U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17213 / October 31, 2001
Securities and Exchange Commission v. William A. Rothrock, IV et al., Civil Action No. H013732 (MH) (S.D. Tex.)
FORMER SENIOR VICE PRESIDENT AT USA WASTE SERVICES, INC. AND NINE OTHERS SETTLE INSIDER TRADING CHARGES BY AGREEING TO BE ENJOINED AND TO PAY MORE THAN $2.5 MILLION IN DISGORGEMENTS, INTEREST AND PENALTIES
The Securities and Exchange Commission today filed a complaint in the United States District Court for the Southern District of Texas (Houston Division) alleging that (1) ten individuals --William A Rothrock, IV, W. Gregory Orr, Logan L. Nichols, Glenn A. Oakes, Clarence L. Miller, Stephen P. Gauthier, Richard M. Miller, Darrell L. Goodreau, Matthew E. Miller, and Timothy D. Trahan -- engaged in unlawful insider trading and/or tipping in advance of the announcement of USA Waste's acquisition of American Waste Services, Inc. in February, 1998, and (2), five weeks later, Rothrock and seven of the individuals engaged in illegal insider trading and/or tipping in advance of the announcement of USA Waste's merger with Waste Management, Inc. in March, 1998.
The Complaint alleges that Rothrock learned of USA Waste's plan to acquire American Waste in his capacity as Senior Vice President of Business Development at USA Waste and breached his duty by tipping Orr, Nichols and Oakes in advance of the public announcement of the acquisition on February 6, 1998. Based on these tips, Orr, Nichols and Oakes each purchased American Waste stock. Shortly thereafter, Nichols tipped his friends Clarence L. Miller, Stephen Gauthier, Richard M. Miller and Robert "Dale" Trahan ("Dale Trahan") (now deceased), each of whom also purchased American Waste stock. Richard Miller then tipped his son, Matthew E. Miller and his friend Goodreau, both of whom traded. Dale Trahan tipped his son Timothy D. Trahan, who also traded. Between February 5 and 6, the trader defendants and Dale Trahan purchased, in the aggregate, 322,500 shares of American Waste stock, which they later sold for combined profits of $567,634.75.
The Complaint further alleges that five weeks later, Rothrock learned of USA Waste's plan to merge with Waste Management in his official capacity and breached his duty by tipping Nichols and Orr in advance of the public announcement of the merger on March 11, 1998. Nichols and Orr purchased Waste Management stock based on these tips. Nichols also tipped Clarence Miller, Richard Miller and Dale Trahan as well as certain non-defendant relatives. Each of those individuals traded. Dale Trahan tipped Timothy Trahan, who traded, and Richard M. Miller tipped Matthew Miller, who also traded. Richard Miller also tipped Goodreau and, based on that tip, Goodreau bought both Waste Management stock and options. Richard Miller also recommended that a non-defendant relative purchase Waste Management stock and the relative did so. Between March 9 and 10, 1998, the seven trader defendants, Dale Trahan and the non-defendant relatives purchased, in the aggregate, 30,918 shares of Waste Management stock and 10 call option contracts, which they later sold for combined profits of $159,171.25.
Simultaneous with the filing of the Complaint, each of the defendants consented, without admitting or denying the allegations in the Complaint, to be permanently enjoined from violating section 10(b) of the Securities Exchange Act of 1934 and rule 10b-5 thereunder, and to pay the following monetary relief:
- William A. Rothrock, IV, who did not trade, will pay a penalty of $701,311.25;
- Logan L. Nichols will disgorge $268,368.75 plus prejudgment interest of $83,268.26 and pay a penalty of $443,140;
- W. Gregory Orr will disgorge $83,750 plus prejudgment interest of $25,387.46 and pay a penalty of $83,750;
- Glenn A. Oakes will disgorge $175,940 plus prejudgment interest of $55,052.94 and pay a penalty of $175,940;
- Clarence L. Miller will disgorge $100,656.25 plus prejudgment interest of $31,349.49 and pay a penalty of $100,656.25;
- Stephen P. Gauthier will disgorge $65,000 plus prejudgment interest of $20,338.98 and pay a penalty of $65,000;
- Richard M. Miller will disgorge $14,427.5 plus prejudgment interest of $4,408.9 and pay a penalty of $26,668.12;
- Darrell L. Goodreau will disgorge $6,565.62 plus prejudgment interest of $2,026.91 and pay a penalty of $6,565.62
- Matthew E. Miller will disgorge $5,675 plus prejudgment interest of $1,752.05 and pay a penalty of $5,675; and
- Timothy D. Trahan will disgorge $6,422.88 plus prejudgment interest of $1,970.82 and pay a penalty of $6,422.88.
The combined disgorgements with prejudgment interest total $952,361.81 and the combined penalties total $1,615,129.12.
The Commission acknowledges the assistance of the New York Stock Exchange on the investigation of this matter.