Litigation Release No. 19676 / April 27, 2006

SEC v. James J. Farley and Shelley J. Farley, Civil Action No. 05-CV-8016 (SDNY)

The Securities and Exchange Commission announced that on April 21, 2006, the Honorable Naomi R. Buchwald, United States District Judge for the Southern District of New York, entered Final Judgments As To Defendants James J. Farley (J. Farley) and Shelley J. Farley (S. Farley), enjoining them from future violations of Sections 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The defendants consented to the entries of the judgments without admitting or denying the allegations of the Commission's Complaint. The court ordered each defendant to pay disgorgement, prejudgment interest and a civil penalty in the respective amounts of $29,762.50, $5,159.09 and $29,762.50.

The Commission's Complaint, filed on September 15, 2005, alleged that the defendants engaged in illegal insider trading in the securities of CryoLife, Inc., a Georgia company that preserves and sells implantable human tissue. During the morning of August 14, 2002, J. Farley, a former salesman for CryoLife, and S. Farley learned that the FDA issued a Recall Order which imposed a nationwide hold on tissue shipments by CryoLife. The Farleys, while in possession of nonpublic information, sold CryoLife stock during the morning of August 14 at prices ranging from $9.30 to $9.45. Later that morning, after various news services learned of the Recall Order and reported that news, the trading volume of CryoLife stock dramatically increased and the stock price dropped from $9.46 to $5.50. The New York Stock Exchange subsequently halted trading in the stock and shortly thereafter CryoLife issued a press release disclosing the Recall Order. On August 15, trading in CryoLife stock resumed and the stock traded actively before closing at $2.03 per share. The defendants' cumulative losses avoided totaled approximately $56,832.00.

See also: Litigation Release No. 19379 (September 15, 2005)