The US District Court for the Northern District of Georgia denied a motion for partial summary judgment in the Security and Exchange Commission’s insider trading case against Earl Arrowood and Parker Petit. The SEC alleges that Arrowood purchased shares of Matria Healthcare after receiving non-public information from Petit—Matria’s then-CEO—regarding a potential merger. Petit moved for partial summary judgment on two grounds: that the SEC lacked circumstantial evidence of communications between Arrowood and Petit, and that the timing of Arrowood’s trade predated serious merger discussions between Matria and Inverness Medical Innovations, Inc. by two months. The district court rejected both arguments and denied the motion, finding that the SEC’s allegations of (i) a close personal relationship between the defendants, (ii) frequent communications between them around the time of the trade, (iii) possible inconsistencies in the deposition testimony of Arrowood and his wife and (iv) Petit’s involvement in Arrowood’s trading management cumulatively were sufficient to survive summary judgment. Moreover, the court found that non-public information regarding the possibility of a merger, even if not concrete about when and with whom such a merger would occur, could be material.  

SEC v. Arrowood, No. 1:12-CV-82-RWS (N.D. Ga. Aug. 7, 2013).