UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 43306 / September 20, 2000
File No. 3-10290
|In the Matter of
GREGORY M. SHEPHARD
|ORDER INSTITUTING CEASE-AND-DESIST PROCEEDINGS PURSUANT TO SECTION 21C OF THE SECURITIES EXCHANGE ACT OF 1934, MAKING FINDINGS AND IMPOSING A CEASE-AND-DESIST ORDER
The Securities and Exchange Commission ("Commission") deems it appropriate that public cease-and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities Exchange Act of 1934 ("Exchange Act") against Gregory M. Shepard ("Respondent").
In anticipation of the institution of these cease-and-desist Proceedings, Respondent has submitted an Offer of Settlement ("Offer") which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying the findings, Respondent consents to the entry of this Order Instituting Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order ("Order").
On the basis of this Order and Respondent's Offer, the Commission makes the following findings:
- Gregory M. Shepard, age 44, is a resident of Bloomington, Illinois. Between 1992 and June 1999, Shepard was the President and 50% owner of American Union Financial Corporation ("American Union"), a privately held Illinois corporation. As President and 50% owner, Shepard participated in all of the investment decisions on behalf of American Union described below.
- In March 1999, Shepard issued a press release announcing that American Union had made a partial tender offer to purchase up to 4.82% or 350,000 shares of Meridian Insurance Group, Inc.'s ("Meridian") outstanding Common Stock. American Union stated in its tender offer that it would purchase the Meridian shares in a "dutch auction" format at the lowest price between $14.50 and $18.50 per share that would enable American Union to purchase the desired 350,000 shares. Under the "dutch auction" format, tendering shareholders elect the price for which they would be willing to sell their shares. The partial tender offer commenced on April 2, 1999 and was to remain open until April 30, 1999.
- On April 5, 1999, during the pendency of the tender offer, Shepard purchased 10,900 shares of Meridian stock for American Union on the open market at the price of $15.19 per share.
- Shepard continued to purchase additional shares of Meridian stock through American Union during the pending tender offer, making purchases on the open market on April 9th, 15th, and 29th. By April 29, 1999, Shepard had purchased a total of 128,000 shares of Meridian stock at prices ranging from $15.19 to $16.63 per share.
- Rule 10b-13 of the Exchange Act prohibits any person who makes a cash tender offer or exchange offer for any equity security from directly or indirectly purchasing, or making any arrangement to purchase, any such security otherwise than through the tender offer. The prohibition on purchases extends from the time the tender offer is publicly announced until the last day of which shares tendered may, by the terms of the offer, be accepted or rejected. Shepard committed or caused violations of Rule 10b-13 of the Exchange Act by purchasing shares of Meridian stock, at a time when the stock was subject to American Union's tender offer, other than as part of the tender offer.
IT IS HEREBY ORDERED, pursuant to Section 21C of the Exchange Act, that Respondent Shepard cease and desist from committing or causing any violation and any future violation of Rule 14e-5 of the Exchange Act.1
By the Commission.
Jonathan G. Katz,
1 Effective January 24, 2000, Rule 10b-13 of the Exchange Act was re-designated as Rule 14e-5.