Litigation Release No. 19780 / July 31, 2006

Securities and Exchange Commission v. Paul Johnson, Civil Action No. 03-0177 (JFK) (S.D.N.Y.)

Former Research Analyst Paul Johnson is Enjoined and Ordered to Pay Approximately $2.2 Million in Disgorgement and Civil Penalties by Federal District Court

The Securities and Exchange Commission announced today that on July 24, 2006, the U.S. District Judge John F. Keenan entered a final judgment against defendant Paul Johnson, a former securities analyst at the now-defunct Robertson Stephens, Inc. firm, that enjoined Johnson for five years from violations of Securities Act Section 17(a) and Exchange Act Section 10(b) and Rule 10b-5 thereunder, which are general antifraud provisions of the federal securities laws. In addition, the Court ordered Johnson to disgorge approximately $2.2 million in illicit gains and prejudgment interest and pay $125,000 in civil penalties. In determining that a five-year injunction against violation of the securities laws was necessary and appropriate, the Court noted the repeated nature of Johnson's violations that involved three different companies over a span of several years. The Court also took into account that Mr. Johnson's current occupation as a hedge fund manager made it likely that future violations may occur.

The judgment against Johnson followed a jury trial in November 2005 where the jury found Johnson liable on four counts of securities fraud for issuing false and misleading research reports about three companies that he covered. In its complaint, the Commission had charged Johnson with failing to disclose in his research reports and statements to the media praising two impending mergers that he stood to realize substantial financial gains from the successful consummation of those mergers. The Commission also charged Johnson with having issued false and misleading "Buy" recommendations for another public company that were inconsistent with his privately-held belief. For further information, please see Litigation Releases Nos. 19468 (November 17, 2005) and 17922 (January 9, 2003).