U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23004 / May 27, 2014
Securities and Exchange Commission v. Ronald L. Drewery, Civil Action No. 5:14-cv-00299-FL (EDNC)
SEC Brings Fourth Insider Trading Action Relating to Mercer Insurance Group
On May 27, 2014, the Securities and Exchange Commission filed an action in the U.S. District Court for the Eastern District of North Carolina charging Ronald L. Drewery with insider trading in the stock of a publicly-traded insurance company shortly before the announcement of that company's acquisition.
The SEC alleges that Defendant Drewery misappropriated material nonpublic information regarding the impending acquisition of Mercer Insurance Group, Inc. ("Mercer"), an insurance company formerly traded on the NASDAQ, from a longtime friend who was then a member of Mercer's board of directors. On the basis of the information regarding the impending acquisition, and in disregard of his duty of trust and confidence owed to the board member, Drewery purchased 3,500 shares of Mercer between October 13, 2010 and November 19, 2010 at a weighted average cost of $17.95. Following the November 30, 2010 announcement of Mercer's acquisition, Mercer's share price rose sharply closing at $27.89 per share, approximately 48% over its November 30, 2010 closing share price. Drewery subsequently sold the 3,500 shares he controlled at prices between $28.05 and $28.25 per share, realizing illicit profits of at least $35,730.
The SEC's complaint alleges that Drewery violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In settling the SEC's charges, Drewery agreed to fully disgorge ill-gotten gains of $35,730, plus pay prejudgment interest of $3,646.50, as well as pay a penalty of $35,730. Drewery neither admits nor denies the allegations, and his settlement is subject to court approval. This is the third action that the SEC has brought in the U.S. District Court for the Eastern District of North Carolina, and the fourth total action brought, relating to this matter.
The SEC's investigation was conducted in its Atlanta Regional Office by Assistant Regional Director Aaron W. Lipson, and the litigation has been led by Senior Trial Counsel Paul Kim. The SEC thanks the U.S. Attorney's Office of the Eastern District of North Carolina and the Financial Industry Regulatory Authority (FINRA) for their assistance in this matter.