SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17029 \ June 6, 2001
SEC FILES SETTLED INSIDER TRADING ACTION AGAINST TWO BRADENTON RESIDENTS FOR TRADING IN THE SECURITIES OF AMERICAN BANCSHARES, INC.
SECURITIES AND EXCHANGE COMMISSION v. THOMAS HOUCK AND MICHAEL LEWIS, Case No. 8:01-CV-1071-T-26MSS (M.D. Fla.).
On June 6, 2001, the Securities and Exchange Commission (SEC) filed insider trading charges in the United States District Court for the Middle District of Florida against Thomas Houck and Michael Lewis, both of Bradenton, Florida. The SEC's lawsuit charges Lewis with illegally providing inside information to Houck. The lawsuit further alleges that Houck then illegally traded in the securities of American Bancshares, Inc. (American Bancshares) before the September 7, 1999 announcement that Gold Banc, Inc. (Gold Banc) had agreed to purchase American Bancshares. Simultaneously with the filing of the complaint, Houck and Lewis agreed to settle the charges against them.
According to the SEC's complaint, on August 30, 1999, Lewis, a vice-president of consumer lending at American Bancshares, discovered non-public information that led him to conclude that American Bancshares would soon be taken over. This information prompted Lewis to ask at least one of American Bancshares' senior executives if the bank was being taken over. The SEC's complaint also alleges that on August 30, 1999, Lewis communicated to his friend, Houck, material non-public information concerning American Bancshares. The complaint alleges that, based upon this tip, Houck purchased 1,500 shares of American Bancshares stock at a price of $9 5/16 per share. The SEC's complaint also alleges that Houck told another individual to purchase American Bancshares stock, and that the individual also purchased 1,500 shares of American Bancshares stock on August 30, 1999.
When the Gold Banc acquisition of American Bancshares was announced on September 7, 1999, American Bancshares' stock price rose as high as $14 ½ per share, before closing at $13.875. That same day, Houck and the individual he tipped sold their American Bancshares stock for a combined profit of $12,291.68.
Simultaneously with the filing of the complaint, Houck and Lewis, without admitting or denying the allegations in the complaint, consented to the entry of a final judgment permanently enjoining them from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The judgment orders Lewis to pay a civil money penalty of $6,145.84, equal to the profits earned by Houck, and orders Houck to pay disgorgement of $12,291.68, plus prejudgment interest, representing the profits he and his tippee earned from their trades in American Bancshares stock, and a civil money penalty of $6,145.84, representing his own profits.
The SEC thanks NASD Regulation, Inc. for its assistance with this matter.