In the summer of 2024, Michael A. Smith, then the President and Chief Operating Officer of PetIQ, Inc., an Idaho-based pet medication and wellness company, learned through his senior role that private equity firm Bansk Group LP was moving to acquire the company at roughly $31 per share. Rather than treat that information as the confidential executive knowledge it was, Smith used it to buy PetIQ stock in the brokerage accounts of his ex-wife, concealing the trades behind her name, and then called his longtime friend Douglas Joshua Dalton, 48, of Bentonville, Arkansas, to pass the tip along. Dalton bought nearly $20,000 in PetIQ call options within days of that call. When the $1.5B acquisition was announced on August 7, 2024, PetIQ’s stock rose 48 percent. Smith cleared $145,772 from the trades in his ex-wife’s accounts. Dalton cleared $96,515 from his options, a return of nearly 500 percent. The Securities and Exchange Commission filed charges against both men on March 31, 2026, in the District of Idaho, and the Department of Justice has secured guilty pleas from each.
A Private Equity Offer Became the Basis of a Trade Hidden in His Ex-Wife’s Name
Bansk Group approached PetIQ with an acquisition offer in June 2024. As President and COO, Smith was directly involved in discussions with PetIQ’s board and management about the pending deal, placing him among a small circle of insiders with access to information that would move the market the moment it became public. In late July 2024, before any public disclosure, Smith acted on that knowledge by purchasing PetIQ common stock, not in his own accounts, but in accounts belonging to his ex-wife, a move the SEC describes in its federal complaint as trading on material nonpublic information in breach of his duty to PetIQ and its shareholders.
The use of the ex-wife’s accounts did not obscure the trades from investigators. The SEC’s Market Abuse Unit identified the purchases and traced them directly back to Smith before litigation was filed.
The July 26 Phone Call That Tied Smith’s Tip to Dalton’s Options Purchase
On July 26, 2024, Smith called Dalton, a close personal friend since high school. During that call, according to court documents and the DOJ announcement of Dalton’s guilty plea, Smith shared the nonpublic details of the impending acquisition, including the per-share price. Dalton knew the information was both confidential and material given Smith’s position at the company.
Within a short window after that call, Dalton purchased $19,985 in PetIQ call options. A call option is a contract that gives the buyer the right to purchase shares at a fixed price before a set date, a structure that produces outsized returns when a stock price spikes on news the buyer already knows is coming. Dalton’s purchase was precisely timed to profit from exactly that outcome.
A 48 Percent Stock Surge Turned $19,000 into $96,000 for Dalton in a Single Day
When PetIQ’s acquisition by Bansk Group was announced on August 7, 2024, the company’s stock rose 48 percent. Smith sold the shares he had placed in his ex-wife’s accounts the day after the announcement, generating a profit of $145,772. Dalton sold his call options and collected $96,515, nearly five times his initial outlay in roughly two weeks.
Together, the two men collected more than $200,000 in profits built entirely on information that other investors in the public market did not have. The SEC’s complaint charges both Smith and Dalton with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, the core antifraud provisions governing insider trading in U.S. markets. The SEC’s enforcement action also seeks a permanent bar preventing Smith from ever serving as an officer or director of a public company.
Both Men Have Pleaded Guilty to Criminal Charges and Face Up to 20 Years in Prison
The civil case runs alongside parallel criminal proceedings. Smith pleaded guilty to one count of securities fraud in November 2025 and is awaiting sentencing, currently scheduled for June 9 in Idaho. Dalton pleaded guilty to one count of securities fraud in April 2026 and is scheduled for sentencing on June 17. Both men face a statutory maximum of 20 years in federal prison.
Smith had joined PetIQ as an executive vice president in 2019 after working in corporate roles around northwest Arkansas following his studies at the University of Arkansas. His FINRA record shows no prior disciplinary history before this matter. Dalton, a resident of Bentonville, Arkansas, had no prior public record in securities markets before the trades that connected him to his friend’s insider knowledge.
Conclusion
The PetIQ insider trading case is a straightforward breach of trust: an executive with access to a market-moving secret used it for personal gain and handed it to a friend. The accounts were in someone else’s name. The call was brief. The profit window was less than two weeks. Federal investigators pieced it together regardless. Smith and Dalton both now face criminal sentencing, and the SEC’s civil action continues to seek disgorgement, penalties, and a permanent bar from public company leadership for Smith. The $200,000 they made is a number that will follow both men into a federal courtroom in Idaho this summer.
