SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16703 / September 15, 2000
SEC v. Lindsey and Perz, (U.S.D.C. N.D. Illinois, Civil Action No. 00-C-5539, filed September 8, 2000)
The U.S. Securities and Exchange Commission ("Commission") announced that on September 14, 2000, the Honorable Charles R. Norgle, U.S. District Judge for the Northern District of Illinois, entered a Final Order and Permanent Injunction ("Order") in an insider trading case against Kevin L. Lindsey ("Lindsey"), a resident of Milwaukee, Wisconsin, and Thomas R. Perz ("Perz"), a resident of Waukesha, Wisconsin, which permanently enjoined Lindsey and Perz from further violations of the antifraud provisions of the federal securities laws. The Order also imposed a civil penalty of $386,875 on both Lindsey and Perz, and directed Perz to surrender $386,875 in trading profits plus $60,687.11 in prejudgment interest. Perz and Lindsey consented to the entry of the Order without admitting or denying the allegations in the Complaint.
The Commission alleges that Lindsey and Perz engaged in insider trading in the securities of Marquette Medical Systems, Inc. ("Marquette"), a manufacturer of medical equipment located in Milwaukee, Wisconsin. In July 1998, Marquette entered into discussions with General Electric Co. ("GE") about GE acquiring Marquette. As Marquette's Corporate Comptroller and Vice President of Business Development, Lindsey was kept informed of the progress of these discussions. The Commission alleges that by August 27, 1998, Lindsey knew that GE and Marquette were apart by only $10 per share in terms of purchase price, that GE had suggested that they split the difference, and that Marquette's Chairman of the Board and GE's Chairman of the Board were scheduled to meet in September to resolve the difference in price.
The Commission alleges that Lindsey tipped his friend Perz about the upcoming acquisition of Marquette by GE. The Commission further alleges that Perz purchased 10,000 shares of Marquette stock on September 9, 1998 and another 10,000 on September 16, 1998 while in possession of this information. On September 21, 1998, Marquette announced its acquisition by GE for $45 per share. Prior to the announcement, Marquette's shares were trading in the $22.75 to $27.375 range. After the announcement, Perz's stock gained $386,875 in value. The Complaint alleges that Lindsey breached his fiduciary duty to Marquette shareholders by disclosing this information. The Complaint alleges that Lindsey and Perz violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.