WASHINGTON — The Securities and Exchange Commission has ordered a former senior executive of SmileDirectClub Inc. to cease and desist from future securities law violations, barred him from serving as a public company officer or director for five years, and imposed financial penalties after finding he engaged in insider trading ahead of the company’s 2023 bankruptcy filing.
In an administrative order released Thursday, the SEC said Martin Tuncaydin, 40, of Brentwood, Tennessee, sold more than 100,000 shares of SmileDirectClub stock in September 2023 after learning the company was likely to file for bankruptcy — information that was not yet public.
According to the SEC’s findings, Tuncaydin, then the company’s senior vice president of customer fulfillment and platform engineering, learned on Sept. 26, 2023, during a conversation with his supervisor that the Nashville-based dental products company was likely to seek Chapter 11 protection.
The following morning, Sept. 27, while the company’s trading window was closed, Tuncaydin sold 101,216 shares of SmileDirectClub common stock at $0.43 per share through a brokerage account he controlled.
SmileDirectClub filed for bankruptcy protection on Sept. 29, 2023. After the filing was announced, the company’s stock price fell approximately 61.45%, dropping from $0.415 per share to $0.16 per share by the close of trading on Oct. 2, 2023.
The SEC determined that by selling before the bankruptcy announcement, Tuncaydin avoided losses of about $27,216.98.
The agency found that Tuncaydin violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, which prohibit fraudulent conduct in connection with the purchase or sale of securities. As a company executive, he was subject to SmileDirectClub’s insider trading policy and code of ethics, which barred trading on material nonpublic information and limited trades to designated open trading windows.
Without admitting or denying the SEC’s findings, Tuncaydin agreed to the entry of a cease-and-desist order. He will pay disgorgement of $27,216.98, prejudgment interest of $4,809.10, and a civil penalty equal to the amount of avoided losses. The funds will be transferred to the U.S. Treasury.
In addition, Tuncaydin is barred for five years from serving as an officer or director of any public company with securities registered under the Exchange Act.
SmileDirectClub, a Delaware corporation headquartered in Nashville, was once listed on the Nasdaq under the ticker symbol “SDC.” Following its bankruptcy filing, its shares began trading on the OTC Expert Market under the symbol “SDCCQ.” The company ceased operations in December 2023, and its bankruptcy case was later converted to a Chapter 7 liquidation.
