UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16258 / August 23, 1999
SECURITIES AND EXCHANGE COMMISSION v. FLOYD P. GOODSON, JAMES F. GOODSON AND JOHN R. FISER, United States District Court for the Northern District Georgia, Civil Action No.199-cv-2133 (N.D.Ga)
The Securities and Exchange Commission ("Commission") announced today that it filed a complaint against Floyd P. Goodson ("Floyd G.") of Alpharetta, Georgia, his father James F. Goodson ("James G.") and a family friend, John R. Fiser ("Fiser"), both residents of Knoxville, Tennessee, alleging illegal insider trading in the options of VeriFone, Inc. ("VeriFone"). The Commission filed its complaint in the Northern District of Georgia, Atlanta Division, on August 19, 1999.
James G. is a co-founder and the president and chief executive officer of the Goodson Brothers Coffee Company, which is based in Knoxville. Floyd G. has been employed at the Goodson Brothers Coffee Company since 1997. Fiser lent approximately $200,000 to the Goodson Brothers Coffee Company and obtained a lien on the company's accounts receivable.
According to the Complaint, James G. and Fiser purchased option contracts in the securities of VeriFone, Inc., a corporation headquartered in Redwood City, California, using material, non-public information concerning a planned acquisition by Hewlett-Packard, Inc. Specifically, on approximately April 21, 1997, Amy Goodson, Floyd G.'s then-wife and an employee of VeriFone, Inc., learned of the impending acquisition of VeriFone by Hewlett-Packard during a VeriFone corporate retreat. That night, concerned about the possible impact the acquisition would have on her career, Amy telephoned Floyd G. and told him about the acquisition and her career concerns. Floyd G. then telephoned his father, James G., and informed him of the pending acquisition. Hours later, James G. purchased VeriFone option contracts. James G. had never purchased VeriFone securities before and had not purchased options in ten years. The Complaint further alleges that James G. also promptly telephoned Fiser and told him of the acquistion. Fiser, who had not purchased options for several years, quickly began purchasing VeriFone option contracts. After being told that he had reached the maximum purchases in one brokerage account, he opened an account at a new firm and purchased more Verifone option contracts.
On April 23, 1997, Verifone announced that it would be acquired by Hewlett-Packard. That news caused VeriFone's stock price to increase nearly 57%, rising from $30 1/8 at the close of trading on April 22, 1997 to $47 1/4 at the close of trading on the day of the announcement. Both James G. and Fiser sold their option contracts immediately after the announcement, reaping one-day profits of $62,374 and $146,907, respectively.
In its complaint, the Commission seeks disgorgement of the profits of James G.'s and Fiser's illegal insider trading, civil penalties for insider trading, and orders from the court permanently enjoining Floyd G., James G., and Fiser from violating and Section 10(b) of the Exchange Act of 1934 and Rule 10b-5 thereunder.