U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 18607 / March 3, 2004
Securities and Exchange Commission v. Richard P. Smyth, Arnold E. Johns, Jr., Michael Becker and Alan T. Davis, Civil Action File No. 1:01-CV-1344 (N.D. Ga.)
SEC OBTAINS FINAL JUDGMENTS AGAINST RICHARD P. SMYTH AND ARNOLD E. JOHNS, JR.
The Securities and Exchange Commission ("Commission") announced today that on February 19, 2004, the Honorable Clarence Cooper of the United States District Court for the Northern District of Georgia entered an order and final judgment against Richard P. Smyth ("Smyth") of Fernandina Beach, Florida directing payment of disgorgement in the amount of $397,362.38, along with prejudgment interest thereon in the amount of $303,399.38. On the same day, Judge Cooper entered an order and final judgment against Arnold E. Johns, Jr. ("Johns") of Atlanta, Georgia directing payment of disgorgement in the amount of $421,563 along with prejudgment interest thereon in the amount of $321,564.02.
In an earlier order of September 24, 2001, Smyth, who had served as Vista 2000, Inc.'s ("Vista") chief executive officer and chairman of its board, was permanently enjoined from further violations of Section 17(a) of the Securities Act of 1933 ("Securities Act"); Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder; Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, 13a-13 thereunder; Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act; Section 13(b)(5) of the Exchange Act and Rules 13b2-1 and 13b2-2 thereunder; and Sections 16(a) and 16(c) of the Exchange Act and Rules 16a-2 and 16a-3 thereunder, and was barred from acting as an officer or director of a public company. In another order of October 31, 2002, Johns, who had served as Vista's president and director, was permanently enjoined from further violating the antifraud provisions, books and records provisions, internal accounting control and reporting provisions of the Securities Act [Section 17(a)] and the Exchange Act [Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), 13(b)(5) and Rules 10b-5, 12b-20, 13-11, 13a-13 and 13b2-1 thereunder].
In ordering disgorgement against the defendants, the Court concluded that Smyth and Johns sold Vista stock while in possession of material, adverse and nonpublic information, which allowed them to avoid losses in the amounts of $397,362.38 and $421,563, respectively. The Commission's complaint and amended complaint alleged a wide-range of securities law violations, including that misstatements were made by Vista in filings with the Commission. Smyth and Johns were charged with violations, as control persons of Vista, arising from those filings. The allegations included, among other things, that Vista's revenues, income, earnings per share, and assets were overstated by Smyth from 1994 through 1996 and by Johns during 1995 and 1996, and that Smyth and Johns engaged in insider trading during 1995 and 1996. The orders direct that Smyth and Johns pay disgorgement and prejudgment interest in full within 30 days from the entry of the orders.