U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20485 / March 10, 2008
Securities and Exchange Commission v. Kent G. Barkouras, United States District Court for the Central District of California, Civil Action No. SACV 08-0260 AHS (ANx) (C.D. Cal. Mar. 10, 2008)
The Securities and Exchange Commission today charged Kent Barkouras with insider trading in Mentor Corporation securities while his company, MyPrint Corporation, was a Mentor subcontractor and had received sensitive nonpublic information. Barkouras is the CEO and largest shareholder of privately-held MyPrint, a technology, print and fulfillment company located in Irvine, California.
The Commission's complaint, filed today in federal district court in Orange County, alleges that Barkouras, age 47, of Newport Beach, California, traded on the basis of confidential information about the FDA's approval of Mentor's silicone-gel filled breast implants. Barkouras had access to this sensitive information through MyPrint's role to store and ship Mentor's breast implant starter kits containing marketing materials for physicians. Barkouras purchased Mentor securities just hours before Mentor's public announcement of the FDA approval. The complaint alleges that Barkouras even tipped a family member, who traded ahead of the announcement. Barkouras and his relative realized illegal profits of $80,295 from their trades.
The Commission's complaint alleges that MyPrint received confidential information about the FDA approval so it could immediately begin shipping the starter kits. According to the complaint, on the morning of Mentor's public announcement, a MyPrint employee emailed Barkouras about the FDA approval stating: "Buy Mentor stock Now $$." Further, the complaint alleges that while Barkouras cautioned the employee about the confidentiality of the information, he was purchasing 543 Mentor call options on the morning of Nov. 17, 2006-just ahead of the public announcement. After the market closed that day, Mentor made the announcement about the FDA approval. On the first trading day after the announcement, Mentor's stock price increased by more than 10 percent and its trading volume increased 650 percent. The complaint alleges that by engaging in such trading, Barkouras traded on the basis of material nonpublic information in breach of his duty of trust and confidence to MyPrint's client, Mentor.
To settle the Commission's charges, Barkouras consented, without admitting or denying the allegations in the complaint, to a final judgment permanently enjoining him from future violations of the antifraud provisions of the federal securities laws, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and ordering him to pay $166,644, representing the disgorgement of his and his relative's illegal trading profits, prejudgment interest, and a civil penalty in an amount equal to the profits, pursuant to Section 21A(a) of the Exchange Act.
The Commission acknowledges the assistance of the Chicago Board Options Exchange.