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U.S. Securities and Exchange Commission

Litigation Release 18596 / February 25, 2004

UNITED STATES v. GEORGE P. MATUS AND PETER T. MATUS
(U.S.D.C., Northern District of Texas, Dallas Division, Criminal Action No. 3-04-CR-060-N)

CIVIL ACTION NO. 4:01CV359-PB, (USDC/Eastern District of Texas)

The Commission announces that on February 24, 2004, a federal grand jury in Dallas, Texas returned a seven-count indictment against George and Peter Matus charging the brothers with illegal insider trading. Specifically, the indictment charges each defendant with one count of conspiracy to commit securities fraud, make false statements and wire fraud; one count of securities fraud; four counts of wire fraud; and one count of making false statements to the Securities and Exchange Commission. It is anticipated that both defendants will surrender to federal authorities in Dallas within the week.

The defendants are:

  • George P Matus, age 34, 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 29, a resident of Salt Lake City, Utah, and brother of George Matus. Peter Matus, at the time of the illegal trades, was a registered representative with a brokerage firm.

Previously, the Commission filed a civil suit against the defendants and 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. Rather than maintain the confidentiality of the news and abstain from trading in Carreker stock, however, 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.

On June 24, 2004, the Court entered a final judgment in the Commission's case that permanently enjoined George and Peter Matus from further violations of Section 10(b) of the Securities Act of 1934, 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/lr18596.htm


Modified: 02/26/2004