U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20616 / June 12, 2008
Securities and Exchange Commission v. Edgar E. Chapman, Civil Action No. 4:08-CV-77 (CDL) (M.D.GA June 11, 2008)
The Securities and Exchange Commission ("Commission") announced that on June 11, 2008, it filed a Complaint in the United States District Court for the Middle District of Georgia against Edgar E. Chapman ("Chapman"). Chapman is a resident of Woodland, Georgia. The Commission seeks a permanent injunction and civil money penalties.
The Complaint alleges violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder that stem from numerous wash trades and other manipulative activity that Chapman conducted between January and August 2005 in the common stock of First Community Bank of Georgia ("FCBG"). During these eight months, FCBG shares were traded over the counter and quoted on the OTC Bulletin Board. Because the shares were thinly traded, Chapman's wash trades significantly inflated both the price and volume for FCBG shares. At a minimum, Chapman knew or recklessly ignored that his trading activity dramatically inflated both the volume and, occasionally, the price for FCBG shares. An injunction is particularly appropriate in this matter because Chapman continued to enter wash trades, albeit less frequently, after (1) his brokerage firm warned him that the conduct was illegal and ultimately required him to transfer his accounts and (2) the Enforcement staff expressed concerns to him that his wash trades distorted the market for FCBG shares.