Smith and Dalton Charged with PetIQ Insider Trading

SEC Litigation Releases

Filed April 1st, 2026

Detected April 2nd, 2026

Summary

The SEC filed insider trading charges against Michael A. Smith, former President and COO of PetIQ, Inc., and his associate Douglas Joshua Dalton for trading ahead of Bansk Group LP's acquisition announcement on August 7, 2024. Smith purchased PetIQ stock in his ex-wife's accounts using material nonpublic information, then tipped Dalton who purchased call options, collectively generating over $200,000 in illicit profits.

View original document View source feed page

What changed

The SEC charged Smith and Dalton in the District of Idaho (No. 26-cv-00193) for violations of Section 10(b) of the Securities Exchange Act and Rule 10b-5. Smith, who learned of the potential acquisition through his executive role, purchased PetIQ stock in his ex-wife's brokerage accounts and shared the tip with Dalton, who bought call options. When the acquisition was announced, PetIQ's stock rose 48%. The complaint seeks permanent injunctions, disgorgement with prejudgment interest, civil penalties, and a bar preventing Smith from serving as an officer or director of a public company. Smith has already pleaded guilty to securities fraud in parallel DOJ criminal proceedings.

Compliance teams at public companies should reinforce insider trading policies, particularly regarding trading in accounts of family members and communication of material nonpublic information to external parties. The SEC's coordinated action with DOJ highlights continued aggressive enforcement of insider trading provisions, and companies should review their disclosure controls to prevent executive misuse of MNPI.

What to do next

Review and reinforce insider trading policies to cover trading through family member accounts
Update MNPI handling procedures to prevent tippee liability scenarios
Conduct training on the consequences of sharing material nonpublic information with external parties

Penalties

Permanent injunctions, disgorgement with prejudgment interest, civil penalties, officer/director bar; parallel criminal charges pending against Dalton, Smith awaiting sentencing on securities fraud plea

Source document (simplified)

Michael Smith and Douglas Joshua Dalton

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 26518 / April 1, 2026

Securities and Exchange Commission v. Michael A. Smith and Douglas Joshua Dalton, No. 26-cv-00193 (D. Idaho filed Mar. 31, 2026)

SEC Charges Former Executive and his Friend with Insider Trading

On March 31, 2026, the Securities and Exchange Commission filed charges against Michael A. Smith, the former President and Chief Operating Officer of PetIQ, Inc., and his friend Douglas Joshua Dalton, for insider trading ahead of the August 7, 2024 announcement that private equity firm Bansk Group LP would acquire PetIQ.

According to the SEC’s complaint, Smith purchased PetIQ common stock in his ex-wife’s brokerage accounts on the basis of material nonpublic information about the potential acquisition of PetIQ, which he learned through his employment. As alleged, shortly after making these purchases, Smith shared information about the potential acquisition with his friend Dalton, and, on the basis of that information, Dalton purchased PetIQ call options. The complaint further alleges that when the acquisition was later announced, the price of PetIQ’s common stock rose 48%, and Smith and Dalton collectively made more than $200,000 in illicit profits.

In parallel criminal actions, the U.S. Department of Justice announced charges against Dalton, and Smith previously pleaded guilty to securities fraud and is awaiting sentencing.

The SEC’s complaint, filed in federal court in the District of Idaho, charges Smith and Dalton with violations of the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and seeks permanent injunctions, disgorgement with prejudgment interest, civil penalties, and a bar that would prevent Smith from serving as an officer or director of a public company.

The SEC’s investigation, which is continuing, was conducted by Andrew Palid, David Scheffler, John Rymas, and Michele T. Perillo of the Division of Enforcement’s Market Abuse Unit, under the supervision of Joseph G. Sansone. Kathleen Shields of the SEC’s Boston Regional Office will lead the litigation. The SEC appreciates the assistance of the U.S. Department of Justice Criminal Division’s Fraud Section, the U.S. Postal Inspection Service, and the Financial Industry Regulatory Authority.