SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 16286 / September 22, 1999
SEC v. William G. Griffin, C.A. No. 99CV11955 (DPW) (D. Mass.)
SEC CHARGES FORMER VICE PRESIDENT OF GTE LABORATORIES WITH INSIDER TRADING
The Securities and Exchange Commission today filed insider trading charges against William G. Griffin, a resident of Newton, Massachusetts and former Vice-President and Director of the Advanced Systems Laboratory at GTE Laboratories, Inc. ("GTE Labs"). GTE Labs is a wholly-owned subsidiary of GTE Corporation. The Commission alleged that Griffin illegally bought BBN Corporation stock ahead of GTE's public announcement on May 6, 1997, that it intended to acquire BBN via a tender offer. Griffin agreed, without admitting or denying the Commission's allegations, to pay $15,485 in disgorgement and civil penalties and to the entry of an injunction prohibiting him from further insider trading violations.
The Commission alleged that, from March 27 to March 28, 1997, Griffin was part of a GTE team performing due diligence for the purpose of determining whether GTE should acquire BBN. On March 28, at the completion of the due diligence session, Griffin's supervisor, who had also been involved in the due diligence, recommended to a GTE mergers and acquisition specialist that GTE "do something" with BBN. Griffin and at least two other GTE Labs employees present concurred with Griffin's supervisor's recommendation. Additionally, on April 7, Griffin was involved in a follow-up conference call related to the due diligence that had been performed at BBN. During that call, BBN was referred to by a code name and Griffin was asked by a superior whether he had any "technical concerns" or had spotted any technical "red flags" during the BBN due diligence project. Griffin responded that he had not. Finally, on the evening of April 29, approximately nine hours after receiving a copy of a due diligence related e-mail suggesting that a GTE-BBN transaction was imminent, Griffin placed an order for the purchase of 1,000 shares of BBN stock. Griffin's order was executed the following day at $21.625 per share. Griffin tendered his 1,000 shares of BBN stock on June 6, at the tender offer price of $29 per share, for a net profit of $7,188.
The Commission charged Griffin with violating Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder. On a neither admit nor deny basis, Griffin agreed to disgorge $7,188, constituting the ill-gotten gain on his BBN purchase, plus prejudgment interest in the amount of $1,109, and a civil penalty of $7,188. Griffin also consented to the entry of a permanent injunction prohibiting him from future violations of the above-referenced provisions.