Nicolas Condroyer and Gilles Roger are alleged to have used information that was not in the public domain to make a $4.2 million profit from the acquisition.
The US Securities and Exchange Commission (SEC) filed insider trading charges against the two men the day after the $1.9 billion acquisition was announced on December 21st 2009.
It also succeeded in obtaining an order freezing $4.2 million of assets belonging to Condroyer and Roger, and preventing the pair from disposing of evidence relating to the case.
The SEC claims that the two men, who live in Belgium, were in possession of confidential information about the planned acquisition when they purchased hundreds of out-of-the-money call option contracts for Chattem stock.
They made the purchases via new US option brokerage accounts between December 7th and 18th 2009.
When the acquisition was announced it valued Chattem shares at a 32.6 per cent premium above market value. Condroyer and Roger immediately sold their options at a profit of $4.2 million, prompting the SEC to act.
The case is one of a number of insider trading investigations the SEC is working on. Others include the high-profile cases involving Arthur Cutillo and Raj Rajaratnam.
By Asim Shah