SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17047 / June 22, 2001
TAMPA REAL ESTATE AGENTS ORDERED TO DISGORGE $269,000 AND PAY $200,000 IN CIVIL PENALTIES FOR ILLEGAL INSIDER TRADING
The Commission announced today that on May 23, 2001, United States District Judge Ann Aldrich, sitting by designation in the Middle District of Florida, ordered Donna Yun of Longwood, Florida, and Jerry Burch of Heathrow, Florida, to disgorge ill-gotten gains in the amount $269,000, plus pre-judgment interest. The Court also ordered Yun and Burch to pay $100,000 each in civil penalties. The Court denied the Commission's request for permanent injunctions.
On December 14, 2000, after an eight-day trial, a federal jury found Yun and Burch liable for illegal insider trading in options on the stock of Scholastic Corporation. In its complaint, filed on February 3, 1999, the Commission alleged the following: on or before February 18, 1997, Yun's husband, an officer of Scholastic, told Yun in confidence that Scholastic would announce that it expected a loss for the quarter ending at the end of that month. Yun's husband also told her that he expected Scholastic common stock, then trading at approximately $65 per share, to decline to $55 as a result of the announcement. At a cocktail party that evening Yun disclosed this information to Burch. Yun and Burch worked as real estate agents in the same office in Tampa, Florida. During the following two days Burch purchased 130 Scholastic put option contracts, which would rise in value if Scholastic stock went down. After the close of trading on the second day, Scholastic announced the expected loss. The next day the price of Scholastic common stock dropped approximately 40 percent, and Burch exercised his put options, making a net profit of approximately $269,000.
On December 19, 2000, the Court entered judgments against Yun and Burch for violations of Section 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5. (See also Litigation Release Nos. 16052 (Feb. 3, 1999) and 16840 (Dec. 21, 2000)).http://www.sec.gov/litigation/litreleases/lr17047.htm