United States Securities and Exchange Commission
Litigation Release No. 21391 / January 22, 2010
Securities and Exchange Commission v. Nicor Inc. and Jeffrey L. Metz, Civil Action No.07-CV-01739 (N.D. Illinois)
SEC Distributes More Than $10 Million To More Than 7,000 Investors Injured in Financial Fraud
The Securities and Exchange Commission announced that on January 22, 2010 the fund administrator issued checks totaling $10.2 million to approximately 7000 shareholders of Nicor, Inc. who had been injured by the company’s financial fraud. The Commission had earlier filed a settled civil injunctive action against Nicor, Inc. and Jeffrey Metz on March 29, 2007, alleging financial fraud lasting from 1999 to 2002. See Litigation Release No. 20060 (March 29, 2007).
The complaint alleged that Nicor, a major Chicago-area natural gas distributor, and Metz, its former Assistant Vice President and Controller, engaged in improper transactions, made material misrepresentations, and failed to disclose material information regarding Nicor's gas inventory in order to meet earnings targets and increase the company's revenues under a performance-based rate plan administered by the Illinois Commerce Commission.
Without admitting or denying the Commission's allegations, Nicor and Metz each consented to an order permanently enjoining them from violating the antifraud and reporting provisions of the federal securities laws. Nicor also consented to pay $1 of disgorgement and a civil penalty of $10 million. Metz also consented to pay disgorgement of $7,404, prejudgment interest of $2,647, a civil penalty of $50,000, and was barred from serving as an officer or director of a public company for five years. All the funds collected were placed in a Fair Fund for distribution to affected shareholders of Nicor’s fraud.
On February 23, 2009, the court appointed The Garden City Group, Inc. (“GCG”) as the fund administrator to oversee the distribution of the settlement funds. GCG worked with the Commission staff to create a distribution plan and submitted the plan to the court for its approval. On June 30, 2009, the court approved the plan. Thereafter, GCG mailed notices and claim forms to affected shareholders, reviewed and processed claim forms and calculated each approved claimant’s recognized loss. GCG is now distributing checks to these approved claimants.