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U.S. Securities and Exchange Commission

IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NORTH CAROLINA, CHARLOTTE DIVISION


Securities and Exchange Commission,
450 Fifth Street, N.W.
Washington, DC 20549,

Plaintiff,   

v.

ARTHUR K. BARTLETT,
6720 Thornton Oaks Court
Charlotte, NC 28270

Defendant.   


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COMPLAINT

Civil Action No.:

COMPLAINT

Plaintiff Securities and Exchange Commission alleges:

SUMMARY

1. This is an insider trading case in which an attorney, defendant Arthur K. Bartlett, bought stock in one of his law firm's clients, LendingTree, Inc. ("LendingTree"), after learning confidential information about a pending transaction in which LendingTree would be acquired by another company. Bartlett violated Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act") [15 U.S.C. § 78j(b)] and Exchange Act Rule 10b-5 [17 C.F.R. § 240.10b-5]. This complaint seeks to enjoin Bartlett from committing such violations in the future, to require him to disgorge his unlawful profits with prejudgment interest, and to require Bartlett to pay an appropriate civil monetary penalty.

JURISDICTION

2. This Court has jurisdiction over this action pursuant to Exchange Act Sections 21(d), 21(e), 21A, and 27 [15 U.S.C. §§ 78u(d), 78u(e), 78u-1, and 78aa]. In connection with the conduct described in this complaint, defendant Bartlett directly or indirectly used the means or instrumentalities of interstate commerce, the mails, or the facilities of a national securities exchange.

DEFENDANT

3. Defendant Bartlett, age 32, resides in Charlotte, North Carolina. During the relevant period, Bartlett was an associate attorney specializing in employment law at a law firm in Charlotte, North Carolina. The firm terminated Bartlett's employment in July 2003.

CLAIM FOR RELIEF

[Insider Trading in Violation of Exhange Act Section 10(b) and Exchange Act Rule 10b-5]

4. Paragraphs 1 through 3 are realleged and incorporated herein by reference.

5. At all times relevant to the facts alleged herein, LendingTree was a Delaware corporation, headquartered in Charlotte, North Carolina, that provided an online exchange through which consumers could access a network of lenders, real estate brokers, and related service providers. LendingTree's common stock was listed and traded on the Nasdaq National Market.

6. On April 23, 2003, defendant Bartlett was told by another attorney at his law firm that the firm was representing LendingTree in connection with a pending transaction in which LendingTree would be acquired by USA Interactive, another public company now known as InterActiveCorp. In the same conversation, Bartlett was asked to perform legal research concerning certain employment law issues relevant to the transaction.

7. At the time, Bartlett knew or was reckless in not knowing that the information he learned about the pending transaction was confidential and nonpublic, and that he was forbidden to purchase or sell any securities of LendingTree while possessing such information.

8. After learning about the pending transaction, while in possession of material nonpublic information about the transaction, and in breach of his fiduciary duties to LendingTree, its shareholders, and Bartlett's law firm, Bartlett purchased 540 shares of LendingTree common stock at $13 per share.

9. On May 5, 2003, prior to the market opening, LendingTree and USA Interactive issued a joint press release announcing an agreement by which USA Interactive would acquire all of LendingTree's outstanding capital stock in a stock-for-stock transaction. After the announcement, LendingTree's stock price increased that day by $6.03 (or 41%), closing at $20.72 per share.

10. Also on May 5, 2003, after the acquisition agreement was announced, Bartlett sold all 540 shares of his LendingTree stock. Bartlett sold 240 shares at $20.80 per share and 300 shares at $21.00 per share, realizing a profit of $4,272.

11. By engaging in the foregoing conduct, Bartlett violated Exchange Act Section 10(b) and Exchange Act Rule 10b-5. Unless enjoined, he is likely to commit such violations in the future.

PRAYER FOR RELIEF

WHEREFORE, plaintiff respectfully requests the Court to enter a final judgment against defendant Bartlett that:

A. Permanently enjoins him from violating Exchange Act Section 10(b) and Exchange Act Rule 10b-5;

B. Orders him to disgorge, with prejudgment interest, all illicit profits realized from the conduct described above;

C. Orders him to pay a civil money penalty pursuant to Exchange Act Section 21A [15 U.S.C. § 78u-1]; and

D. Grants such other and further relief as the Court deems just and appropriate.

Dated: September 24, 2003

Respectfully submitted,

___________________
Paul R. Berger
Russell G. Ryan (D.C. Bar # 414472)
Derek M. Meisner
Mark E. Wolfe

Attorneys for Plaintiff
Securities and Exchange Commission

SEC Division of Enforcement
450 Fifth Street, N.W.
Washington, DC 20549-0806
Tel. (202) 942-4660 (Ryan)
Fax (202) 942-9630

 

http://www.sec.gov/litigation/complaints/comp18361.htm


Modified: 09/25/2003