UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
Case No.

Plaintiff, Securities and Exchange Commission ("Commission"), alleges as follows:

1. This action arises out of insider trading in the common stock of NetOptix Corp. by friends or family members (the "Trading Group") of Gerhard Andlinger, the former chief executive officer of NetOptix. The members of the Trading Group (and others they tipped) bought a total of more than $2.8 million in NetOptix stock on January 21 and January 24, 2000, just weeks before NetOptix announced that it would be acquired by Corning, Inc. (the "Corning acquisition"). At the time they made those purchases, the Trading Group possessed material, non-public information that they had obtained from Andlinger. After the Corning acquisition was announced on February 14, 2000, the shares owned by the Trading Group and others they tipped initially increased in value by approximately $1.8 million.

2. By the conduct alleged herein, Andlinger and the Trading Group members have engaged, directly or indirectly, in transactions, acts, practices, or courses of business that constitute violations of Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5, thereunder. Unless they are permanently enjoined by this Court, the Defendants will continue to engage in the transactions, acts, practices and courses of business set forth in this Complaint and in transactions, acts, practices and courses of business of similar type and object. The Commission also asks this Court to order the Trading Group members to disgorge their ill-gotten gains, order all of the Defendants to pay civil money penalties, and impose an officer and director bar on Andlinger.

JURISDICTION AND VENUE

3. The Commission brings this action pursuant to the authority conferred upon it by Section 21(d) of the Exchange Act, 15 U.S.C. § 78u(d), for permanent injunctive relief against the Defendants, from engaging in the transactions, acts, practices, and courses of business alleged in this Complaint and for civil penalties pursuant to Section 21(d) of the Exchange Act, 15 U.S.C. § 78u(d)(3). The Commission also brings this action pursuant to Section 21A of the Exchange Act, 15 U.S.C. § 78u-1, for civil penalties against the Defendants under the Insider Trading and Securities Fraud Enforcement Act of 1988 ("ITSFEA"). In addition, the Commission seeks an order barring Andlinger from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act, 15 U.S.C.

§ 781, or that is required to file reports pursuant to Section 15(d) of the Exchange Act, 15 U.S.C. § 78o(d), and Section 21(d)(2) of the Exchange Act, 15 U.S.C. § 78u(d)(2), and for such other relief as the Court may deem appropriate.

4. The Defendants, directly and indirectly, singly or in concert, made use of the means or instruments of transportation or communication in, or the means or instrumentalities of, interstate commerce, or of the mails, or of any facility of any national securities exchange, in connection with the transactions, acts, practices, and courses of business alleged herein. Certain of the alleged transactions, acts, practices, and courses of business occurred in the Southern District of Florida. Accordingly, this Court has jurisdiction over this action, and venue is proper in this district, pursuant to Sections 21(d), 21A, and 27 of the Exchange Act, 15 U.S.C. §§ 78u(d), 78u-l, 78aa.

DEFENDANTS

5. Andlinger, age 71, resides in Vero Beach, Florida. He was the CEO and chairman of the board of directors of NetOptix from 1998 until May, 2000.

6. Jeanne Andlinger, age 48, resides in Vero Beach, Florida. She has been married to Andlinger since 1994.

7. Suzanna Dailey, age 54, resides in Vero Beach, Florida. She is Jeanne Andlinger's sister.

8. Sallie Donner, age 52, resides in Vero Beach, Florida. She is Jeanne Andlinger's sister.

9. Louis B. Lloyd, age 61, resides in New York, New York. He is the majority owner, president and CEO of Belfinance Securities, Inc., a broker-dealer registered with the Commission.

ISSUER

10. NetOptix was a Massachusetts-based company that manufactured optical filters. Before its acquisition by Corning, NetOptix's securities were quoted on the NASDAQ National Market. In May 2000, Corning completed its acquisition of NetOptix, which is now known as Corning NetOptix, Inc.

THE ILLEGAL CONDUCT

Andlinger's Fiduciary Duty

11. At the time of the transactions and events alleged in this Complaint, Andlinger was NetOptix's CEO, and therefore owed a fiduciary duty to NetOptix and its shareholders to keep material non-public information confidential.

The Defendants' Illegal Conduct

12. Donner, Dailey and Lloyd had begun buying NetOptix shares in their personal accounts in 1998 or 1999. On Friday, January 14, 2000, however, they each sold most or all of the NetOptix shares they owned after Andlinger expressed the opinion that the NetOptix share price was over-valued.

13. The week of January 17, 2000, however, saw a change in NetOptix's prospects as two companies with businesses similar to NetOptix announced a merger. A senior level employee of Corning (which was one of NetOptix's customers) then contacted the president of NetOptix by telephone and requested a personal meeting. During this telephone conversation, the Corning employee expressed Corning's interest in discussing a broader business relationship with NetOptix. At the end of this conversation, the Corning employee and the president of NetOptix agreed to meet in Boston on Tuesday, January 25, 2000.

14. Andlinger learned of this conversation between the Corning employee and NetOptix's president on or before Friday, January 21, 2000. The information Andlinger received regarding Corning and NetOptix was material and non-public.

15. On or before January 21, 2000, Lloyd and other members of the Trading Group obtained this non-public information from Andlinger in breach of a fiduciary duty to NetOptix and its shareholders. At that time, each member of the Trading Group knew that Andlinger was the CEO of NetOptix, and each of them knew or recklessly disregarded that Andlinger owed a fiduciary or similar duty of trust and confidence to NetOptix.

16. After obtaining the non-public information from Andlinger, each member of the Trading Group, and others they tipped (identified below as Tippees A through D), as detailed below, purchased shares of NetOptix stock. Their stock purchases, in total, equaled more than $2.8 million:

a. On January 21, 2000, at approximately 9:36a.m., Lloyd purchased 2,000 shares of NetOptix stock at $95 per share, for a total cost of $190,123.

b. On January 21, 2000, at approximately 10:38a.m., Dailey purchased 10,000 shares of NetOptix stock at an average price of $92.36 per share, for a total cost of $923,689.

c. On January 21, 2000, at approximately 12:10p.m., Tippee A (a relative of Andlinger and Jeanne Andlinger) purchased 370 shares of NetOptix stock at $93.02 per share, for a total cost of $34,418.

d. On January 24, 2000, at approximately 9:48a.m., Tippee B (an employee of Andlinger and Jeanne Andlinger) purchased 150 shares of NetOptix stock at $98.93 per share, for a total cost of $14,952.

e. On January 24, 2000, at approximately 9:53a.m., Donner purchased 1,250 shares of NetOptix stock at $98.20 per share, for a total cost of $122,752.

f. On January 24, 2000, at approximately 10:13a.m., Donner purchased an additional 6,200 shares of NetOptix stock at $97.02 per share, for a total cost of $601,524.

g. On January 24, 2000, at approximately 10:47a.m., Dailey added to her January 21, 2000 purchase by buying an additional 5,000 shares of NetOptix stock at an average price of $98.30 per share, for a total cost of $491,527.

h. On January 24, 2000, at approximately 11:30a.m., Dailey purchased an additional 2,200 shares of NetOptix stock at $98.03 per share, for a total cost of $215,675.

i. On January 24, 2000, at approximately 1:08p.m., Tippee A added to the January 21, 2000 purchase by buying an additional 580 shares of NetOptix stock at $110.05 per share, for a total cost of $63,831.

j. On January 24, 2000, at approximately 3:23p.m., Jeanne Andlinger purchased 1,450 shares of NetOptix stock at $103.04 per share, for a total cost of $149,412.

k. On January 24, 2000, at approximately 3:55p.m., Tippee C (another employee of Andlinger and Jeanne Andlinger) purchased 59 shares of NetOptix stock at $99.75 per share, for a total cost of $5,924.

17. The purchases of NetOptix stock by Tippee B and Tippee C were the first stock purchases they had ever made. Jeanne Andlinger had opened her first securities account on January 19, 2000.

18. Tippee A also tipped another relative, Tippee D, about the information that Tippee A learned about Corning and NetOptix. Based on this non-public information, Tippee D bought 100 shares of NetOptix stock on January 24, 2000 for a total cost of $10,330.

19. In addition to the purchases described in paragraph 17, above, Lloyd purchased an additional 1,000 shares of NetOptix on February 7, 2000 at a total cost of $116,063. Lloyd made this purchase shortly after he and Andlinger discussed possible investment bankers for a transaction involving NetOptix. On February 7, 2000, Dailey called Lloyd on two occasions. One additional telephone call was made from Dailey to Lloyd on February 8, 2000. That same day, Dailey told her stockbroker that "NetOptix would soon be taken over," and asked what the tax consequences of such a transaction would be on her NetOptix stock holdings.

20. On February 14, 2000, Corning announced that it would acquire NetOptix. NetOptix's stock closed at $156 per share that day, an increase of $20 per share from the previous day's closing price. Although only one of the tippees sold their stock at that time or for that price, and most have continued to hold their stock (which is now Corning stock), the value of the Trading Group members' stock increased by approximately $1.6 million after the announcement of the Corning acquisition.

FIRST CLAIM FOR RELIEF

Defendants' Violations of Section 10(b) of the Exchange Act and Rule 10b-5

21. The Commission realleges and incorporates by reference the allegations contained in Paragraphs 1 through 20, above.

22. Andlinger, Jeanne Andlinger, Dailey, Donner, and Lloyd directly or indirectly, by use of the means or instrumentalities of interstate commerce or of the mails, or of any facility of any national exchange, in connection with the purchase or sale of securities, as described herein, have knowingly, willfully or recklessly: (a) employed devices, schemes or artifices to defraud; (b) made untrue statements of material facts and omitted to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; and/or (c) engaged in acts, practices and courses of business, which have operated, are now operating and will operate as a fraud upon the purchasers of such securities.

23. By reason of the foregoing, Andlinger, Jeanne Andlinger, Dailey, Donner and Lloyd have violated and, unless enjoined, will continue to violate Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. § 240. 10b-5, thereunder.

RELIEF SOUGHT

WHEREFORE, Plaintiff respectfully requests a Final Judgment:

A. Permanently enjoining the Defendants, their agents, servants, employees, and attorneys, and all persons in active concert or participation with them who receive actual notice of the injunction by personal service or otherwise, and each of them, from future violations of Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-5;

B. Ordering Defendants Jeanne Andlinger, Dailey, Donner and Lloyd to disgorge their ill-gotten gains and the ill-gotten gains of all persons who traded on the basis of material non-public information that these defendants provided, plus prejudgment interest thereon, arising out of the conduct alleged herein;

C. Ordering Defendant Andlinger to disgorge the ill-gotten gains of all persons who traded on the basis of material non-public information that they obtained from him, plus prejudgment interest thereon, arising out of the conduct alleged herein;

D. Ordering Defendants to pay civil money penalties pursuant to Sections 21(d) and 21A of the Exchange Act, 15 U.S.C. § 78u(d)(3) and § 78u-1;

E. Ordering that Defendant Andlinger be barred from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act, 15 U.S.C.§ 78l, or that is required to file reports pursuant to Section 15(d) of the Exchange Act, 15 U.S.C.§ 78o(d), pursuant to Section 20(e) of the Securities Act of 1933, 15 U.S.C. § 77t(e), and Section 21(d)(2) of the Exchange Act, 15 U.S.C. § 78u(d)(2); and

F. Granting such other relief as the Court shall deem just and proper.

Dated: October 1, 2003

http://www.sec.gov/litigation/complaints/comp18383.htm