SEC Charges Two South Florida Residents with Insider Trading

On March 17, 2020 the SEC filed charges against Scott Hirsch and Kenneth Friedman for insider trading in the stock of PetMed Express, Inc. The complaint alleges that in 2017 Hirsch and Friedman executed trades based on nonpublic, proprietary financial information provided by a then senior manager and management committee member of PetMed. Hirsch and Friedman’s allegedly unlawful trades yielded profits of $74,536 and $501,697, respectively. Hirsch is also alleged to have shared the insider information with relatives who then made trades generating over $20,000 in profits.

In 2017, the senior manager had access to PetMed’s quarterly earnings data and financial reports along with extensive knowledge of business operations. The senior manager’s role at the company involved analyzing and preparing financial information for fiscal reporting.

The SEC alleges the senior manager tipped the defendants regarding material, nonpublic information relating to PetMed’s 2017 fourth quarter reports and year-end financial results just prior to the company’s May 8, 2017 earnings announcement. Towards the end of April, four phone calls took place between Hirsch and the senior manager.  Subsequently, Hirsch deposited $300,000 dollars into his brokerage account and purchased over 22,000 shares of PetMed common stock. Around the same time, the senior manager encouraged Friedman to buy PetMed stock at multiple poker games leading up to the earnings announcement. The senior manager went as far as to show Friedman company earnings yet to be announced. Friedman purchased over 80,000 shares of PetMed common stock based on information provided by the senior manager.

The complaint alleges Hirsch and Friedman violated the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Hirsch and Friedman consented to permanent injunction without admitting or denying charges. Hirsch has agreed to pay a total of approximately $180,000 in disgorgement, pretrial interest, and a civil money penalty. Friedman has agreed to pay just over $1 million for the same penalties.

You can find more information on this case and access the SEC Complaint at the following link If you have any questions about this or other securities-related issues, please contact Tomlinson & Shapiro, P.C. at (312) 715-8770.


Michael Shapiro
(312) 715-8770