U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19944 / December 12, 2006
SEC v. Adam M. Lloyd, Carl D. Udler, and Howard J. Miller (United States District Court for the District of Columbia C.A. No. 06 2106)
SEC Charges Adam M. Lloyd, Carl D. Udler, and Howard J. Miller With Insider Trading in the Securities of PEC Solutions, Inc.; Settlement Includes More Than $280,000 in Monetary Relief
The Securities and Exchange Commission (Commission) today filed a settled civil action in federal district court against Adam M. Lloyd (Lloyd), Carl D. Udler (Udler), and Howard J. Miller (Miller) alleging violations of federal securities laws in two separate instances of insider trading in the securities of PEC Solutions, Inc. (PEC), a Fairfax, Virginia based government information technology services entity.
Without admitting or denying the allegations in the complaint Lloyd, Udler, and Miller consented to entry of a final judgment which imposes permanent injunctions, disgorgement, with prejudgment interest and civil penalties against each defendant.
SEC COMPLAINT
The Commission's complaint alleges:
Lloyd, Udler, and Miller engaged in two separate instances of insider trading in PEC securities. On March 13, 2003 PEC announced that it expected reduced financial results for the first quarter 2003 and the year ending December 31, 2003 (the March 2003 Announcement). On April 26, 2005, prior to the opening of the market, Nortel Networks Corp. announced a tender offer to purchase PEC (the April 2005 Announcement). In both instances in advance of these announcements Lloyd purchased PEC securities on the basis of material, non-public information he misappropriated from his father, then PEC's Chief Financial Officer. In both instances Lloyd then tipped Udler, who in turned tipped Miller. Udler and Miller each purchased PEC securities on the basis of material, non-public information provided by Lloyd.
The Commission's complaint further alleges that: (i) Lloyd knew the non-public information regarding the March 2003 and April 2005 Announcements he misappropriated from his father was confidential; (ii) Lloyd knew, or was reckless in not knowing, that he violated a duty of trust and confidence to his father by trading in PEC securities before the March 2003 and April 2005 Announcements based on material non-public information he misappropriated from his father, and by tipping Udler regarding those events; (iii) Udler knew, or should have known, that the information he received from Lloyd about PEC shortly before the March 2003 and April 2005 Announcements was material non-public information disclosed in violation of a duty of trust and confidence; and (iv) Miller knew, or should have known, that the information he received from Udler about PEC shortly before the March 2003 and April 2005 Announcements was material non-public information disclosed in violation of a duty of trust and confidence.
The Commission's complaint sought from each defendant: (i) permanent injunctions against violations of the antifraud prohibitions contained in Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder; (ii) disgorgement of all profits realized from the unlawful conduct, plus prejudgment interest; and (iii) civil money penalties.
SEC SETTLEMENT
- Lloyd consented to entry of a final judgment that imposes the injunction sought by the Commission, disgorgement of $72,020, prejudgment interest of $6,272.43, and a $36,010 civil penalty.
- Udler consented to entry of a final judgment that imposes the injunction sought by the Commission, disgorgement of $49,251, prejudgment interest of $4,290.60, and a $49,251 civil penalty.
- Miller consented to entry of a final judgment that imposes the injunction sought by the Commission, disgorgement of $31,260, prejudgment interest of $2,723.28, and a $31,260 civil penalty.
SEC v. Adam M. Lloyd, Carl D. Udler, and Howard J. Miller (United States District Court for the District of Columbia C.A. No. 06 2106) (LR-19943)
