SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16999 / May 14, 2001
SECURITIES AND EXCHANGE COMMISSION v. MICHAEL R. HENDRIX et al., Civ. Action No. C-00-20655 (JW) (N.D. Cal.)
The United States District Court for the Northern District of California recently entered settled judgments against five more defendants in the Commission's insider trading case arising from unlawful purchases of Xylogics, Inc. stock in September 1995. In particular, final judgments were entered against San H. Mai, his mother Bich Thi Hoang, and his uncle Linh Ngoc Vu, and against Timothy J. Helms and his father Raymond L. Helms, each of whom consented to the judgments without admitting or denying the Commission's allegations. The final judgments permanently enjoin each of the settling defendants from violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and require the following monetary payments: San Mai will disgorge $34,720.63 in trading profits plus $12,927.50 in prejudgment interest, and pay a $209,783.13 civil penalty, for a total of $257,431.26; Bich Thi Hoang will disgorge $7,375 in trading profits plus $4,194.18 in prejudgment interest, and pay a $7,375 civil penalty, for a total of $18,944.18; Linh Ngoc Vu will disgorge $24,625 in trading profits plus $9,205.64 in prejudgment interest, and pay a $24,625 civil penalty, for a total of $58,455.64; Raymond L. Helms will disgorge $36,000 in trading profits plus $20,473.30 in prejudgment interest, and pay a $36,000 civil penalty, for a total of $92,473.30; and Timothy Helms, who did not trade but who, according to the Commission's complaint, tipped his father, will pay a $36,000 civil penalty.
These five recent settlements were reached after the Court's January 30, 2001 decision denying all of the defendants' motions to dismiss the complaint, which the Commission originally filed in June 2000 and later amended in October 2000. The complaint alleges that, while working for Bay Networks, Inc. and before the first public announcement of the deal on September 6, 1995, defendant Michael Hendrix learned that Bay Networks would acquire Xylogics. According to the complaint, Hendrix then traded heavily in Xylogics stock and tipped numerous friends and former colleagues, including Mai, who also traded. The complaint further alleges that Mai, in turn, tipped his mother Bich Thi Hoang, his uncle Linh Ngoc Vu, and two others, each of whom also bought Xylogics stock. Separate and apart from this line of insider trading, the complaint alleges that defendant Timothy Helms, who also worked for Bay Networks at the time, learned about the Xylogics acquisition and then tipped his father, Raymond Helms, who bought Xylogics stock in advance of the public announcement. (See Lit Rel. No. 16591/June 15, 2000.)
Two of the original twelve defendants settled simultaneously with the filing of the complaint. Five defendants-Michael Hendrix, Douglas Sawamura, Craig Larrew, Nick Park and John Oh - continue to contest the Commission's allegations.http://www.sec.gov/litigation/litreleases/lr16999.htm