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U.S. Securities and Exchange Commission

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

LITIGATION RELEASE NO. 17592 / June 27, 2001

SECURITIES AND EXCHANGE COMMISSION V. GEORGE P. MATUS AND PETER T. MATUS, CIVIL ACTION NO. 4:01CV359-PB, (USDC/Eastern District of Texas)

The Commission announces that on June 24, 2002, the federal district court for the Eastern District of Texas entered a final judgment against George and Peter Matus permanently enjoining each from future violations of the federal securities laws, barring George Matus from serving as an officer or director, ordering disgorgement and imposing the maximum civil monetary penalties available under the Insider Trading Sanctions Act. The Commission instituted suit against the two brothers on December 4, 2001, alleging that they had engaged in insider trading.

The defendants are:

  • George P Matus, age 33, a resident of Allen, Texas, at the time of the illegal trades was Senior Vice President of Investor Relations at Carreker Corporation, a Dallas, Texas, based company traded on the Nasdaq stock market.

  • Peter T. Matus, age 27, a resident of Temecula, California and brother of George Matus. Peter Matus, at the time of the illegal trades, was a registered representative with a brokerage firm.

The case was filed in the United States District Court for the Eastern District of Texas, Sherman Division, and was assigned to United States Magistrate Judge Robert Faulkner.

Specifically, the SEC alleged that George Matus had advance knowledge of Carreker's negative earnings news and participated in both the drafting of the press release announcing the negative news and the decision as to when to release the news. However, rather than maintain the confidentiality of the news and abstain from trading in Carreker stock, George Matus conveyed the confidential negative information to his brother and transferred $50,000 to him in order to trade in Carreker securities and profit from the non-public information. Pursuant to their plan, Peter Matus then used his brother's funds to purchase 750 Carreker put options, effectively betting that the price of Carreker shares would decline once the negative news was made public. Predictably, upon release of the negative news, the price of Carreker stock declined. When Peter Matus sold the options a week later, the price had declined more than 40%, netting the brothers a profit of $209,940.

Without admitting or denying the allegations in the Commission's Complaint, the defendants consented to a permanent injunction and an order of disgorgement. The remaining issues were tried to the Court on April 23, 2002. The trial court, after hearing the evidence and argument of counsel, granted the Commission all relief sought in its Complaint.

In the final judgment, the Court permanently enjoined George and Peter Matus from further violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, ordered George and Peter Matus jointly and severally to disgorge $209,940 in illegal trading profits plus $9,941 prejudgment interest on that amount and assessed the maximum civil penalty of $629,820 against each defendant under the Insider Trading Sanctions Act. The Court also imposed an officer and director bar against George Matus, finding that he acted with a high degree of scienter in releasing material non-public information to Peter Matus and that his conduct was egregious.


http://www.sec.gov/litigation/litreleases/lr17592.htm

Modified: 06/28/2002