Phong Nguyen and Chanh Nguyen

Litigation Release No. 17940 / January 16, 2003

Securities and Exchange Commission v. Phong Nguyen and Chanh Nguyen, Civil Action No. 03-863 JMR/FLN (D. Minn.)

SEC CHARGES FORMER AT&T EMPLOYEE AND ASSOCIATE WITH INSIDER TRADING

The Securities and Exchange Commission today filed an injunctive action against Phong Nguyen, of Bloomington, Minnesota, and Chanh Nguyen, of Chanhassen, Minnesota, alleging that the defendants traded on confidential information regarding an Internet-based product developed by AT&T Corporation and iNTELEFILM Corporation. iNTELEFILM, headquartered in Eden Prairie, Minnesota, is a service provider for the television commercial production industry. In August 2002, iNTELEFILM filed for Chapter 11 bankruptcy.

The Commission's complaint alleges that in 1999 Phong Nguyen was employed as an emerging markets developer for AT&T and was working directly with iNTELEFILM to develop an Internet-based product, Intelesource.org. Chanh Nguyen, a close friend of Phong Nguyen, worked for Business Integration Services-an agent of AT&T that was procuring computer hardware for Intelesource.org. While working on the Intelesource.org project, Phong and Chanh Nguyen learned that iNTELEFILM planned to publicly announce Intelesource.org on December 8, 1999. In the five trading days immediately before the announcement, Phong and Chanh Nguyen purchased 76,000 shares of iNTELEFILM stock. They profited by over $200,000 when the price of iNTELEFILM stock more than doubled immediately after the announcement. The complaint also alleges that Chanh Nguyen illegally tipped his father to purchase iNTELEFILM stock, which his father did two days before the announcement. The complaint does not allege, however, that Chanh Nguyen's father acted illegally.

The Commission charges the defendants with securities fraud in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The Commission seeks permanent injunctions, disgorgement of ill-gotten trading profits, prejudgment interest and civil penalties.

The Commission staff acknowledges the assistance of NASD in connection with this matter.