U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22596 / January 17, 2013
Securities and Exchange Commission v. John M. Darden III, Civil Action No. 1:13-cv-00138-ODE, United States District Court, Northern District of Georgia
SEC Charges Georgia Resident with Insider Trading
On January 15, 2013, the Securities and Exchange Commission filed a civil injunctive action in the Northern District of Georgia against John M. Darden III. The Commission alleges that Darden learned material non-public information about a pending merger from a long-time board member of AirTran Holdings, Inc. (“AirTran”). The Commission further alleges that, based upon the inside information obtained from the board member, Darden purchased 40,000 common shares and 200 out-of-the-money call options in the days before the September 27, 2010 public announcement that Southwest Airlines Company and AirTran had entered into a definitive merger agreement.
According to the Commission’s complaint, as a result of his improper use of the inside information concerning the merger, Darden generated trading profits of $159,160.
Darden has agreed to settle the Commission’s claims against him by consenting to the entry of a final judgment providing permanent injunctive relief under Section 10(b) of the Exchange Act of 1934 and Rule 10b-5 thereunder, and by paying disgorgement of $159,160, prejudgment interest of $9,387, and a penalty of $159,160. Darden neither admits nor denies the Commission’s allegations, and his settlement is subject to court approval.
The SEC thanks the Financial Industry Regulatory Authority (FINRA) and the Options Regulatory Surveillance Authority (ORSA) for their assistance in this matter.