U.S. SECURITIES & EXCHANGE COMMISSION
Litigation Release No. 17944 / January 21, 2003
SEC v. Blackwell et al., (U.S.D.C. S..D. Ohio, Civil Action No. C2-03-0063, filed January 21, 2003)
SEC v. Parker et al., (U.S.D.C. S.D. Ohio, Civil Action No. C2-03-0065, filed January 21, 2003)
SEC v. Maxwell et al., (U.S.D.C. S.D. Ohio, Civil Action No. C2-03-0064, filed January 21, 2003)
On January 21, 2003, the Securities and Exchange Commission filed three related cases with the United States District Court for the Southern District of Ohio, charging 11 individuals and two entities with illegal insider trading in Worthington Foods, Inc. ("Worthington") securities prior to the announcement on October 1, 1999 of the Kellogg Company's ("Kellogg") acquisition of Worthington
In the first case, the SEC charged that during August and September 1999, Roger D. Blackwell ("Blackwell"), a resident of Columbus, Ohio, illegally disclosed inside information he obtained while serving as a director of Worthington about Kellogg's proposed acquisition of Worthington to: (1) his father Dale Blackwell, a resident of Upper Arlington, Ohio, (2) son Christian Blackwell, a resident of Columbus, Ohio, (3) his office assistant and close friend Kelley Hughes and her husband Kevin Stacy, residents of Columbus, Ohio, (4) his close business associate attorney Arnold Jack, a resident of Columbus, Ohio, (3) Black-Jack Enterprises, Roger Blackwell's 50/50 investment partnership with Jack, and (6) the Roger Blackwell and Associates Pension Plan Trust, Roger Blackwell's marketing company's pension plan (the "Blackwell Group"). In total, the Blackwell Group made approximately $245,000 in ill-gotten profits by illegally trading on the inside information.
In the second case, the SEC alleged that in August 1999, David W. Maxwell, a resident of Westerville, Ohio, illegally disclosed inside information obtained while he was a senior executive of Worthington, about Kellogg's proposed acquisition of Worthington to his barber Elton Jehn, a resident of Westerville, Ohio. Jehn made approximately $192,000 in ill-gotten profits by illegally trading on inside information.
Finally, in the third case, the SEC alleged that in August and September 1999, William D. Parker, a resident of Somerset, Ohio, disclosed inside information he obtained while serving as a director of Worthington about Kellogg's proposed acquisition of Worthington, to his accountant and brother, Charles N. Parker Sr., a resident of Nashville, Tennessee, and William Parker's close friend Danny H. Harris Sr. ("Harris"), a resident of Memphis, Tennessee. In that case, the SEC alleged that while William Parker illegally tipped Harris, Charles Parker misappropriated the inside information from his brother. Charles Parker and Danny Harris made over $107,000 in ill-gotten profits by trading on inside information. In settlement, William Parker and Danny Harris, without admitting or denying the allegations, have agreed to consent to orders permanently enjoining them from securities fraud violations. Danny Harris also consented to pay a civil penalty of $42,546.90, and to surrender $42,546.90 in trading profits plus $8,977 in prejudgment interest. The cases are still pending against the other defendants.
In total, the defendants in these three cases collectively made approximately $545,000 in ill-gotten profits by illegally trading on the inside information.
In its lawsuits, the SEC charges that that each of the defendants violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC also charges that Blackwell violated Section 16(a) of the Securities Exchange Act and Rules 16a-2, 16a-3 and 16a-8 thereunder. The SEC seeks orders requiring that the defendants disgorge their ill-gotten profits, and that they pay civil penalties and prejudgment interest. The SEC also seeks orders permanently enjoining the defendants from violating the securities laws. Finally, the SEC seeks an order barring Roger Blackwell from acting as an officer or director of a public company.
The Commission acknowledges the assistance of the National Association of Securities Dealers and the Philadelphia Options Exchange in the investigation of this matter.
SEC Complaint re: Maxwell et al.
SEC Complaint re: Parker et al.