SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 17212 / October 31, 2001
SECURITIES AND EXCHANGE COMMISSION v. MICHAEL R. HENDRIX, et al., Civ. Action No. C-00-20655 (JW) (N.D. Cal.)
SEC OBTAINS SETTLED FINAL JUDGMENT AGAINST ANOTHER
DEFENDANT IN XYLOGICS INSIDER TRADING CASE
On October 26, 2001, the United States District Court for the Northern District of California entered a settled final judgment against John H. Oh, one of the remaining defendants in the Commission's insider trading case arising from unlawful purchases of Xylogics, Inc. stock in September 1995. The final judgment permanently enjoins Oh from violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and requires him to disgorge $47,570.31 in illicit profits and interest. Based on Oh's documented financial condition, however, the Court waived payment of Oh's disgorgement obligation beyond $36,000, permitted him to pay his obligation in installments over a period of one year, and did not impose a civil penalty. Oh consented to entry of the final judgment without admitting or denying the allegations in the Commission's complaint.
The Commission's complaint, originally filed in June 2000 and later amended in October 2000, charges 12 people with insider trading and tipping before a September 6, 1995 announcement that Bay Networks, Inc. would acquire Xylogics. It alleges that defendant Michael R. Hendrix, while working for Bay Networks, learned that Bay Networks would acquire Xylogics, and then traded heavily in Xylogics stock and tipped numerous friends and former colleagues who also traded. According to the complaint, one of Hendrix's tippees, San H. Mai, in turn tipped Oh, who immediately bought $100,000 worth of Xylogics stock - more than twice his annual salary at the time - on margin and with money borrowed from his friend and co-defendant Nick S. Park. After Bay Networks' acquisition of Xylogics became public the following day, Oh realized $34,437.50 in profits from his purchase of Xylogics stock. (See Litigation Release No. 16591/June 15, 2000.)
With this settlement, the Commission has now obtained final judgments against 8 of the 12 defendants in the case. The other defendants who previously settled with the Commission are Jeffrey S. Summerlin, James A.S. Lewis, San H. Mai, Bich Thi Hoang, Linh Ngoc Vu, Timothy J. Helms, and Raymond L. Helms. Details regarding those settlements can be found in Litigation Release Nos. 16591 (June 15, 2000) and 16999 (May 14, 2001). The four remaining defendants - Michael R. Hendrix, Douglas S. Sawamura, Craig A. Larrew, and Nick S. Park - continue to contest the Commission's allegations.