SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 16287 \ September 22, 1999
SEC v. C. David Decker, C.A. No. 99CV11961 (REK) (D. Mass. September 22, 1999)
SEC CHARGES FORMER PRESIDENT OF GTE LABORATORIES WITH INSIDER TRADING
The Securities and Exchange Commission today filed insider trading charges against C. David Decker, a resident of Sudbury, Massachusetts and the former President of GTE Laboratories, Inc. ("GTE Labs"). GTE Labs is a wholly-owned subsidiary of GTE Corporation. The Commission alleged that Decker illegally bought BBN Corporation stock ahead of GTE's public announcement on May 6, 1997, that it intended to acquire BBN via a tender offer. The Commission also alleged that Decker illegally recommended to a relative that she buy BBN stock and loaned her money to do so. Decker agreed, without admitting or denying the Commission's allegations, to pay $36,290 in disgorgement and civil penalties and to the entry of an injunction prohibiting him from further insider trading violations.
The Commission alleged that, from March 25 to March 28, 1997, Decker was part of a GTE team performing due diligence for the purpose of determining whether GTE should acquire BBN. On March 28, at the completion of the due diligence session, Decker recommended to a GTE mergers and acquisitions specialist that GTE "do something" with BBN. Several GTE Labs employees present concurred with Decker's recommendation. On March 31, the next business day, Decker purchased 1,000 shares of BBN stock at $17.375 per share. At about the same time, Decker recommended to a relative that she purchase BBN stock and loaned her $20,000 for that purpose. Decker's relative, based on Decker's recommendation and with the money loaned to her by Decker, purchased 1,000 shares of BBN stock at $16.75 per share.
Decker sold his BBN stock on April 30, 1997, four business days before GTE's public announcement of its intention to acquire BBN, at $22.50 per share. Though he sold his BBN shares before the public announcement, Decker made a net profit of $5,495 on his BBN trades, because BBN's stock price had risen amidst publicly reported takeover speculation. Decker's relative sold her BBN stock on May 6, after the public announcement, at $28.875, for a net profit of $11,201.
The Commission charged Decker with violating Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder. On a neither admit nor deny basis, Decker agreed to disgorge $16,696, constituting his and his relative's trading profit, plus prejudgment interest in the amount of $2,898, and a civil penalty of $16,696. Decker also consented to the entry of a permanent injunction prohibiting him from future violations of the above-referenced provisions.