SEC v. MICHAEL A. SMITH; and DOUGLAS JOSHUA DALTON, District of Idaho (Apr. 1, 2026) — Complaint

Kathleen Burdette Shields (Mass Bar No. 637438)
Email: [email protected]
33 Arch Street, 24th Floor
Boston, MA 02110
Phone: (617) 573-8900
Fax: (617) 573-4590
Attorney for Plaintiff
Securities and Exchange Commission

UNITED STATES DISTRICT COURT

DISTRICT OF IDAHO

SECURITIES AND EXCHANGE
COMMISSION,
   Plaintiff,
 v.

MICHAEL A. SMITH and
DOUGLAS JOSHUA DALTON,

   Defendants.

      Civil Action No. 26-CV-

      COMPLAINT

      Demand for Jury Trial

 Plaintiff, Securities and Exchange Commission (the “Commission”), alleges the

following against defendants Michael A. Smith (“Smith”) and Douglas Joshua Dalton (“Dalton”)

(collectively “Defendants”):

SUMMARY

1. This is an insider trading action.  Defendants traded in the securities of PetIQ, Inc.

(“PetIQ”), an Idaho-based pet products company whose stock was publicly traded, in advance of

PetIQ’s public announcement on August 7, 2024 that PetIQ would be acquired by a private

equity firm (the “Announcement”).

2. At the time, Smith was the President and Chief Operating Officer (“COO”) of

PetIQ and was part of ongoing discussions among the PetIQ board of directors and PetIQ

management about the potential acquisition.  In breach of his duty of trust and confidence to

mailto:[email protected]

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PetIQ and its shareholders, Smith traded on the basis of material, non-public information he

learned in these discussions by purchasing shares of PetIQ in his ex-wife’s brokerage accounts

on July 26, 2024.

3. Smith also shared material, non-public information about the potential acquisition

with his longtime close friend Dalton.  Dalton understood that Smith had this confidential

information because of his position as an executive at PetIQ, and Dalton traded on the material,

non-public information by purchasing PetIQ stock options in late July and early August 2024.

4. On August 7, 2024, the day of the Announcement, the value of PetIQ’s common

stock rose 48% to $30.42 per share, up from the prior day’s closing price of $20.57 per share.

5. By trading on the confidential and nonpublic information that Smith received

through his employment about the upcoming acquisition of PetIQ, Smith breached his duty to

PetIQ and its shareholders and Defendants gained an unfair advantage over other investors in the

public markets.  As a result of their insider trading, Smith earned approximately $145,772 in

illegal trading profits in his ex-wife’s accounts, and Dalton gained approximately $101,670 in

illegal trading profits.

6. As a result of the conduct alleged herein, Defendants violated, and unless

restrained and enjoined will continue to violate, Section 10(b) of the Securities Exchange Act of

1934 (“Exchange Act”) and Rule 10b-5 thereunder [15 U.S.C. §78j(b); 17 C.F.R. §240.10b-5].

7. The Commission seeks: (i) permanent injunctions against Defendants, enjoining

them from engaging in the transactions, acts, practices, and courses of business of the type

alleged in this Complaint, (ii) disgorgement of ill-gotten gains they received from the unlawful

conduct set forth in this Complaint pursuant to Sections 21(d)(3), (5) and (7) of the Exchange

Act [15 U.S.C. §78u(d)(7)], together with prejudgment interest, (iii) civil penalties pursuant to

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Section 21A of the Exchange Act [15 U.S.C. §78u-1], (iv) an order barring Defendant Smith

from serving as an officer or director of certain public companies pursuant to Section 21(d)(2) of

the Exchange Act [15 U.S.C. §78u(d)(2)], and (v) such other relief as the Court may deem

appropriate.

JURISDICTION AND VENUE

8. This Court has jurisdiction over this action pursuant to Sections 21(d)(1), 21(e),

and 27 of the Exchange Act [15 U.S.C §§78u(d)(1), 78u(e) and 78aa].

9. Venue is proper in this District pursuant to Section 27 of the Exchange Act [15

U.S.C §78aa].  Defendant Smith resides in the District of Idaho, and PetIQ’s corporate

headquarters was in the District of Idaho.  Also, certain of the acts, practices, transactions and

courses of business constituting the violations alleged in this Complaint occurred within the

District of Idaho, and were effected, directly, or indirectly, by making use of the means or

instrumentalities of transportation or communication in interstate commerce, or the mails,

including the internet and the telephone.

DEFENDANTS

10. Smith, age 48, resides in Eagle, Idaho.  In the summer of 2024, Smith served as

PetIQ’s President and COO.

11. Dalton, age 48, resides in Bentonville, Arkansas.  Dalton is employed in the

insurance industry.

RELATED ENTITY

12. PetIQ was a Delaware corporation with a principal place of business in Eagle,

Idaho before its acquisition by a private equity firm named Bansk Group LP (“Bansk Group”).

During the relevant period, PetIQ’s securities were registered pursuant to Section 12(b) of the

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Exchange Act and traded on the Nasdaq Global Select Market under the ticker symbol PETQ.

Once the acquisition closed in October 2024, PetIQ’s shares were no longer publicly traded.

PetIQ’s business involved pet medications, pet wellness services and pet-related products.

FACTUAL ALLEGATIONS

Smith Received Nonpublic Information About PetIQ’s Potential Acquisition.

13. On June 2, 2024, Bansk Group made a non-binding proposal to acquire all

outstanding shares of PetIQ common stock for $25.50 per share, subject to certain due diligence.

This proposal was shared with PetIQ’s Chief Executive Officer (“CEO”) and PetIQ’s board of

directors, which rejected the initial proposal on June 11, 2024.

14. On June 18, 2024, Bansk Group made a revised proposal to acquire all

outstanding shares of PetIQ common stock for $28.50 per share, subject to certain due diligence.

PetIQ’s CEO and members of PetIQ’s board reviewed this proposal on June 19, 2024, and

decided to allow Bansk Group to conduct limited due diligence, under a confidentiality

agreement, to determine if Bansk Group would be able to offer additional value to PetIQ’s

stockholders with a further revised non-binding proposal.

15. On June 25, 2024, PetIQ and Bansk Group extended their confidentiality

agreement so that Bansk Group could conduct additional due diligence.  On June 28, 2024,

Smith signed a confidentiality agreement with PetIQ in connection with his work on the potential

acquisition.  In that agreement, Smith acknowledged that he had a duty to keep “all information

related to this project and its name, as well as its existence, in strict confidence” and that he was

prohibited from communicating any information, either orally or in writing, about the potential

acquisition to anyone outside the company.

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16. Discussions continued and, on July 17, 2024, Bansk Group submitted a further

revised non-binding proposal to acquire all outstanding shares of PetIQ common stock for

$31.00 per share, and to complete confirmatory due diligence and negotiate definitive documents

in the next 21 days.  Bansk Group told PetIQ’s CEO that its proposal reflected its best and final

offer to acquire PetIQ.

17. Later on July 17, 2024, the PetIQ board discussed Bansk Group’s latest proposal

with members of PetIQ management, including Smith, and indicated support for negotiating

definitive agreements on the basis of the proposal.

18. Following this discussion, PetIQ’s legal counsel sent a draft acquisition

agreement to Bansk Group’s legal counsel.  Between July 23, 2024 and August 5, 2024, PetIQ

and Bansk Group, through their counsel and their management, negotiated the terms of the

acquisition agreement.  On July 31, 2024, PetIQ’s board discussed the progress of the

negotiations with members of PetIQ management, including Smith.  Smith was informed that the

parties were tentatively planning to present final transaction documents for the board’s approval

on August 6, 2024.  During this time, Bansk Group also negotiated rollover and employment

agreements for certain members of PetIQ management, including Smith, so that Smith would

remain employed as the President and COO of the surviving company if the deal closed.

19.  On August 6, 2024, PetIQ’s board approved the acquisition, and on August 7,

2024, before the stock market opened, PetIQ and Bansk Group executed the acquisition

agreement and issued the Announcement in a joint press release.

20. The price offered for existing shareholders’ shares if the acquisition closed

included a premium of approximately 51% over the closing price of PetIQ shares on August 6,

2024, the last full trading day before the Announcement.

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Smith Had a Duty to Keep PetIQ’s Information Confidential and Not to Misuse It.

21. Smith knew that he was obligated to keep confidential the information he

possessed about PetIQ’s potential acquisition.  In addition to the specific confidentiality

agreement relating to the acquisition that he signed in June 2024, Smith was aware of PetIQ’s

general business practices regarding confidentiality and use of its information.

22. As the President and COO of PetIQ, Smith was required to comply with PetIQ’s

Insider Trading Policy.  According to that policy, a PetIQ officer or employee in possession of

“‘material, nonpublic information’ relating to the Company . . . may not (a) purchase or sell

securities of the Company . . ., (b) direct any other person to purchase or sell such securities or

(c) disclose the information to anyone outside the Company.”  The policy defined “material,

nonpublic information” as “information that is not available to the public at large that could

affect the market price of a security and which a reasonable investor would regard as important

in deciding whether to buy, sell or hold the security,” and the policy listed as examples “news of

a pending or proposed merger, acquisition, tender offer, divestiture or disposition of significant

assets.”

23. As an officer and employee of PetIQ, Smith was also required to comply with the

company’s Code of Business Ethics and Conduct, which provided that:

All non-public information about the Company should be considered confidential
information. Employees who have access to confidential information about the Company
or any other entity are not permitted to use or share that information for trading purposes
or for any other purpose except to conduct Company business as described in the
Company’s Insider Trading Policy. To use non-public information for personal financial
benefit or to “tip” others who might make an investment decision based on this
information is unethical and illegal.

The Code of Business Ethics specifically identified news about a potential acquisition of PetIQ

as information on which an employee could not trade.

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Smith Traded PetIQ Shares in His Ex-Wife’s Brokerage Accounts.

24. Smith and his ex-wife divorced in 2023.  His ex-wife maintained two brokerage

accounts in her own name.  Following their divorce, Smith and his ex-wife communicated

regularly, and Smith managed the trading in her brokerage accounts.

25. On the morning of July 26, 2024, during the time period when PetIQ was

negotiating the acquisition agreement with Bansk Group, Smith visited his ex-wife’s house.

Between about 10:47 am and 10:55 am, Smith purchased a total of 17,255 shares of PetIQ stock

in his ex-wife’s accounts.  Smith spent approximately $379,125 to purchase these PetIQ shares,

at an average price of about $21.97 per share.  In order to fund those purchases, Smith sold

shares of several exchange traded funds, including shares of two funds which he sold for a loss.

26. When Smith purchased PetIQ stock in his ex-wife’s accounts on July 26, 2024, he

was aware of material, non-public information about PetIQ’s potential acquisition at the price of

$31 per share, well above the then-current trading price of PetIQ stock.  Smith also knew that the

information was non-public and highly confidential.  He owed PetIQ a duty of trust and a duty to

preserve the confidentiality of that information and not to misuse the information for personal

gain.  Smith breached that duty by trading on the information to purchase PetIQ shares in his ex-

wife’s accounts.

27. After markets closed on August 7, 2024, the day the acquisition was announced,

Smith returned to his ex-wife’s house and placed orders in her brokerage accounts to sell the

17,255 PetIQ shares he had purchased on July 26, 2024.  Smith’s orders executed the next day at

the August 7, 2024 closing price and yielded approximately $145,772 in profits.

Smith Shared Confidential Information with Dalton About PetIQ’s Potential Acquisition
and Dalton Traded on that Information.

28. In or about July 2024, Smith shared with Dalton material, nonpublic information

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concerning the potential acquisition of PetIQ.  In sharing this information, Smith provided

Dalton with an illicit gift of material, nonpublic information that Dalton could profit upon by

purchasing PetIQ securities before the public announcement of the acquisition.

29. Smith and Dalton have been close friends since high school.  On more than one

occasion, Smith has loaned substantial sums of money to Dalton.

30. Before July 2024, Dalton was aware that Smith held a high-level position at PetIQ

and Smith knew that Dalton had previously traded in PetIQ securities.  The two had discussed

PetIQ and its business several times before July 2024.

31. On the morning of July 26, 2024, about 13 minutes before Smith began

purchasing PetIQ securities in his ex-wife’s accounts, Dalton attempted to reach Smith by phone.

Approximately one hour later, after Smith had purchased PetIQ shares in his ex-wife’s accounts,

Smith returned Dalton’s call and the two spoke for approximately 35 minutes.  During this call,

Smith disclosed to Dalton material, nonpublic information about PetIQ’s upcoming acquisition.

32. Approximately 16 minutes after his call with Smith ended, Dalton transferred

$25,000 to his brokerage account and called his broker to ask when those funds would be

available for trading.  About one hour later, Dalton attempted to purchase PetIQ call options but

his attempts were unsuccessful.  Call options give the buyer the right to purchase stock at a fixed

price within a specified time frame.  Call options generally permit a buyer to profit from future

increases in a stock’s price and typically cost less than the stock to which the options relate, thus

allowing the buyer to leverage his prediction that the stock would increase in value.  Dalton then

called his broker to ask questions about options trading. The next day, Saturday, July 27, 2024,

Dalton sent the following text message to another individual:

Just in case we don’t get to run into each other again. Pull your available cash together
and buy PETQ it’s at 23 dollars getting bought out in the next couple of days at 31 dollars

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a piece. If you have or know options do a call on them. It’s my best friend telling me this
that’s a VP in the company.

33. The information that a potential acquirer had offered $31 per share for PetIQ

stock in a merger or acquisition transaction was material, nonpublic information belonging to

PetIQ that Dalton received from Smith.  Smith breached his duty to PetIQ by disclosing this

material, nonpublic information to his friend Dalton, while knowing, consciously avoiding

knowing, or being reckless in not knowing that Dalton would use this information to trade in

PetIQ securities.

34. Dalton knew that the information about PetIQ’s potential acquisition was material

and nonpublic.  Dalton also knew that Smith was an officer at PetIQ or otherwise employed at a

high level by PetIQ.  Further, Dalton knew, was reckless in not knowing, or consciously avoided

knowing, that Smith had no legitimate business purpose in providing him with material,

nonpublic information about the potential acquisition of PetIQ, and that Smith was breaching his

duty to PetIQ by sharing that information with him.

35. Smith obtained a personal benefit from communicating this information to

Dalton, including the benefit of making a gift of material, nonpublic information to a close

friend.

36. On Monday, July 29, 2024, Dalton again tried to purchase PetIQ call options but

was unsuccessful.  Throughout the day, Dalton spoke with his broker multiple times about

options trading generally and PetIQ options specifically.

37. On Tuesday, July 30, 2024, Dalton succeeded in buying 200 PetIQ call options

with a $25 strike price that would expire on October 18, 2024.  In essence, Dalton was predicting

that PetIQ’s stock would be worth more than $25 before October 18, 2024.  At the time of

Dalton’s purchase, these option contracts were “out-of-the-money” because PetIQ’s stock was

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then trading below $25 per share.

38. On August 5, 2024, Dalton bought an additional six PetIQ call options with the

same strike price and expiration date.

39. By purchasing PetIQ call options based on the material, nonpublic information

Smith provided him, Dalton generated illegal profits of approximately $101,670 as of the close

of regular market trading on August 7, 2024, the day of the Announcement.  Dalton sold all of

his PetIQ options contracts between August 16 and August 20, 2024.

CLAIM FOR RELIEF

FRAUD IN CONNECTION WITH THE PURCHASE OR SALE OF SECURITIES
(Defendants’ Violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder)

40. Paragraphs 1 through 39 above are re-alleged and incorporated by reference as if

fully set forth herein.

41. By reason of the conduct described above, Defendants, directly or indirectly, in

connection with the purchase or sale of securities, by the use of the means or instrumentalities of

interstate commerce or of the mails, or of any facility of any national securities exchange,

intentionally, knowingly, or recklessly, (i) employed devices, schemes, or artifices to defraud;

(ii) made untrue statements of material facts or omitted to state material facts necessary to make

the statements made, in the light of the circumstances under which they were made, not

misleading; and/or (iii) engaged in acts, practices, or courses of business which operated or

would operate as a fraud or deceit upon any persons, including purchasers or sellers of the

securities.

42. By reason of the conduct described above, Defendants violated Exchange Act

Section 10(b) [15 U.S.C. §78j(b)] and Rule 10b-5 [17 C.F.R §240.10b-5] thereunder.

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PRAYER FOR RELIEF

 WHEREFORE, the Commission respectfully requests that this Court:

A. Permanently restrain Defendants, their agents, servants, employees and attorneys,

and those persons in active concert or participation with them who receive actual notice of the

injunction by personal service or otherwise, and each of them, from violating Section 10(b) of

the Exchange Act [15 U.S.C. §78j(b)], and Rule 10b-5 thereunder [17 C.F.R §240.10b-5] by (i)

buying or selling a security of any issuer, on the basis of material, nonpublic information, in

breach of a fiduciary duty or other duty of trust or confidence that is owed directly, indirectly, or

derivatively, to the issuer of that security or the shareholders of that issuer, or to any other person

who is the source of the information; or (ii) by communicating material, nonpublic information

about a security or issuer, in breach of a fiduciary duty or other duty of trust or confidence, to

another person or persons for purposes of buying or selling any security;

B. Order Defendants to disgorge, with prejudgment interest, all ill-gotten gains that

were obtained by reason of the unlawful conduct alleged in this Complaint, pursuant to Sections

21(d)(3), (5) and (7) of the Exchange Act [15 U.S.C. §78u(d)(7)];

C. Order Defendants to pay a civil monetary penalty pursuant to Section 21A of the

Exchange Act [15 U.S.C. §78u-1];

D. Enter an order barring Defendant Smith from serving as an officer or director of

any issuer required to register securities with the Commission pursuant to Sections 12(b) or 12(g)

[15 U.S.C. §78l(b), 78l(g)], or to file reports with Commission pursuant to Section 15(d) [15

U.S.C. §78o(d)], of the Exchange Act;

E. Retain jurisdiction over this action to implement and carry out the terms of all

orders and decrees that may be entered; and

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F. Grant such other further relief as the Court may deem just and proper.

JURY DEMAND

 The Commission demands a jury in this matter for all claims so triable.

Dated: March 31, 2026

      Respectfully submitted,

      /s/ Kathleen Burdette Shields
      Kathleen Burdette Shields (Mass Bar No. 637438)*

SECURITIES AND EXCHANGE COMMISSION
      Boston Regional Office
      33 Arch Street, 24th Floor
      Boston, MA 02110

   Phone: (617) 573-8904
      Fax:(617) 573-4590
      [email protected]

      * Appearing pursuant to Local Rule 83.4(c) as an

attorney employed by and representing the SEC, a
United States agency

mailto:[email protected]

Kathleen Burdette Shields (Mass Bar No. 637438)        
Email: [email protected] 
33 Arch Street, 24th Floor 
Boston, MA 02110 
Phone: (617) 573-8900 
Fax: (617) 573-4590 
Attorney for Plaintiff  
Securities and Exchange Commission 

 
UNITED STATES DISTRICT COURT 

 
DISTRICT OF IDAHO 

 
 
SECURITIES AND EXCHANGE 
COMMISSION, 
   Plaintiff, 
 v. 
 
MICHAEL A. SMITH and 
DOUGLAS JOSHUA DALTON, 
 
   Defendants. 
 

 
 
      Civil Action No. 26-CV- 
 
 
      COMPLAINT 
 
      Demand for Jury Trial 

 
 Plaintiff, Securities and Exchange Commission (the “Commission”), alleges the 

following against defendants Michael A. Smith (“Smith”) and Douglas Joshua Dalton (“Dalton”) 

(collectively “Defendants”): 

SUMMARY 

1. This is an insider trading action.  Defendants traded in the securities of PetIQ, Inc. 

(“PetIQ”), an Idaho-based pet products company whose stock was publicly traded, in advance of 

PetIQ’s public announcement on August 7, 2024 that PetIQ would be acquired by a private 

equity firm (the “Announcement”).  

2. At the time, Smith was the President and Chief Operating Officer (“COO”) of 

PetIQ and was part of ongoing discussions among the PetIQ board of directors and PetIQ 

management about the potential acquisition.  In breach of his duty of trust and confidence to 

Case 1:26-cv-00193-DCN     Document 1     Filed 03/31/26     Page 1 of 12

mailto:[email protected]


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PetIQ and its shareholders, Smith traded on the basis of material, non-public information he 

learned in these discussions by purchasing shares of PetIQ in his ex-wife’s brokerage accounts 

on July 26, 2024.   

3. Smith also shared material, non-public information about the potential acquisition 

with his longtime close friend Dalton.  Dalton understood that Smith had this confidential 

information because of his position as an executive at PetIQ, and Dalton traded on the material, 

non-public information by purchasing PetIQ stock options in late July and early August 2024.   

4. On August 7, 2024, the day of the Announcement, the value of PetIQ’s common 

stock rose 48% to $30.42 per share, up from the prior day’s closing price of $20.57 per share. 

5. By trading on the confidential and nonpublic information that Smith received 

through his employment about the upcoming acquisition of PetIQ, Smith breached his duty to 

PetIQ and its shareholders and Defendants gained an unfair advantage over other investors in the 

public markets.  As a result of their insider trading, Smith earned approximately $145,772 in 

illegal trading profits in his ex-wife’s accounts, and Dalton gained approximately $101,670 in 

illegal trading profits. 

6. As a result of the conduct alleged herein, Defendants violated, and unless 

restrained and enjoined will continue to violate, Section 10(b) of the Securities Exchange Act of 

1934 (“Exchange Act”) and Rule 10b-5 thereunder [15 U.S.C. §78j(b); 17 C.F.R. §240.10b-5]. 

7. The Commission seeks: (i) permanent injunctions against Defendants, enjoining 

them from engaging in the transactions, acts, practices, and courses of business of the type 

alleged in this Complaint, (ii) disgorgement of ill-gotten gains they received from the unlawful 

conduct set forth in this Complaint pursuant to Sections 21(d)(3), (5) and (7) of the Exchange 

Act [15 U.S.C. §78u(d)(7)], together with prejudgment interest, (iii) civil penalties pursuant to 

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Section 21A of the Exchange Act [15 U.S.C. §78u-1], (iv) an order barring Defendant Smith 

from serving as an officer or director of certain public companies pursuant to Section 21(d)(2) of 

the Exchange Act [15 U.S.C. §78u(d)(2)], and (v) such other relief as the Court may deem 

appropriate. 

JURISDICTION AND VENUE 

8. This Court has jurisdiction over this action pursuant to Sections 21(d)(1), 21(e), 

and 27 of the Exchange Act [15 U.S.C §§78u(d)(1), 78u(e) and 78aa].   

9. Venue is proper in this District pursuant to Section 27 of the Exchange Act [15 

U.S.C §78aa].  Defendant Smith resides in the District of Idaho, and PetIQ’s corporate 

headquarters was in the District of Idaho.  Also, certain of the acts, practices, transactions and 

courses of business constituting the violations alleged in this Complaint occurred within the 

District of Idaho, and were effected, directly, or indirectly, by making use of the means or 

instrumentalities of transportation or communication in interstate commerce, or the mails, 

including the internet and the telephone. 

DEFENDANTS 

10. Smith, age 48, resides in Eagle, Idaho.  In the summer of 2024, Smith served as 

PetIQ’s President and COO. 

11. Dalton, age 48, resides in Bentonville, Arkansas.  Dalton is employed in the 

insurance industry.   

RELATED ENTITY 

12. PetIQ was a Delaware corporation with a principal place of business in Eagle, 

Idaho before its acquisition by a private equity firm named Bansk Group LP (“Bansk Group”).  

During the relevant period, PetIQ’s securities were registered pursuant to Section 12(b) of the 

Case 1:26-cv-00193-DCN     Document 1     Filed 03/31/26     Page 3 of 12



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Exchange Act and traded on the Nasdaq Global Select Market under the ticker symbol PETQ.  

Once the acquisition closed in October 2024, PetIQ’s shares were no longer publicly traded.  

PetIQ’s business involved pet medications, pet wellness services and pet-related products. 

FACTUAL ALLEGATIONS 

Smith Received Nonpublic Information About PetIQ’s Potential Acquisition. 

13. On June 2, 2024, Bansk Group made a non-binding proposal to acquire all 

outstanding shares of PetIQ common stock for $25.50 per share, subject to certain due diligence.  

This proposal was shared with PetIQ’s Chief Executive Officer (“CEO”) and PetIQ’s board of 

directors, which rejected the initial proposal on June 11, 2024.   

14. On June 18, 2024, Bansk Group made a revised proposal to acquire all 

outstanding shares of PetIQ common stock for $28.50 per share, subject to certain due diligence.  

PetIQ’s CEO and members of PetIQ’s board reviewed this proposal on June 19, 2024, and 

decided to allow Bansk Group to conduct limited due diligence, under a confidentiality 

agreement, to determine if Bansk Group would be able to offer additional value to PetIQ’s 

stockholders with a further revised non-binding proposal. 

15. On June 25, 2024, PetIQ and Bansk Group extended their confidentiality 

agreement so that Bansk Group could conduct additional due diligence.  On June 28, 2024, 

Smith signed a confidentiality agreement with PetIQ in connection with his work on the potential 

acquisition.  In that agreement, Smith acknowledged that he had a duty to keep “all information 

related to this project and its name, as well as its existence, in strict confidence” and that he was 

prohibited from communicating any information, either orally or in writing, about the potential 

acquisition to anyone outside the company. 

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16. Discussions continued and, on July 17, 2024, Bansk Group submitted a further 

revised non-binding proposal to acquire all outstanding shares of PetIQ common stock for 

$31.00 per share, and to complete confirmatory due diligence and negotiate definitive documents 

in the next 21 days.  Bansk Group told PetIQ’s CEO that its proposal reflected its best and final 

offer to acquire PetIQ.   

17. Later on July 17, 2024, the PetIQ board discussed Bansk Group’s latest proposal 

with members of PetIQ management, including Smith, and indicated support for negotiating 

definitive agreements on the basis of the proposal.  

18. Following this discussion, PetIQ’s legal counsel sent a draft acquisition 

agreement to Bansk Group’s legal counsel.  Between July 23, 2024 and August 5, 2024, PetIQ 

and Bansk Group, through their counsel and their management, negotiated the terms of the 

acquisition agreement.  On July 31, 2024, PetIQ’s board discussed the progress of the 

negotiations with members of PetIQ management, including Smith.  Smith was informed that the 

parties were tentatively planning to present final transaction documents for the board’s approval 

on August 6, 2024.  During this time, Bansk Group also negotiated rollover and employment 

agreements for certain members of PetIQ management, including Smith, so that Smith would 

remain employed as the President and COO of the surviving company if the deal closed.   

19.  On August 6, 2024, PetIQ’s board approved the acquisition, and on August 7, 

2024, before the stock market opened, PetIQ and Bansk Group executed the acquisition 

agreement and issued the Announcement in a joint press release. 

20. The price offered for existing shareholders’ shares if the acquisition closed 

included a premium of approximately 51% over the closing price of PetIQ shares on August 6, 

2024, the last full trading day before the Announcement. 

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Smith Had a Duty to Keep PetIQ’s Information Confidential and Not to Misuse It. 

21. Smith knew that he was obligated to keep confidential the information he 

possessed about PetIQ’s potential acquisition.  In addition to the specific confidentiality 

agreement relating to the acquisition that he signed in June 2024, Smith was aware of PetIQ’s 

general business practices regarding confidentiality and use of its information. 

22. As the President and COO of PetIQ, Smith was required to comply with PetIQ’s 

Insider Trading Policy.  According to that policy, a PetIQ officer or employee in possession of 

“‘material, nonpublic information’ relating to the Company . . . may not (a) purchase or sell 

securities of the Company . . ., (b) direct any other person to purchase or sell such securities or 

(c) disclose the information to anyone outside the Company.”  The policy defined “material, 

nonpublic information” as “information that is not available to the public at large that could 

affect the market price of a security and which a reasonable investor would regard as important 

in deciding whether to buy, sell or hold the security,” and the policy listed as examples “news of 

a pending or proposed merger, acquisition, tender offer, divestiture or disposition of significant 

assets.” 

23. As an officer and employee of PetIQ, Smith was also required to comply with the 

company’s Code of Business Ethics and Conduct, which provided that:  

All non-public information about the Company should be considered confidential 
information. Employees who have access to confidential information about the Company 
or any other entity are not permitted to use or share that information for trading purposes 
or for any other purpose except to conduct Company business as described in the 
Company’s Insider Trading Policy. To use non-public information for personal financial 
benefit or to “tip” others who might make an investment decision based on this 
information is unethical and illegal. 
 

The Code of Business Ethics specifically identified news about a potential acquisition of PetIQ 

as information on which an employee could not trade. 

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Smith Traded PetIQ Shares in His Ex-Wife’s Brokerage Accounts. 

24. Smith and his ex-wife divorced in 2023.  His ex-wife maintained two brokerage 

accounts in her own name.  Following their divorce, Smith and his ex-wife communicated 

regularly, and Smith managed the trading in her brokerage accounts.   

25. On the morning of July 26, 2024, during the time period when PetIQ was 

negotiating the acquisition agreement with Bansk Group, Smith visited his ex-wife’s house.  

Between about 10:47 am and 10:55 am, Smith purchased a total of 17,255 shares of PetIQ stock 

in his ex-wife’s accounts.  Smith spent approximately $379,125 to purchase these PetIQ shares, 

at an average price of about $21.97 per share.  In order to fund those purchases, Smith sold 

shares of several exchange traded funds, including shares of two funds which he sold for a loss.   

26. When Smith purchased PetIQ stock in his ex-wife’s accounts on July 26, 2024, he 

was aware of material, non-public information about PetIQ’s potential acquisition at the price of 

$31 per share, well above the then-current trading price of PetIQ stock.  Smith also knew that the 

information was non-public and highly confidential.  He owed PetIQ a duty of trust and a duty to 

preserve the confidentiality of that information and not to misuse the information for personal 

gain.  Smith breached that duty by trading on the information to purchase PetIQ shares in his ex-

wife’s accounts. 

27. After markets closed on August 7, 2024, the day the acquisition was announced, 

Smith returned to his ex-wife’s house and placed orders in her brokerage accounts to sell the 

17,255 PetIQ shares he had purchased on July 26, 2024.  Smith’s orders executed the next day at 

the August 7, 2024 closing price and yielded approximately $145,772 in profits. 

Smith Shared Confidential Information with Dalton About PetIQ’s Potential Acquisition 
and Dalton Traded on that Information. 
 

28. In or about July 2024, Smith shared with Dalton material, nonpublic information 

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concerning the potential acquisition of PetIQ.  In sharing this information, Smith provided 

Dalton with an illicit gift of material, nonpublic information that Dalton could profit upon by 

purchasing PetIQ securities before the public announcement of the acquisition. 

29. Smith and Dalton have been close friends since high school.  On more than one 

occasion, Smith has loaned substantial sums of money to Dalton. 

30. Before July 2024, Dalton was aware that Smith held a high-level position at PetIQ 

and Smith knew that Dalton had previously traded in PetIQ securities.  The two had discussed 

PetIQ and its business several times before July 2024. 

31. On the morning of July 26, 2024, about 13 minutes before Smith began 

purchasing PetIQ securities in his ex-wife’s accounts, Dalton attempted to reach Smith by phone.  

Approximately one hour later, after Smith had purchased PetIQ shares in his ex-wife’s accounts, 

Smith returned Dalton’s call and the two spoke for approximately 35 minutes.  During this call, 

Smith disclosed to Dalton material, nonpublic information about PetIQ’s upcoming acquisition. 

32. Approximately 16 minutes after his call with Smith ended, Dalton transferred 

$25,000 to his brokerage account and called his broker to ask when those funds would be 

available for trading.  About one hour later, Dalton attempted to purchase PetIQ call options but 

his attempts were unsuccessful.  Call options give the buyer the right to purchase stock at a fixed 

price within a specified time frame.  Call options generally permit a buyer to profit from future 

increases in a stock’s price and typically cost less than the stock to which the options relate, thus 

allowing the buyer to leverage his prediction that the stock would increase in value.  Dalton then 

called his broker to ask questions about options trading. The next day, Saturday, July 27, 2024, 

Dalton sent the following text message to another individual: 

Just in case we don’t get to run into each other again. Pull your available cash together 
and buy PETQ it’s at 23 dollars getting bought out in the next couple of days at 31 dollars 

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a piece. If you have or know options do a call on them. It’s my best friend telling me this 
that’s a VP in the company. 
 
33. The information that a potential acquirer had offered $31 per share for PetIQ 

stock in a merger or acquisition transaction was material, nonpublic information belonging to 

PetIQ that Dalton received from Smith.  Smith breached his duty to PetIQ by disclosing this 

material, nonpublic information to his friend Dalton, while knowing, consciously avoiding 

knowing, or being reckless in not knowing that Dalton would use this information to trade in 

PetIQ securities. 

34. Dalton knew that the information about PetIQ’s potential acquisition was material 

and nonpublic.  Dalton also knew that Smith was an officer at PetIQ or otherwise employed at a 

high level by PetIQ.  Further, Dalton knew, was reckless in not knowing, or consciously avoided 

knowing, that Smith had no legitimate business purpose in providing him with material, 

nonpublic information about the potential acquisition of PetIQ, and that Smith was breaching his 

duty to PetIQ by sharing that information with him. 

35. Smith obtained a personal benefit from communicating this information to 

Dalton, including the benefit of making a gift of material, nonpublic information to a close 

friend. 

36. On Monday, July 29, 2024, Dalton again tried to purchase PetIQ call options but 

was unsuccessful.  Throughout the day, Dalton spoke with his broker multiple times about 

options trading generally and PetIQ options specifically. 

37. On Tuesday, July 30, 2024, Dalton succeeded in buying 200 PetIQ call options 

with a $25 strike price that would expire on October 18, 2024.  In essence, Dalton was predicting 

that PetIQ’s stock would be worth more than $25 before October 18, 2024.  At the time of 

Dalton’s purchase, these option contracts were “out-of-the-money” because PetIQ’s stock was 

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then trading below $25 per share. 

38. On August 5, 2024, Dalton bought an additional six PetIQ call options with the 

same strike price and expiration date. 

39. By purchasing PetIQ call options based on the material, nonpublic information 

Smith provided him, Dalton generated illegal profits of approximately $101,670 as of the close 

of regular market trading on August 7, 2024, the day of the Announcement.  Dalton sold all of 

his PetIQ options contracts between August 16 and August 20, 2024. 

CLAIM FOR RELIEF 
 

FRAUD IN CONNECTION WITH THE PURCHASE OR SALE OF SECURITIES  
(Defendants’ Violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder) 

 
40. Paragraphs 1 through 39 above are re-alleged and incorporated by reference as if 

fully set forth herein. 

41. By reason of the conduct described above, Defendants, directly or indirectly, in 

connection with the purchase or sale of securities, by the use of the means or instrumentalities of 

interstate commerce or of the mails, or of any facility of any national securities exchange, 

intentionally, knowingly, or recklessly, (i) employed devices, schemes, or artifices to defraud; 

(ii) made untrue statements of material facts or omitted to state material facts necessary to make 

the statements made, in the light of the circumstances under which they were made, not 

misleading; and/or (iii) engaged in acts, practices, or courses of business which operated or 

would operate as a fraud or deceit upon any persons, including purchasers or sellers of the 

securities. 

42. By reason of the conduct described above, Defendants violated Exchange Act 

Section 10(b) [15 U.S.C. §78j(b)] and Rule 10b-5 [17 C.F.R §240.10b-5] thereunder. 

 

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PRAYER FOR RELIEF 

 WHEREFORE, the Commission respectfully requests that this Court: 

A. Permanently restrain Defendants, their agents, servants, employees and attorneys, 

and those persons in active concert or participation with them who receive actual notice of the 

injunction by personal service or otherwise, and each of them, from violating Section 10(b) of 

the Exchange Act [15 U.S.C. §78j(b)], and Rule 10b-5 thereunder [17 C.F.R §240.10b-5] by (i) 

buying or selling a security of any issuer, on the basis of material, nonpublic information, in 

breach of a fiduciary duty or other duty of trust or confidence that is owed directly, indirectly, or 

derivatively, to the issuer of that security or the shareholders of that issuer, or to any other person 

who is the source of the information; or (ii) by communicating material, nonpublic information 

about a security or issuer, in breach of a fiduciary duty or other duty of trust or confidence, to 

another person or persons for purposes of buying or selling any security; 

B. Order Defendants to disgorge, with prejudgment interest, all ill-gotten gains that 

were obtained by reason of the unlawful conduct alleged in this Complaint, pursuant to Sections 

21(d)(3), (5) and (7) of the Exchange Act [15 U.S.C. §78u(d)(7)]; 

C. Order Defendants to pay a civil monetary penalty pursuant to Section 21A of the 

Exchange Act [15 U.S.C. §78u-1]; 

D. Enter an order barring Defendant Smith from serving as an officer or director of 

any issuer required to register securities with the Commission pursuant to Sections 12(b) or 12(g) 

[15 U.S.C. §78l(b), 78l(g)], or to file reports with Commission pursuant to Section 15(d) [15 

U.S.C. §78o(d)], of the Exchange Act; 

E. Retain jurisdiction over this action to implement and carry out the terms of all 

orders and decrees that may be entered; and  

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F. Grant such other further relief as the Court may deem just and proper. 

JURY DEMAND 

 The Commission demands a jury in this matter for all claims so triable. 

Dated: March 31, 2026 

      Respectfully submitted, 

      /s/ Kathleen Burdette Shields    
      Kathleen Burdette Shields (Mass Bar No. 637438)* 

SECURITIES AND EXCHANGE COMMISSION 
      Boston Regional Office 
      33 Arch Street, 24th Floor 
      Boston, MA 02110 

   Phone: (617) 573-8904 
      Fax:(617) 573-4590 
      [email protected] 
 
      * Appearing pursuant to Local Rule 83.4(c) as an  

attorney employed by and representing the SEC, a 
United States agency 

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mailto:[email protected]