UNITED STATES DISTRICT COURT
Plaintiff Securities and Exchange Commission (the "Commission") alleges:
1. This is an insider trading case involving violations of antifraud provisions of federal securities laws. In September 2000, the defendants purchased securities of Delhaize America, Inc. while in possession of material, nonpublic information concerning a contemplated buyout offer for Delhaize America, Inc. when they knew or recklessly disregarded the fact that the information about the contemplated buyout had been communicated to them, directly or indirectly, through a breach of a fiduciary duty of trust and confidence. When the buyout offer was publicly announced on September 7, 2000, the price of Delhaize America, Inc.'s securities increased by approximately 15 per cent, giving the defendants illegal profits of $135,674.
2. The Commission seeks disgorgement of all ill-gotten gains plus prejudgment interest thereon, civil money penalties and permanent injunctions against further violations of certain antifraud provisions of the federal securities laws.
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 (the "Exchange Act") [15 U.S.C. §§ 78u(e), 78u-1 and 78aa].
4. Defendants directly or indirectly 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. This Court properly has venue over this action because the securities transactions at issue herein were executed through the facilities of the New York Stock Exchange in the Southern District of New York.
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.
7. Defendant Jean Jacques Degroof, age 46, is a resident of Brussels, Belgium.
8. Defendant Francis Degroof, age 44, is a resident of the French West Indies and is the brother of defendant Jean Jacques Degroof.
9. Delhaize Le Lion" ("Delhaize Group"), is an international food retailer headquartered in Brussels, Belgium. Prior to the buyout offer, Delhaize Group owned approximately 45% of the outstanding shares of Delhaize America, Inc.
10. Delhaize America, Inc. was, at all material times, a New York Stock Exchange listed company headquartered in Salisbury, North Carolina, engaged in the business of operating supermarkets. Shares of Delhaize America, Inc. were registered with the Commission.
THE BUYOUT OFFER BY DELHAIZE GROUP
11. On January 7, 2000, the board of directors of Delhaize Group authorized a study regarding the feasibility of purchasing substantially all of the shares of Delhaize America, Inc. not owned by Delhaize Group. On February 25, 2000, the board concluded that it would not be feasible or practical to pursue the contemplated buyout and decided not to complete the study. On June 23, 2000, the board again considered the possibility of a buyout of Delhaize America, Inc. and again authorized a formal feasibility study which commenced on July 10, 2000.
12. On September 3, 2000, the study was discussed at an informal meeting between management and a majority of the directors of Delhaize Group.
13. On September 6, 2000, the board of directors of Delhaize Group met and decided to make an offer to purchase all of the shares of Delhaize America, Inc. not owned by Delhaize Group. Specifically, Delhaize Group determined to offer 0.35 shares of Delhaize Le Lion in exchange for each share of Delhaize America, Inc.
14. On September 6, 2000, Delhaize Group informed Delhaize America, Inc. of its offer.
15. On September 7, 2000, Delhaize America, Inc. issued a press release announcing the terms of the offer it had received from Delhaize Le Lion.
THE DEFENDANTS' PURCHASES OF DELHAIZE STOCK
16. On September 5, 2000, defendant Jean Jacques Degroof purchased 20,000 shares of Delhaize America, Inc. at an average price of $15.35 per share, and on September 6, 2000, he purchased an additional 10,000 shares at $16.187 per share and 9,300 shares at 16.4374 per share for a total of 39,300 shares. He purchased the shares in accounts he maintained at Banque de Luxembourg and at Banque Paribas in Luxembourg.
17. On September 5, 2000, defendant Francis Degroof purchased 25,000 shares at an average price of $16.00 per share in an account he maintained at Banque de Luxembourg.
18. As a result of the announcement of the buyout offer, the market price of Delhaize America, Inc. shares increased by approximately 15 %, resulting in illegal profits of $85,674 for Jean Jacques Degroof and $50,000 for Francis Degroof.
CAUSE OF ACTION
Violations of Exchange Act Section 10(b) and
19. Paragraphs 1 through 18 are realleged and incorporated herein by reference.
20. When the defendants purchased the Delhaize America, Inc. stock, they possessed material, nonpublic information about the contemplated buyout offer and they knew, or recklessly disregarded the fact that they obtained the material nonpublic information about the buyout offer in breach of fiduciary or similar duties of trust and confidence.
21. By reason of the foregoing, each defendant, 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]
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 [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 the 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 June 4, 2002