Bruce D. Cowen

Litigation Release No. 16200 / June 29, 1999

SECURITIES AND EXCHANGE COMMISSION v. BRUCE D. COWEN, No. 1:99CV01762 (RMU)

SEC Sues Former President Of TRC Companies, Inc. For Misallocating to Himself Company Securities

The Securities and Exchange Commission (the "Commission") filed a complaint today in the United States District Court for the District of Columbia against Bruce D. Cowen, former President and Director of TRC Companies, Inc. ("TRC") The complaint alleges, that while serving as the president of TRC, Cowen enriched himself by misallocating to himself stock options and warrants in excess of amounts authorized by the board of directors to be issued to him.

Specifically, the complaint alleges that during the period 1986 to 1996, TRC's board of directors periodically authorized the grant of employee stock options under the company's incentive compensation program and directed the company's now-deceased former chief executive officer ("CEO") to distribute those options to others. At various times, the board: 1) specified certain employees who were to receive options; 2) directed that a certain number of options be granted to employees of particular departments or subsidiaries or new potential employees if they were hired; or 3) gave the CEO discretion to assign a specified number of options to others as he saw fit. However, the board did not give the CEO discretion to grant options to himself or Cowen. Rather, all option grants to the CEO and Cowen were specified in the board of directors' resolutions. According to the complaint, on at least ten separate occasions between approximately 1986 and approximately 1996, Cowen and the CEO intentionally diverted to themselves options that the board had authorized for other officers, employees and potential new hires. They facilitated and concealed this conduct through, among other means, the creation of false option contracts and fraudulent transfer agent instructions. In 1994, Cowen and the CEO also diverted 50,000 TRC warrants that the board had designated for other employees.The Commission further alleges that, as a result of these actions, Cowen realized approximately $702,100 in gross profits. The Commission alleges that these actions violated Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5.

In settlement of this matter, Cowen has consented, without admitting or denying the allegations in the complaint, to the entry of an order permanently enjoining him from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and barring him from serving as an officer or director of a publicly-held company for a period of five years. He has also agreed to pay a civil penalty of $400,000. Cowen previously paid the company $1.1 million, including interest, in a separate settlement.