U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20510 / March 25, 2008
Accounting and Auditing Enforcement Release No. 2803 / March 25, 2008
U.S. Securities and Exchange Commission v. Conrad M. Black, F. David Radler and Hollinger Inc., Civil Action No. 04C7377 (N.D. Ill. 2004)
The Securities and Exchange Commission ("Commission") announced on March 25, 2008, that it settled its federal district court action against Hollinger Inc., a Canadian corporation and the controlling shareholder of Sun-Times Media Group, Inc., formerly known as Hollinger International, Inc., pending in the United States District Court for the Northern District of Illinois.
On November 15, 2004, the Commission filed its action against Hollinger Inc., Conrad M. Black, Hollinger International's former Chairman and CEO, and F. David Radler, Hollinger International's Deputy Chairman and COO, alleging that from approximately 1999 through 2003, the defendants engaged in a fraudulent and deceptive scheme to divert cash and assets from Hollinger International, Inc. ("Hollinger International"), through a series of related party transactions. The Commission's complaint alleges, among other things, that Black and Radler diverted to themselves, other corporate insiders and Hollinger Inc. approximately $85 million of the proceeds from Hollinger International's sale of newspaper publications through purported "non-competition" payments. The complaint further alleges that in order to perpetrate their fraudulent scheme, Black and Radler misled Hollinger International's Audit Committee and Board of Directors concerning the related party transactions and also misrepresented and omitted to state material facts regarding these transactions in Hollinger International's filings with the Commission and during shareholder meetings. The complaint also alleges that Hollinger Inc. made misstatements and omissions of material fact regarding the purported non-competition payments in its responses to Hollinger International's proxy questionnaires and in Hollinger Inc.'s filings with the Commission. Radler previously entered into a settlement with the Commission concerning the allegations against him in this case.
Hollinger Inc., without admitting or denying the allegations in the complaint, has consented to the entry of a final judgment which permanently enjoins it from violations of Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), 13(b)(5) and 14(a) of the Securities Exchange Act of 1934 and Rules 10b-5, 12b-20, 13a-1, 13a-13, 13a-16, 13b2-1, 14a-3 and 14a-9 thereunder. The Final Judgment also orders Hollinger Inc. to pay a total of $21,279,471.84 in disgorgement, representing $16,550,000 in alleged non-competition payments received by Hollinger Inc., plus prejudgment interest thereon in the amount of $4,729,471.84. The $21,279,471.84 paid to Hollinger International in satisfaction of the judgment against Hollinger, Inc. and Conrad Black in the action captioned Hollinger International, Inc. v. Black, et al., 844 A.2d 1022 (Del. Ch. C.A. No. 183-N), shall be credited dollar-for-dollar toward the disgorgement in this action. The settlement is subject to approval of U.S. District Judge William T. Hart.