Dive Brief:

• Doron Tavlin, a former Mazor Robotics executive, has been charged with unlawful insider trading by the Securities and Exchange Commission.
• Tavlin was vice president of business development at Mazor when Medtronic acquired the company for $1.6 billion. The SEC alleges in a case filed on July 6 with the U.S. District Court for the District of Minnesota that the executive told a friend about the pending deal one month before the news went public and led to illegal trades from the non-public information. 
• The agency is seeking to make Tavlin and the other two defendants pay a civil penalty and return funds received through the alleged illegal conduct. Tavlin also could be prohibited from acting as an officer or director of public companies.

Dive Insight:

The SEC charges paint Tavlin as a key player in Medtronic’s 2018 acquisition of Mazor. According to the agency, Tavlin worked as a consultant for Medtronic in 2016 and 2017 and handled work related to its Mazor relationship. Mazor hired Tavlin as VP of business development in 2017.

The following year, Tavlin met with one of the Medtronic executives responsible for negotiating the terms of the Mazor acquisition, the SEC said in the filing.

The agency added that one day after Tavlin emailed the Mazor CEO about the “very important” meeting, Afshin Farahan, whom the SEC says was a close personal friend of Tavlin, flew to stay with Tavlin at his home in Minneapolis. 

“During his stay, Tavlin tipped Farahan that Mazor was about to be acquired, that Farahan should purchase shares quickly, and that the information was confidential. Tavlin told Farahan he could be fired for providing Farahan with this information. Tavlin also asked Farahan to invest in Mazor on Tavlin’s behalf,” according to the SEC.

The agency alleges that Farahan passed the information on to David Gantman.

The SEC added that Farahan bought $1 million of Mazor stock over the following month. Gantman is accused of buying $287,000 worth of Mazor securities, mainly stock but also some call options.

Mazor released news of its acquisition agreement with Medtronic a little more than one month after Farahan visited Tavlin. Farahan and Gantman allegedly made profits of $247,500 and $255,600, respectively, according to the SEC. In October 2019, Tavlin received a check for $25,000 from Farahan, the agency said.

In October 2018, Tavlin learned that the Financial Industry Regulatory Authority was investigating some of the trades in Mazor shares, the Justice Department said in a statement on July 7, 2022. Tavlin asked insiders who knew about the secret acquisition negotiations whether they knew any of the parties who had recorded trades in Mazor’s stock prior to the the public announcement of the deal, it added.

Tavlin responded to FINRA’s inquiry “by falsely denying that he recognized any names” on a list of purchasers of the stock, which included the names of Farahan and Gantman, the Justice Department said.