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U.S. Securities and Exchange Commission

Thomas C. Newkirk (TN7271)
Charles D. Stodghill
L. Hilton Foster
Attorneys for Plaintiff
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
(202) 942-4528 (Stodghill)
(202) 942-9581 (Fax)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK


SECURITIES AND EXCHANGE COMMISSION,

Plaintiff,

v.

ONE OR MORE UNKNOWN PURCHASERS OF
CALL OPTIONS FOR THE COMMON STOCK OF
INVISION TECHNOLOGIES, INC.,

Defendants.


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Civil Action No
04 Civ. 02037

COMPLAINT

Plaintiff Securities and Exchange Commission (the "Commission") alleges:

NATURE OF THE ACTION

1. This is an insider trading case involving highly profitable purchases of call option contracts for the common stock of InVision Technologies, Inc., ("InVision") made anonymously through overseas accounts during the period March 5 through March 12, 2004. These purchases were made just days prior to InVision's public announcement, on March 15, 2004, prior to the opening of trading in the U.S. markets, that it had agreed to be acquired by a subsidiary of General Electric Company ("GE") in an all cash deal for $50 per share. As a result of this announcement, the price of InVision's common stock increased by nearly 20% and opened for trading at approximately $49.30 per share, an increase of over $8 per share from its closing price on Friday, March 12, 2004. The identities of the defendants are not yet known because the defendants effected their purchases anonymously through accounts maintained in London at UBS AG; in Zurich at UBS Zurich; and in Geneva at UBP Private Bank. These overseas firms placed orders for the subject options in omnibus accounts they each maintained at UBS Securities LLC, a registered broker dealer in the United States, which in turn executed the purchase orders through the facilities of The International Securities Exchange, an options exchange located in New York City.

2. On information and belief, while in possession of material, nonpublic information concerning the proposed but unannounced acquisition of InVision, the defendants purchased a total of at least 1,965 April 45 call option contracts and 2,500 March 45 call option contracts for the common stock of InVision. When purchased by the defendants, the call option contracts were "out of the money", that is the strike price of the options, $45 per share, was higher than the market price of the underlying InVision common stock. The defendants' purchases represented a substantial portion of the trading volume in these two series during the relevant period. If liquidated at current market prices, the profit from these transactions would be approximately $1.7 million.

JURISDICTION AND VENUE

3. This Court has jurisdiction over this action pursuant to Sections 21(e), 21A and 27 of the Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. 78u(e), 78u-1 and 78aa].

4. Defendants, directly or indirectly, have made use of the means or instrumentalities of interstate commerce, or of the mails, or the facilities of a national securities exchange in connection with the transactions, acts, practices and courses of business alleged herein.

5. On information and belief, the majority of the transactions at issue herein were executed through the facilities of International Securities Exchange, a registered options exchange located in New York City.

6. Defendants will, unless restrained and enjoined, continue to engage in the acts, practices and courses of business alleged herein, or in transactions, acts, practices and courses of business of similar purport and object.

DEFENDANTS AND OTHER ENTITIES

7. The unknown purchasers defendants (hereinafter, the "Unknown Purchasers") are one or more individuals or entities whose identities and addresses are unknown to the Commission. The Unknown Purchasers purchased, or caused to be purchased call options contracts for the common stock of InVision in accounts located in London, Zurich and Geneva as set forth herein.

8. InVision is headquartered in Newark, California. Its subsidiaries develop, manufacture, market and support explosives detection systems. InVision's common stock is registered with the Commission pursuant to Section 12(g) of the Exchange Act and is traded on NASDAQ. Options for the common stock of InVision are traded in the U.S. markets.

9. GE Infrastructure, a unit of the General Electric Company headquartered in Wilton, Connecticut, is high technology platform comprised of some of GE's fastest growing businesses.

CLAIM FOR RELIEF

Violations of Exchange Act Section 10(b) and
Rule 10b-5 Promulgated Thereunder

10. Paragraphs 1 through 9 are realleged and incorporated herein by reference.

11. On March 15, 2004, InVision announced that it had agreed to be acquired by GE Infrastructure in an all cash deal for $50 per share. Following this announcement, the price of InVision's common stock opened for trading at approximately $49.30 per share, an increase of over $8 per share from its closing price on Friday, March 12, 2004. Prior to the public announcement, and at all times relevant herein, InVision and GE undertook efforts to maintain the confidentiality of information relating to the proposed acquisition. Employees, agents and others working on the proposed transaction were instructed by the companies to maintain the confidentiality of the proposed transaction.

12. The proposed acquisition was announced prior to the opening of the U.S. markets on March 15, 2004. As a result of the announcement, the price of InVision's common stock opened for trading at approximately $49.30 per share, an increase of over $8 per share from its closing price on Friday, March 12, 2004.

13. During the period March 5, 2004 through March 12, 2004, one or more of the Unknown Purchaser defendants purchased a total of 405 April 45 call option contracts for the common stock of InVision at a total cost of $50,020 through an account at UBS Zurich.

14. During the period March 5, 2004 through March 12, 2004, one or more of the Unknown Purchaser defendants purchased a total of 1200 April 45 call option contracts for the common stock of InVision at a total cost of $54,870 ; and a total of 2500 of the March 45 call option contracts at a total cost of $109,270, all through an account maintained at UBS AG in London.

15. During the period March 10, 2004 through March 11, 2004, one or more of the Unknown Purchaser defendants purchased a total of 380 of the March 45 call option contracts for the common stock of InVision at a total cost of $19,900; and a total of 90 of the April 45 call option contracts at a total cost of $10,350.

16. On information and belief, at the time the Unknown Purchasers purchased the call options as set forth above, they were in possession of material, nonpublic information about the proposed acquisition of InVision. The Unknown Purchasers knew, had reason to know, or recklessly disregarded the fact that (a) their trading was in breach of fiduciary or similar duties of trust and confidence they owed to the shareholders of InVision or to the source from which they received the material nonpublic information; or (b) material nonpublic information about the acquisition had been communicated to them in breach of fiduciary or similar duties of trust and confidence.

17. The Unknown Purchasers made aggregate illegal profits of at least $ 1.7 million when the value of the options they had purchased, as set forth above, rose in response to the public announcement of the proposed acquisition.

18. The Unknown Purchasers have submitted orders for the sale of the majority of the subject options contracts and the Unknown Purchasers will be able to remove, from the United States, proceeds from the subject options transactions as early as today.

19. By reason of the foregoing, defendants, directly and indirectly, violated 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], and are likely to commit such violations in the future unless enjoined from doing so.

PRAYER FOR RELIEF

WHEREFORE, Plaintiff Commission respectfully requests that this Court enter a judgment:

(i) permanently enjoining the defendants from violating 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];

(ii) ordering the defendants to disgorge all profits realized from the unlawful trading alleged herein, with prejudgment interest;

(iii) ordering defendants to pay civil penalties under Section 21A of the Exchange Act [15 U.S.C. 78u-1]; and

(iv) granting such other relief as this Court may deem just and appropriate.

Dated: March 16, 2004

Respectfully submitted,

_________________________
Thomas C. Newkirk (TN7271)
Charles D. Stodghill
L. Hilton Foster

Attorneys for Plaintiff
Securities and Exchange Commission
Mail Stop 09-11
450 Fifth Street, N.W.
Washington, D.C. 20549
(202) 942-4528 (Stodghill)
(202) 942-9581 (fax)

 

http://www.sec.gov/litigation/complaints/comp18627.htm


Modified: 03/17/2004