SECURITIES AND EXCHANGE COMMISSION

LITIGATION RELEASE NO. 16755 / October 5, 2000

SEC CHARGES FORMER DIRECTOR OF MASSACHUSETTS COMPANY WITH INSIDER TRADING

SECURITIES AND EXCHANGE COMMISSION v. ROBERT D. HAPP (United States District Court for the District of Massachusetts, C.A. No. 00CV12051-REK (filed October 5, 2000)

The Securities and Exchange Commission today announced the filing of an injunctive action against Robert D. Happ for illegal insider trading in the stock of Galileo Corporation while he was a director of Galileo. The complaint alleges that Happ sold 4,000 shares of stock in Galileo in advance of the company's July 23, 1998, announcement of a number of adverse events affecting the company, including that its earnings for the third quarter of fiscal 1998 were substantially worse than forecasted. As a result of his sale of Galileo stock, Happ illegally avoided losses of $34,758. Happ, a resident of Palm Beach, Florida, who also maintains a home in Weston, Massachusetts, was a director of Galileo and chairman of the board of directors' audit committee from 1995 until May 2000. During the relevant period, Galileo was a publicly traded company located in Sturbridge, Massachusetts. Galileo, which later changed its name to NetOptix Corporation, is now owned by Corning, Inc. and its operations are now located in Natick, Massachusetts.

According to the Commission's complaint, in late June 1998, Happ learned from Galileo's chief executive officer that the company had experienced difficulties or problems during its fiscal third quarter ending June 30, 1998. Just days after learning this inside information and prior to the public announcement of Galileo's poor performance during the third quarter and an assortment of other bad news affecting the company, Happ used his inside knowledge that the company was having trouble in the third quarter to sell all 4,000 of his shares of Galileo. By selling when he did, Happ illegally avoided a loss of $34,758 that he would have faced had he held his shares until after July 23, 1998, when Galileo's public announcement of earnings and other bad news caused the stock's price to decline 64% from $8.25 per share to $3 per share.

According to the complaint, Happ 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 Commission seeks to enjoin Happ from continuing to violate these laws. The Commission also seeks disgorgement of the amount of the loss avoided by Happ, plus prejudgment interest thereon. The Commission's complaint further seeks a civil monetary penalty from Happ of up to three times the loss avoided.