U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 20804A / November 13, 2008

Securities and Exchange Commission v. William M. Gallahair, Civil Action No. CV08-5134, (N.D. Cal. filed November 12, 2008)

SEC Files Insider Trading Charges Against Former McKesson Corporation Vice President of Sales

The Securities and Exchange Commission announced that it filed a complaint against William M. Gallahair for insider trading in advance of McKesson Corporation's public announcement on July 11, 2005 that it intended to acquire D&K Healthcare Resources, Inc., a St. Louis, Missouri-based distributor of pharmaceuticals and healthcare products. The Commission's complaint, filed on November 12, 2008 in the United States District Court for the Northern District of California - San Francisco Division, alleges that Gallahair, a former Vice President of Sales at McKesson, misappropriated material, non-public information from McKesson about its planned acquisition of D&K through a tender offer and purchased shares of D&K stock based on that information.

According to the Commission's complaint, Gallahair, a resident of Newport Beach, California, was not officially provided with any notice of McKesson's plans to acquire D&Kthrough a tender offer. Instead, the complaint alleges that Gallahair first learned about the planned acquisition eighteen days before McKesson publicly announced its tender offer for D&K when he overheard a telephone conversation by his supervisor about McKesson's integration plans for D&K. According to the Commission's complaint, Gallahair's supervisor had been selected to lead the team of McKesson employees preparing to integrate D&K's operations into McKesson. The complaint alleges that shortly after overhearing his supervisor's conversation, Gallahair purchased 20,000 shares of D&K stock based on material, non-public information about McKesson's imminent acquisition of D&K. According to the Commission, on July 11, 2005 when McKesson publicly announced its tender offer for D&K, the price of D&K's stock rose 68% from the previous day's closing price of $8.50 to $14.30 per share. That day, according to the Commission's complaint, Gallahair placed orders to sell all of his shares of D&K stock and realized profits of over $120,000 from his illegal insider trading. The complaint alleges that on several occasions when he has been questioned about his trading, Gallahair has given conflicting explanations of his reasons for purchasing shares of D&K stock.

Based on Gallahair's conduct, the Commission's complaint charges Gallahair with violating Sections 10(b) and 14(e) of Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder. The Commission is seeking an order permanently enjoining Gallahair from future violations of the federal securities laws, requiring Gallahair to disgorge his ill-gotten gains of $120,170.13, plus prejudgment interest, and imposing civil penalties against Gallahair.

The Commission acknowledges the assistance and cooperation of the Financial Industry Regulatory Authority.

SEC Complaint in this matter