U.S. Securities and Exchange Commission
Litigation Release No. 17599 / July 3, 2002
Securities and Exchange Commission v. Janice A. Loef, Civil Action No. 02C 4618 (N.D. Ill.)(filed June 28, 2002)
Former Mercury Finance Employee Settles Insider Trading Action
On June 28, 2002, the Commission filed a Complaint in the U.S. District Court for the Northern District of Illinois, alleging that Janice Loef, a resident of Wheeling, Illinois and former employee of Mercury Finance Co. (Mercury), avoided losses of approximately $280,000 by selling Mercury common stock shortly before Mercury disclosed the existence of massive accounting irregularities. On July 2, 2002, Judge Charles P. Kocoras issued an order enjoining her from violating 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, ordering her to disgorge $278,993.70 plus pre-judgment interest. All but $160,000 of the disgorgement was waived and penalties were not imposed, based on Loef's sworn representations in her statement of financial condition. Loef consented to the order, without admitting or denying the Commission's allegations,
The Complaint alleges that Mercury, a prominent sub-prime finance company, disclosed on January 29, 1997, that its reported net earnings for 1995 and 1996 had been overstated by more than $80 million. In reaction to that announcement, the price of Mercury's common stock plummeted by 89%. According to the Complaint, Loef sold a total of 20,799 shares of Mercury common stock on January 27 and 28, 1997, avoiding losses of $278,993.70. The Complaint further alleges that, at the time Loef sold her shares, she was generally aware that Mercury's headquarters were in a crisis atmosphere, that Mercury's Principal Accounting Officer was missing, and that Mercury's outside auditors were at Mercury's headquarters questioning personnel.
The Commission thanks the U.S. Attorney for the Northern District of Illinois for its cooperation in this matter.