U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21286 / November 6, 2009
SEC v. Robert Wayne Tedder, et al., Civil Action No. 3:08-CV-1013-G, United States District Court for the Northern District of Texas (Dallas)
SEC OBTAINS JURY VERDICT FINDING STOCK BROKER LIABLE FOR INSIDER TRADING IN THE SECURITIES OF AVIALL, INC.
On November 5, after less than an hour of deliberation, a jury found Gregory Carl Gunn, a registered representative of a broker-dealer, liable for insider trading in the securities of Aviall, Inc. The jury verdict followed three days of trial before Senior District Judge Joe A. Fish, in the United States District Court for the Northern District of Texas, Dallas Division.
The SEC sued five defendants -- Robert Wayne Tedder, Joseph Wayne Tedder, Phillip Brian Gunn, Brian Patrick Carr and Gregory Carl Gunn - for illegally trading in Aviall securities ahead of Aviall's May 1, 2006 announcement of a merger with The Boeing Company. The complaint alleged that two Aviall employees, Robert Tedder and Brian Carr, learned Aviall's impending acquisition by Boeing in the course of their employment at Aviall's Dallas headquarters. The complaint alleged that Robert Tedder then tipped his father, Joseph Wayne Tedder, and a business associate, Phillip Gunn with this information. Phillip Gunn thereafter passed this information to his brother, Gregory Gunn.
Only Gregory Gunn went to trial. The other four defendants offered to settle before trial. The Court severed the claims against Gregory Gunn so that the Commission could proceed against him.
At trial, the Commission established that, between April 17 and April 28, 2006, Gregory Gunn liquidated his account of blue-chip stocks and purchased shares of Aviall common stock and Aviall call option contracts while in possession of non-public information about Boeing's acquisition of Aviall. On the day of the merger announcement, Aviall's common stock closing price of $46.96 was nearly 25% higher than the preceding day's closing price of $37.70. Gregory Gunn sold all his Aviall securities on the day of the merger announcement. As a result of his unlawful trading in Aviall common stock and call options, Gregory Gunn reaped illicit profits of $108,587.87.
The Commission thanks the Philadelphia Stock Exchange for its cooperation in this matter.
For more information, see the original litigation release announcing the filing of the complaint: