SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16477 / March 21, 2000
Securities and Exchange Commission v. Richard Adler, et al., N.D. Ala., 94-C-2018-S.
The Securities and Exhange Commission today announced that on March 2, 2000, Judge U.W. Clemon of the United States District Court for the Northern District of Alabama entered Final Judgments of Permanent Injunction against Richard F. Adler, Harvey L. Pegram and Domer L. Ishler in an insider trading case involving the securities of Comptronix Corporation, formerly located in Guntersville, Alabama. The Commission's Complaint, filed in August 1994, alleges that the defendants unlawfully traded or tipped others to trade prior to an announcement on November 25, 1992 that top officers of Comptronix had perpetrated a financial fraud which caused the company to overstate sales and profits in prior and current years. The Complaint alleges that Adler, then a Comptronix director, learned of the fraud on November 15, 1992 in confidential board meetings and shortly thereafter tipped Pegram, his business customer and friend, who in turn tipped his business associate, Domer Ishler, as to the fraud. Both Pegram and Ishler traded in Comptronix stock prior to the public announcement on November 25.
The Final Judgments to which Adler, Pegram and Ishler consented, without admitting or denying the Complaint's allegations, enjoin them from further violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and order (i) Pegram to pay disgorgement in the amount of $154,000, plus prejudgment interest thereon in the amount of $116,000, and to pay a civil penalty of $100,000; and (ii) Adler and Ishler each to pay a civil penalty of $50,000.
The Complaint was initially filed in August 1994 and the case went to trial in August 1995. After a seven day trial the jury was deadlocked. The Court declared a mistrial and subsequently granted renewed motions for judgment as a matter of law as to Adler and Pegram and summary judgment as to Ishler. The Commission appealed the District Court judgments to the Eleventh Circuit, which reversed the judgments, and remanded the case to the District Court. Comptronix declared bankruptcy in August 1996 and was purchased by Sanmina Corporation on November 1, 1996.
See Litigation Releases 14198 (August 18, 1994) and 14034 (March 29, 1994) for additional information.