U.S. Securities and Exchange Commission
Litigation Release No. 22640 / March 11, 2013
Securities and Exchange Commission v. Michael Dale Lackey, Civil Action No. 2:13-CV-2153 (W.D. Tenn., March 11, 2013)
SEC Charges Former International Paper Company Executive with Insider Trading
On March 11, 2013, the Securities and Exchange Commission charged Michael Dale Lackey, a former Vice-President and General Manager of International Paper Company, with insider trading in the stock of Temple-Inland, Inc. based on material, non-public information regarding International Paper Company's tender offer of Temple-Inland. On June 6, 2011, after the end of regular trading on the New York Stock Exchange, International Paper Company announced that it had made a $3.31 billion hostile takeover bid for Temple-Inland, Inc. and had offered $30.60 per share, a 46% premium to Temple-Inland's closing share price that day of $21.01 a share. As a result, Temple-Inland stock rose to $30.40 by 4:26 p.m. on June 6, 2011, and opened on June 7, 2011 at $29.97 per share.
According to the SEC's complaint filed in the U.S. District Court for the Western District of Tennessee, Lackey learned about International Paper Company's potential acquisition of Temple-Inland during a private conversation with an International Paper Company Executive while attending a charity event on April 30, 2011. The complaint alleges that between May 2, 2011 and June 1, 2011, based on this material, non-public information, Lackey made multiple purchases of Temple-Inland stock totaling 9,000 shares in two of his brokerage accounts. The complaint also alleges that on June 7, 2011, Lackey sold all 9,000 shares of Temple-Inland stock for a profit of $56,533.89. The complaint alleges that Lackey misappropriated this information for his own personal profit and breached the duty of trust and confidence that he owed to International Paper Company.
Without admitting or denying the SEC's allegations, Lackey agreed to settle the case against him. The settlement is pending final approval by the court. Specifically, Lackey consented to the entry of a final judgment permanently enjoining him from future violations of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder; requiring him to pay disgorgement of $56,533.89, the amount of his ill-gotten gains, plus prejudgment interest of $2,942.26, and a civil penalty of $56,533.89; and prohibiting him from serving as an officer and director of a public company for a period of five years.
The Commission acknowledges the assistance of FINRA in this matter.