Stephen B. Humphries

SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 16361/ November 18, 1999

SECURITIES AND EXCHANGE COMMISSION v. STEPHEN B. HUMPHRIES, Civil Action No. 99-3074 (GK) (D.D.C.) (filed November 18, 1999)

SEC SUES LITTLE ROCK CPA FOR INSIDER TRADING IN
MOBIL-EXXON MERGER; DEFENDANT SETTLES
BY PAYING MORE THAN $144,000

On November 18, 1999, the Commission filed a civil complaint in the United States District Court for the District of Columbia against Little Rock certified public accountant Stephen B. Humphries in connection with his purchases in November 1998 of Call options of Mobil Corporation, the second largest U.S. oil company. The complaint alleges that the defendant engaged in insider trading prior to the November 27, 1998 public announcement that Mobil and Exxon Corporation were in merger discussions. The complaint alleges that the defendant violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

The complaint alleges that on November 9, 1998, the defendant learned, in confidence, from an individual with whom he had a fiduciary or similar relationship of trust and confidence, that the individual had been approached by Mobil as a possible advisor on a potential merger between Mobil and Exxon. The complaint alleges that the defendant misappropriated that information when, on November 19, 1998, he purchased, with a friend and through that friend's brokerage account, 100 Mobil Call options expiring in December 1998. Immediately after the November 27 announcement that Mobil and Exxon were in merger discussions, the Mobil Call options the defendant purchased approximately doubled in price. The defendant and his friend sold the options on November 30 and December 2, 1998, realizing total profits of $70,000.

Simultaneously with the filing of the complaint, the defendant agreed to settle the civil action by consenting, 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 ordering him to pay $144,596.52, which comprises $70,000 in disgorgement of illicit trading profits, $4,596.52 in prejudgment interest thereon, and a civil penalty of $70,000.