U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19082 / February 16, 2005
Securities and Exchange Commission v. Richard Curtiss, Civil Action No. 305CV286 (JBA) (D.Conn. filed February 16, 2005)
RICHARD CURTISS SETTLES INSIDER TRADING CHARGES
The Securities and Exchange Commission announced today that it filed a settled insider trading case in the United States District Court for the District of Connecticut against Richard Curtiss ("Curtiss"). In its Complaint, the Commission alleged that Curtiss, the former director of corporate development of Gerber Scientific, Inc. ("Gerber"), was responsible for locating potential mergers and acquisitions and developing other business opportunities for Gerber. The Commission further alleged that by January 2000, Curtiss was responsible for coordinating Gerber's efforts to enter into a proposed on-line apparel venture with another company. This information about the proposed venture was material and nonpublic. On March 1 and 2, 2000, while he was working on a draft of the press release announcing the proposed on-line apparel venture, Curtiss purchased a total of 2,000 shares of Gerber stock at an average price of $15.375 per share on the basis of the material, nonpublic information. On March 7, 2000, Gerber made its announcement of the plan to form the proposed venture with another company. Gerber's stock price increased to $17.4375, up $0.9375 from the previous day's close. Curtiss thus enjoyed a profit at that time of $4,125.
The Commission further alleged that by March 24, 2000, Curtiss received additional material, nonpublic information indicating that Gerber likely would miss earnings expectations for the quarter ending April 30, 2000. On the basis of this information, Curtiss sold 2,500 shares of Gerber stock at $20.50 per share. When Gerber announced its lowered earnings expectation on April 26, 2000, Gerber's stock price dropped to $11.50, down $3.94 from the previous day's closing price. By selling his stock in advance of the April 26, 2000, earnings announcement, Curtiss avoided losses of $22,500.
The Commission further alleged that, when Curtiss traded, he did so in knowing or reckless disregard that he was trading on the basis of material, nonpublic information in breach of the fiduciary or other duty of trust and confidence that he owed to Gerber and its shareholders. As a result of his conduct, Curtiss violated Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Exchange Act Rule 10b-5. Without admitting or denying the allegations in the Commission's Complaint, Curtiss consented to the entry of a judgment (i) permanently enjoining him from future violations of Section 10(b) of the Exchange Act and Exchange Act Rule 10b-5, (ii) ordering disgorgement of profits and losses avoided of $26,625 plus prejudgment interest of $9,134, (iii) imposing a civil penalty of $26,625 pursuant to Section 21A of the Exchange Act, and (iv) barring him from serving as an officer or director of a public company.