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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 21899 / March 24, 2011

Securities and Exchange Commission v. Mark A. Duffell, Civil Action No. CV-11-1404 EDL (N.D. Cal. March 24, 2011)

SEC Charges Former Consultant at Silicon Valley Private Investment Firm with Insider Trading

The Securities and Exchange Commission today charged a former consultant for Menlo Park, Calif.-based private investment firm Accel-KKR with insider trading. The SEC alleges that Mark Duffell bought shares of Silicon Valley software company SumTotal Systems while he was involved in discussions on AKKR’s behalf regarding a potential acquisition of SumTotal. Without admitting or denying the allegations, Duffell has agreed to settle the charges against him and pay disgorgement and penalties of over $300,000.

According to the SEC’s complaint, filed in U.S. District Court for the Northern District of California, Duffell met with the CEO of SumTotal on March 2, 2009, to discuss a potential acquisition of the company by AKKR. Two days later, while in possession of confidential information about the potential deal, Duffell began amassing shares of SumTotal stock in his personal trading account. Between March 4 and March 5, Duffell paid nearly $90,000 to purchase 65,000 shares of SumTotal stock at a price of $1.33 per share.

According to the SEC’s complaint, AKKR and SumTotal announced publicly on April 24 that they had signed a preliminary merger agreement under which AKKR would acquire the company at a substantial premium to its trading price. SumTotal’s share price jumped to $3.83 per share on the news, giving Duffell a profit of $162,500 on the shares he had purchased during the confidential discussions.

The Commission’s complaint charges Duffell with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Duffell has agreed to settle the SEC’s charges without admitting or denying the allegations. Duffell has consented to the entry of a final judgment permanently enjoining him from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and requiring him to pay $162,500 in disgorgement, $7,163 in prejudgment interest and a $162,500 civil penalty.

The SEC acknowledges the assistance of the Financial Industry Regulatory Authority in this matter.

 

http://www.sec.gov/litigation/litreleases/2011/lr21899.htm


Modified: 03/24/2011