Petit of profiting from Arrowood’s transactons.
The Institute for Bioengineering and Bioscience at Georgia Tech is named for Petit.
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