Feds charge then-Rite Aid exec with insider trading

The federal Securities and Exchange Commission has charged a then-Rite Aid executive with illegal insider trading, claiming he sold $1 million worth of company stock right before a proposed merger with Walgreens collapsed in January 2017.

Steven J. Sheinfeld, who was vice president of internal assurance services, used highly confidential information he received as a company official to dump that stock right before the deal tanked, the SEC contends.

The complaint it filed Thursday in U.S. Middle District Court states Sheinfeld knew of the impending collapse of the merger plan because he was working on a project to integrate the policies of the two companies.

SEC investigators claim Sheinfeld learned through that work that a deadline for completing the merger was not going to be met because the unification proposal was not going to receive approval from the federal government.

Using that information, he liquidated nearly all of his Rite Aid stock, avoiding a $140,000 loss when the failure of the merger became public and the value of Rite Aid stock plunged, the SEC contends. He did the same for two family members, saving them from $15,000 in losses, investigators say.

Sheinfeld, 67, formerly of Mechanicsburg, left Rite Aid in April 2017 and now lives in Florida, the SEC complaint states. It notes that one of his duties at Rite Aid was to oversee enforcement of the company’s code of business ethics and conduct, “which explicitly prohibited insider trading.”

The SEC is asking Senior Judge Yvette Kane to impose an unspecified fine on Sheinfeld.

Sheinfeld is the second former Rite Aid executive to be charged by the SEC this year with committing insider trading while armed with confidential information about the merger’s impending collapse.

In March, the agency charged David Mahan, a former regional vice president, who sold off $650,000 worth of Rite Aid stock in January 2017. In April, U.S. Middle District Chief Judge John E. Jones III ordered Mahan to pay $186,561 under a deal Mahan struck with the SEC to resolve that case.