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LITIGATION RELEASE NO. 16528 / April 27, 2000

Jury Finds Former Supercuts CEO Liable for Insider Trading

SECURITIES AND EXCHANGE COMMISSION v. DAVID E. LIPSON, Civil Action No. 97 C. 2661 (N.D. Ill.) (filed April 17, 1997)

On April 26, 2000, a federal jury in the Northern District of Illinois found David E. Lipson liable for illegal insider trading in the common stock of Supercuts, Inc., ("Supercuts"), formerly a NASDAQ-listed company located in San Francisco, California. The Commission's lawsuit, filed on April 17, 1997, alleged that Lipson, the former chairman, chief executive officer and largest shareholder of Supercuts, sold 365,000 shares of Supercuts common stock at prices between $9.50 and $9.3125 in an account that he controlled in his son's name, while Lipson was in possession of material nonpublic information about Supercuts' disappointing financial performance during the quarter ended March 31, 1995. After the company announced its quarterly results on May 12, 1995, the price of the company's common stock fell from $9.00 to $7.625 per share. Lipson breached duties he owed to Supercuts' shareholders and avoided losses of approximately $621,875 through his insider trading.

After a two-week trial, the jury found that Lipson violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The court will rule in subsequent proceedings on the Commission's requests for injunctive relief, disgorgement of Lipson's trading losses avoided, prejudgment interest and civil penalties.