SEC charges former Allscripts accountant

Alleges insider trading resulted in $286K gain
By Bernie Monegain
10:19 AM
Former Allscripts accountant faces insider trading charges.

The Securities and Exchange Commission has charged a former accountant at healthcare IT company Allscripts with insider trading, trades he's alleged to have conducted through his wife's account. The SEC alleges the violations occurred in April 2012 -- a time when the company was disarray.

On April 25 the Allscripts Board of Directors ousted its chairman, which triggered three board members to quit in protest; the CFO had already announced his resignation -- for reasons unrelated, according to the company -- and Allscripts turned in a dismal quarterly report, all of which led to the stock price plunging 44 percent.

[See also: Allscripts in skid mode as shares plunge, chairman ousted]

The SEC's complaint, filed in federal court in Chicago, Jan. 28, alleges that in April 2012, Steven M. Dombrowski, a certified public accountant and at the time Director of Corporate Audit at Allscripts Healthcare Solutions, learned through his job that Allscripts' first quarter 2012 financial results were much worse than had been expected and that Allscripts would miss its earnings target for the quarter.

According to the SEC, despite a company-imposed blackout period on trading its securities, Dombrowski used this non-public information to his advantage by trading in Allscripts securities using his wife's account. Between April 10 and the close of the markets on April 26, Dombrowski, knowing of Allscripts' poor financial results, sold short 1000 shares of Allscripts stock and purchased more than 510 Allscripts put option contracts, trades that would be profitable only if Allscripts' stock price went down.

On April 26, 2012, Allscripts announced first quarter financial results that were much worse than the market had expected. The company also announced that its chief financial officer would soon leave the company for another job, and the chairman of the board and several other board members had resigned.

[See also: Allscripts announces first quarter 2012 results.]

"Immediately after the announcement Dombrowski purchased Allscripts stock to close his short position, and the next day, on April 27, Dombrowski sold all of his options positions as Allscripts' common stock fell $5.72, or approximately 35.7 (percent) from the previous day's close," according to the SEC. The SEC's complaint alleges that Dombrowski's trading resulted in illegal profits of $286,211.55.

[See also: Clients seek swift Allscripts turnaround.]

The SEC is asking the court to return all of his "ill-gotten gains." The agency also seeks a civil penalty and an order requiring Dombrowski's wife, Lisa Fox, to pay disgorgement, plus prejudgment interest, as Dombrowski's illegal trades were in her account.

The U.S. Attorney's Office for the Northern District of Illinois also announced criminal charges against Dombrowski.

Read the full SEC complaint here.