Litigation Release No. 21159 / July 30, 2009

United States Securities and Exchange Commission v. Steven R. Chamberlain, Elaine M. Brown and Gary A. Prince, Civil Action No. 09-cv-01423 (D. D.C.)

SEC Charges Three Former Integral Systems Officers with Securities Fraud

The Securities and Exchange Commission ("Commission") filed a civil action today charging three former senior officers of Integral Systems, Inc. ("Integral Systems" or the "Company"), a corporation based in Columbia, Maryland that manufactures satellite ground systems, with fraudulently concealing for over seven years the identity and involvement of a convicted securities fraud felon in the Company's top management. Named in the complaint were Steven R. Chamberlain, the former CEO of Integral Systems, Elaine M. Brown, the former CFO at the Company and Gary A. Prince, the undisclosed felon. Separately, the Commission instituted and settled an administrative proceeding against Integral Systems charging the firm with violations of the periodic reporting and proxy solicitation provisions of the Securities Exchange Act of 1934 ("Exchange Act").

The Commission's complaint alleges that from 1999 through August 2006 Chamberlain, Brown and Prince made materially false and misleading statements, and omitted material information, in various filings with the Commission by failing to disclose Prince's role at the Company and his legal background in its filings. Prince's executive officer position at Integral Systems was concealed from investors out of concern that disclosing his securities fraud conviction and other legal issues would have a negative impact on the Company's stock price. The complaint states that Prince pleaded guilty to criminal charges of conspiracy to commit securities fraud and bank fraud at another company in 1995. In related Commission actions, he was enjoined from violating the antifraud and other provisions of the federal securities laws and was barred from appearing or practicing before the Commission as an accountant. Prince had been CFO of Integral Systems for several years until he resigned shortly before his criminal conviction. When Prince was rehired in 1998 after serving his criminal sentence, he was given executive officer responsibilities in the Company's accounting, financial reporting, and policy making functions, but was never disclosed as an officer of the Company.

As a result of the conduct described in the complaint, the Commission alleges that Chamberlain, Brown and Prince violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and aided and abetted violations of Exchange Act Section 13(a) and Rules 12b-20 and 13a-1. Defendants Chamberlain and Brown are alleged to have also violated Exchange Act Rule 13a-14 by signing false and misleading certifications accompanying Integral Systems' periodic filings. The complaint also alleges that Chamberlain violated, and Brown and Prince aided and abetted violations of, the proxy statement provisions of Exchange Act, Section 14(a) and Rule 14a-9 thereunder; and that Prince violated the Exchange Act's provisions concerning stock ownership and transaction reports, Exchange Act Section 16(a) and Rule 16a-3 thereunder. The Commission also alleges that through certain of his conduct at the Company, such as reviewing the Company's filings with the Commission and drafting the MD&A portion of those filings, Prince violated the Commission's order denying him the privilege of appearing or practicing before the Commission as an accountant.

The Commission seeks permanent injunctions against further violations of the securities laws against each defendant, as well as court orders imposing officer and director bars and civil penalties.

In the related administrative proceeding against Integral Systems, without admitting or denying the Commission's findings, Integral Systems consented to an order finding that the Company violated the periodic reporting and proxy solicitation provisions of the Exchange Act. The order directs Integral Systems to cease and desist from committing or causing violations of Sections 13(a) and 14(a) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1 and 14a-9. In the Matter of Integral Systems, Inc., Exchange Act Release No. 34-60401, July 30, 2009.

The Commission appreciates the assistance of The Nasdaq Stock Market, Inc., Listing Investigations in this matter.