The Securities and Exchange Commission announced today that it filed civil fraud charges in the United States District Court for the Southern District of New York against Frederick David Jones ("Jones") and Mark Godden ("Godden") for engaging in insider trading in the securities of Gerber Scientific, Inc. ("Gerber").

In its Complaint, the Commission alleged that Jones, age 57, was the Group Managing Director of Gerber's Spandex PLC ("Spandex") subsidiary and that Godden, age 47, was the vice-president of marketing with Spandex. The Commission further alleged that in early June 1999, Jones learned that Gerber had decided to acquire the assets of Graphic-Cal, Australia's largest sign making materials supplier. On the basis of this information and before the acquisition was made public, Jones, on June 11, 1999, purchased 5,000 shares of Gerber stock. Following the announcement of the acquisition on September 13, 1999, Gerber's stock price increased and Jones made a profit of $5,250 from his trading in advance of the announcement of the Graphic-Cal acquisition.

The Commission further alleged that shortly before March 15, 2000, Jones received additional material, nonpublic information indicating that Gerber and its subsidiaries would have significantly worse financial results than previously expected. On the basis of this information, Jones, on March 15, 2000, sold 5,000 shares of Gerber stock. On April 26, 2000, Gerber announced that its results for the fourth quarter of fiscal year 2000 likely would be lower than expected. Gerber's stock price closed that day at $11.50 per share, down $3.63 from the prior day's closing price. Jones thus avoided losses of $47,500.

In its Complaint, the Commission alleged that Godden also received material, nonpublic information about Gerber and its subsidiaries prior to the April 26, 2000 announcement. Among other things, Godden learned of product problems that a Gerber subsidiary was experiencing and that the subsidiary's operating income for February 2000 was below budget. Godden further learned that Gerber's fourth quarter results would be worse than expected. On the basis of this information and on the first day when he could trade in his recently opened brokerage account, Godden, on April 18, 2000, sold 10,000 shares of Gerber stock. By trading in advance of Gerber's April 26, 2000 announcement, Godden avoided losses of $64,375.

The Commission alleged in its Complaint that, as a result of their misconduct, Jones and Godden each violated Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act"), Exchange Act Rule 10b-5, and Section 17(a) of the Securities Act of 1933. The Commission is seeking a final judgment enjoining Jones and Godden from violating these provisions, compelling each of them to pay monetary penalties, requiring each of them to disgorge his profits and/or the losses avoided from their unlawful trading, with prejudgment interest thereon.

In addition to the relief sought in the Complaint, the Commission today also sought a temporary freeze of assets of Mr. Jones sufficient to pay disgorgement plus prejudgment interest thereon and penalties that the Court may order. The Court granted the Commission's request, entered an order freezing $300,000 of assets of Mr. Jones until otherwise ordered by the Court, and scheduled a hearing for June 16, 2004, for Mr. Jones to show cause why the Court should not enter an order extending the asset freeze until there is a final adjudication of the case.

SEC Complaint in this matter