MN Med-Tech Co. Subpoenaed in Insider Trading Probe

Amid an insider-trading probe, federal prosecutors reportedly subpoenaed Cardiovascular Systems; there have been no allegations of wrongdoing.

St. Paul-based med-tech company Cardiovascular Systems, Inc., (CSI) was reportedly among several companies subpoenaed amid an investigation into whether corporate directors misused government-sanctioned trading plans based on insider information.
 
According to the Wall Street Journal, federal prosecutors sent subpoenas to CSI, as well as to Palo Alto, California-based Tesla Motors, asking for documents and e-mails relating to the investment trading that the newspaper described in a previous article, which was published on April 25. There have reportedly been no allegations of wrongdoing.
 
Among other things, the April 25 story detailed how CSI director John Friedman used 10b5-1 plans to sell a large portion of CSI stock held by a private equity firm he runs, after setting up a plan about a month after the company said it would see disappointing earnings. 

10b5-1 plans allow corporate executives and non-executive directors a way to sell company shares even if they have nonpublic information about their companies, as long as they planned the sales before they knew the insider information. The U.S. Securities and Exchange Commission initiated 10b5-1 plans in 2000.
 
A spokesman for Cardiovascular Systems told the Wall Street Journal that the company is “readily providing the information requested,” and “we have nothing to hide.” The director under scrutiny had an investment fund that sold shares under a 10b5-1 plan that was “in compliance with [Cardiovascular's] governance procedures,” he added.
 
Separately, CSI on Wednesday reported its third-quarter financial results. For the quarter that ended March 31, CSI reported a net loss of $6.2 million, or $0.29 per share, compared to a net loss of $4.2 million, or $0.23 per share, during the same period in 2012. Revenue, meanwhile, totaled $26.5 million, up 25 percent from $21.2 million in the third quarter of 2012.