U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16158 / May 21, 1999
U.S. SECURITIES AND EXCHANGE COMMISSION v. DERRYL W. PEDEN, Civil Action No.
COURT ORDERS WAIVER OF DISGORGEMENT AND PENALTIES
The Securities and Exchange Commission announced today the entry of an Order on Disgorgement And Penalties ("Order") by the Honorable Judge Henry T. Wingate, United States District Court Judge for the Southern District of Mississippi, regarding defendant Derryl W. Peden ("Peden"). The Order set disgorgement of ill-gotten gains against Peden in the amount of $2,080,753 and waived payment of disgorgement and civil penalties based on Pedens demonstrated inability to pay. Peden submitted sworn financial statements to the Commission. Peden also filed a voluntary chapter 7 bankruptcy proceeding on September 25, 1998: In the Matter of Derryl W. and Sue D. Peden, chapter 7 case no. 98-05053-JEE (Bankr. S.D. Miss.).
Previously, on July 15, 1998, the Honorable Judge Henry T. Wingate entered a Final Judgment of Permanent Injunction against Peden ("Judgment"). The Judgment permanently enjoined Peden from violating the antifraud provisions of the federal securities laws, ordered Peden to comply with an administrative cease-and-desist order which had been entered against Peden by the Securities and Exchange Commission on December 2, 1994 (Securities Exchange Act of 1934 Release No. 35045), and ordered that the amount of Pedens disgorgement of ill-gotten gains and civil penalties, if any, would be set upon subsequent motion by the SEC. Peden consented to the relief without admitting or denying the SECs allegations.
The Order and Judgment resolve the Commissions lawsuit which was initially filed against Peden on July 13, 1998. In the lawsuit, the Commission alleged, among other things, that between 1987 and April 1996, Peden induced 39 Mississippi municipalities to offer and sell 74 separate urban renewal revenue note issues totaling approximately $287,300,000. The notes were issued based on an opinion from Peden, acting as bond counsel, that interest on the notes was exempt from the federal income tax. The complaint alleged that Peden knew or was reckless in not knowing that a substantial risk existed that interest on the notes was not tax exempt. That risk was not disclosed to investors. For further information about the SEC lawsuit against Peden, please refer to Litigation Release No. 15807, dated July 13, 1998.
See also the following releases concerning additional SEC enforcement actions related to the 74 urban renewal revenue note issues:
Regarding the underwriter of the note issues, See: In the Matter of John E. Thorn, Jr. and Thorn Welch & Co., Inc., f/k/a Thorn, Alvis, Welch, Inc., Securities Act of 1933 Release No. 7663 / Securities Exchange Act of 1934 Release No. 41233 (March 31, 1999). See also: In the Matter of Eugene J. Yelverton, Jr., Securities Act of 1933 Release No. 7662 / Securities Exchange Act of 1934 Release No. 41232 (March 31, 1999).
Regarding the cities, towns and counties which issued the notes, See: In the Matter of Coahoma County, MS, et. al., Securities Act of 1933 Release No. 7554 / Securities Exchange Act of 1934 Release No. 40194 (July 13, 1998). See also: In the Matter of City of Moorhead, MS, Securities Act of 1933 Release No. 7585 / Securities Exchange Act of 1934 Release No. 40478 (September 24, 1998), and Securities Act of 1933 Release No. 7616 / Securities Exchange Act of 1934 Release No. 40770 (December 10, 1998).http://www.sec.gov/litigation/litreleases/lr16158.htm