Wall Street regulators on Thursday filed a complaint against a Rite Aid executive from Marlton who allegedly traded on inside information, selling more than $650,000 in stock before Rite Aid’s share price dropped one day later.

David Mahan, 58, has worked for Rite Aid since 1984, according to the lawsuit filed by the Securities and Exchange Commission in the Middle District of Pennsylvania. He has been a regional vice president at Rite Aid since 2003, and reported to executives at Rite Aid headquarters in Camp Hill, Pa.

The SEC alleges that on Jan. 19, 2017, Mahan illegally traded using inside information about Rite Aid, which had agreed to a merger with Walgreens.

Walgreens, headquartered in Deerfield, Ill., is a public company that owns Walgreens, Duane Reade, and Boots retail pharmacy chains. In 2015, Walgreens had agreed to acquire all outstanding shares of Rite Aid for $9 a share in cash, a 48% premium. The transaction was expected to close in early 2017.

According to the SEC complaint, based on the terms of the merger, if the Federal Trade Commission did not approve the deal by Jan. 27, 2017, then Rite Aid and Walgreens would need to agree to extend the end date.

Rite Aid, Walgreens, and investors understood that a delay would likely require divesting additional stores and Walgreens would likely cut the purchase price, the SEC said.

regional vice president, Rite Aid
regional vice president, Rite Aid

The SEC claims that Mahan got information through his employment on Jan. 18, 2017, that the sale would likely be delayed.

On Jan. 19, 2017, Mahan called his brokerage firm, where he held Rite Aid employee stock options and employer-granted stock. Mahan sold 11,985 shares of Rite Aid stock and exercised 63,675 Rite Aid employee stock options and sold the stock. Mahan’s Rite Aid shares were sold at prices ranging from $8.61 to $8.62 a share, for a total of $651,604.

The 75,660 total shares constituted all of his Rite Aid holdings.

On Jan. 30, 2017, Rite Aid and Walgreens amended the merger agreement, extending the end date, and the price dropped to $6.50 to $7.00 per share.

By selling before the delay became public, Mahan, who still works for the company, avoided a loss of more than $87,000, the complaint said.

Without admitting or denying the allegations, Mahan has agreed to a final judgment that would order him to repay $87,277, plus interest of $12,107, and a civil penalty of $87,277. The court must approve the settlement.

Mahan’s lawyers, listed as Amy Carver and Catherine Recker with the Philadelphia firm Welsh & Recker, could not be reached for comment Thursday.

Ultimately, the merger never happened, but Walgreens bought about half of Rite Aid’s stores. Rite Aid is one of the nation’s leading drugstore chains with fiscal 2018 annual revenues of $21.5 billion.