The SEC charged five physicians with insider trading in the securities of a Michigan based holding company.  According to the complaint, Apparao Mukkamala served as chairman of the board of directors of American Physicians Capital, Inc. (“ACAP.”).  As chairman of the board, he owed a fiduciary duty of trust and confidence to ACAP and its shareholders.

According to the SEC, between March 12, 2010 and July 8, 2010 Mukkamala illegally disclosed material non-public information concerning the anticipated sale of ACAP, to four fellow physicians.  Between April 30 and July 7, 2010, Mukkamala and the other four purchased nearly $2.2 million of ACAP stock based on the non-public confidential information learned by Mukkamala.   On July 8, 2010, after The Doctors Company publicly announced its acquisition of ACAP, Defendants collectively realized more than $623,000 in profits from their illegal trading in ACAP.

Without admitting or denying the SEC allegation, the five physicians consented to the entry of final judgments ordering them to pay more than $1.9 million to settle the SEC’s charges.  The SEC stated, “These physicians made numerous purchases of ACAP shares that were detected as highly unusual when compared to their past trading patterns… [b]oard chairmen and other insiders should never choose greed over duty when possessing confidential information about the companies they serve.”