Federal Court Orders Maximum Civil Penalties and Officer and Director Bar in Insider Trading Cases
FOR IMMEDIATE RELEASE
Washington, DC, June 28, 2002 -- The Securities and Exchange Commission announced today that the federal district court for the Eastern District of Texas, ruling in an insider trading case brought against a corporate executive and his brother, has imposed the maximum civil penalty against each of the two brothers and an officer-and-director bar against the corporate executive. The defendants are George P. Matus, formerly a Senior Vice President of Investor Relations at Carreker Corporation, a Dallas-based Nasdaq company, and Peter T. Matus, a registered securities broker. In all, the court ordered that they pay a total of more than $1.4 million in disgorgement, pre-judgment interest and penalties.
According to Stephen M. Cutler, Director of the SEC's Enforcement Division, "insider trading by a corporate executive is an abuse of trust owed to the executive's company and its shareholders. Severe consequences will follow — including officer and director bars and large penalties — when corporate executives place their own interests ahead of the shareholders they serve."
In its Complaint, filed December 4, 2001, the SEC 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. However, rather than maintain the confidentiality of the news and abstain from trading in Carreker stock, George Matus conveyed the confidential 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. 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, 2002, the Matuses were ordered to pay disgorgement of the $209,940 in insider trading profits, plus prejudgment interest of $9,941. Each brother was ordered to pay a three-times penalty of $629,820. George Matus was barred from serving as an officer or director of a public company. Each brother was also enjoined from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
Harold F. Degenhardt (817) 978-6469
Spencer C. Barasch (817) 978-6425