SECURITIES EXCHANGE ACT OF 1934
Release No. 41429 / May 20, 1999
File No. 3-9435
|In the Matter of
|FINDINGS AND ORDER
OF THE COMMISSION
AS TO KEDAR GUPTA
AND ALVAN CHORNEY
Kedar Gupta ("Gupta") and Alvan Chorney ("Chorney") have submitted Offers of Settlement for the purpose of disposing of the issues raised with respect to them by this proceeding. Solely for the purposes of these proceedings 1 and any other proceedings brought by or on behalf of the Commission or to which the Commission is a party, and prior to hearing and without admitting or denying the findings set forth herein, Gupta and Chorney each consent to the entry of these Findings and Order of the Commission ("Order"). The Commission has determined that it is appropriate and in the public interest to accept Offers of Settlement from Gupta and Chorney, and accordingly issues this Order.
Based on the foregoing, the Commission finds that: 2
1. Kedar Gupta
Gupta, age 51, is President of GT Equipment Technologies, Inc., a privately held company that engineers and builds custom equipment. From 1985 until 1994, Gupta was General Manager of Ferrofluidics Corporation's ("Ferrofluidics") Systems Equipment Division.
2. Alvan Chorney
Chorney, age 53, is Vice President of New Business Development of Ferrofluidics. He worked for Ferrofluidics from 1976 until 1986, and returned to the company full-time as vice president in January 1990. Chorney served on Ferrofluidics' Board of Directors from 1986 until 1994.
B. Other Relevant Individuals and Entities
1. Ferrofluidics Corporation
Ferrofluidics is a Massachusetts corporation headquartered in Nashua, New Hampshire. Ferrofluidics' stock is registered with the Commission under Section 12(g) of the Exchange Act and is listed on the Nasdaq National Market.
C. Applicable Law
Section 13(d) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 13d-1(a) thereunder require any person that acquires beneficial ownership of more than five percent of an equity security registered under Section 12 of the Exchange Act to file a Schedule 13D. Rule 13d-5(b)(1) under the Exchange Act provides that "[w]hen two or more persons agree to act together for the purpose of acquiring, holding, voting or disposing of equity securities of an issuer, the group formed thereby shall be deemed to have acquired beneficial ownership, for purposes of Sections 13(d) and 13(g) of the Act, as of the date of such agreement, of all equity securities of that issuer beneficially owned by any such persons."
D. Gupta's and Chorney's Violations of Section 13(d) of the Exchange Act and the Rules Thereunder
During fiscal year 1992, a Ferrofluidics shareholder advised the company that he intended to present a proposal at Ferrofluidics' December 15, 1992 annual meeting requesting that the Board of Directors adopt certain limits on executive compensation. The CEO separately asked Gupta and Chorney to exercise their warrants and options and arranged for Ferrofluidics to provide them with loans to fund the exercise. In addition, the CEO arranged to have Chorney's unvested warrants accelerated. Chorney and Gupta exercised their warrants and options on October 26, 1992 (the record date for the annual meeting), and, in accordance with their agreement with the CEO, who was beneficial owner of over five percent of the equity securities of Ferrofluidics, voted their shares to oppose the shareholder's proposal. Gupta and Chorney failed to file a Schedule 13D with the Commission disclosing the agreement with respect to voting against the shareholder's proposal, which involved more than five percent of the outstanding common stock.
Based on the above, the Commission finds that Gupta and Chorney each violated Section 13(d) of the Exchange Act and Rule 13d-1 thereunder.
OFFER OF SETTLEMENT
Gupta and Chorney have each submitted Offers of Settlement in this proceeding which the Commission has determined to accept. Gupta and Chorney, in their Offers, without admitting or denying the matters set forth herein, consent to this Order making findings, as set forth above, and ordering each of them to cease and desist from committing or causing any violations of, and committing or causing any future violations of, Section 13(d) of the Exchange Act and Rule 13d-1 thereunder.
Accordingly, IT IS HEREBY ORDERED, pursuant to Section 21C of the Exchange Act, that,
A. Gupta cease and desist from committing or causing any violations of, and committing or causing any future violations of, Section 13(d) of the Exchange Act and Rule 13d-1 thereunder.
B. Chorney cease and desist from committing or causing any violations of, and committing or causing any future violations of, Section 13(d) of the Exchange Act and Rule 13d-1 thereunder.
By the Commission.
Jonathan G. Katz
|1||These proceedings were instituted on September 25, 1997 (Release No. 34-39128).|
|2||The findings herein are made pursuant to Gupta's and Chorney's Offers of Settlement and are not binding on any other person or entity in this or any other proceeding.|