UNITED STATES SECURITIES AND EXCHANGE COMMISSION LITIGATION RELEASE NO. 15910 / September 29 , 1998 SECURITIES AND EXCHANGE COMMISSION v. LLOYD MYERS, ET AL. (United States District Court for the Eastern District of New York, Civil Action No. CV98-5984) The Securities and Exchange Commission ("Commission") announced the filing, on September 28, 1998, of a complaint in the United States District Court for the Eastern District of New York, alleging insider trading in the securities of Health Management, Inc. ("Health Management") by Lloyd Myers, a former officer of Health Management, his wife, Deborah Myers, and his in-laws Martin Freiwirth and Beverly Freiwirth. The complaint seeks permanent injunctions for violations of the antifraud provisions of the securities laws, disgorgement and civil penalties. Lloyd and Deborah Myers live in Pittsburgh, Pennsylvania. Martin and Beverly Freiwirth live in Oceanside, New York. Health Management, headquartered in Holbrook, New York, provides outpatient drug therapies to individuals and performs management services for the health care industry. On June 14, 1995, the company announced lower than expected earnings for its fourth quarter ending April 30, 1995. Following the announcement, the price of Health Management common stock dropped by 29 percent, from $17 1/2 to $12 1/2 per share. The complaint alleges that Lloyd Myers learned of the earnings shortfall during the first week of June 1995 while attending a senior staff meeting. He then tipped his wife and in-laws regarding Health Management's anticipated earnings shortfall and impending announcement. On June 9, 1995, Deborah Myers purchased 600 put option contracts on Health Management stock for a total purchase price of $30,403. A put option gives its buyer the right to sell a specified number of shares of stock at a particular price within a specified time period. As of the close of business on June 16, 1995, two days after the June 14th announcement, the value of the put options had increased to $105,000, affording Deborah Myers an unrealized profit of $74,597. The complaint further alleges that on June 13, 1995, after being tipped by Lloyd Myers, and instructed by him to sell shares of Health Management stock which they owned, Martin and Beverly Freiwirth sold 2,000 shares of Health Management common stock, and avoided losses of $10,750. Simultaneously with the filing of the complaint, and without admitting or denying the Commission's allegations, the defendants consented to the entry of Final Judgments and Orders. The Orders permanently enjoin the defendants from future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Lloyd Myers, Martin Freiwirth and Beverly Freiwirth are also enjoined from future violations of Section 17(a) of the Securities Act of 1933. The Order also requires that the Myers disgorge $74,597 plus prejudgment interest, and pay a civil penalty of $37,298, and that the Freiwirths disgorge $10,750 plus prejudgment interest, and pay a civil penalty of $10,750.