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SECURITIES AND EXCHANGE COMMISSION

LITIGATION RELEASE NO. 16716 / September 21, 2000

FINAL JUDGMENT ENTERED AGAINST ARTHUR H. SHOEMAKER IN INSIDER TRADING ACTION

SECURITIES AND EXCHANGE COMMISSION v. ARTHUR H. SHOEMAKER, (United States District Court for the District of Massachusetts, C.A. No. 99cv11568-MLW (July 22, 1999)

The Securities and Exchange Commission today announced the entry of a final judgment by consent against Arthur H. Shoemaker, formerly of Hubbardston, Massachusetts and now living in Illinois, in an insider trading action. On July 22, 1999, the Commission filed a complaint against Shoemaker, a former senior engineer and director of development of the medical products group of Galileo Corporation. During the relevant period, Galileo was a publicly traded company located in Sturbridge, Massachusetts. Galileo is now owned by Corning, Inc. and its operations are located in Newton, Massachusetts.

The Commission's complaint alleged that Shoemaker sold 7,700 shares of Galileo stock on February 12, 1997 immediately after learning the non-public information that Galileo's largest customer, Xerox Corp., had terminated Galileo as a supplier. Galileo announced the loss of the Xerox business after the close of trading that day, causing the price of Galileo's stock to decrease 63% from its February 12, 1997 closing price of $18.625 to a February 13, 1997 closing price of $6.875. Prior to terminating Galileo as a supplier, Xerox's purchases had accounted for 48% of Galileo's total sales revenues and a substantial amount of its profits. The Commission alleged that by trading in advance of the announcement, Shoemaker illegally avoided a loss of approximately $87,827 on his sales, and violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

The Final Judgment, entered pursuant to Shoemaker's consent and without admitting or denying the allegations contained in the Commission's complaint, enjoins Shoemaker from future violations of the antifraud provisions of the Securities Act and the Exchange Act. The judgment also orders Shoemaker to disgorge $87,827 plus prejudgment interest, but waives payment of all but $47,250 of this amount based upon Shoemaker's demonstrated financial inability to pay more. A civil penalty was not assessed based on Shoemaker's inability to pay.

For further information, see Litigation Release No. 16217.

http://www.sec.gov/litigation/litreleases/lr16716.htm


Modified:09/25/2000