Securities and Exchange Commission
Litigation Release No. 17320 / January 16, 2002
SEC CHARGES FORMER CFO OF TRICON GLOBAL
Securities and Exchange Commission v. Robert C. Lowes, Case No. 1: 02CV00071 (D.D.C. January 16, 2002)
The Securities and Exchange Commission today filed a civil injunctive action in the United States District Court for the District of Columbia, against Robert C. Lowes, former Chief Financial Officer of Tricon Global Restaurants, Inc. alleging that he engaged in illegal insider trading. The complaint alleges that Lowes, age 56 and a resident of California, bought 5,000 shares of Tricon common stock on August 17, 1998, with advance knowledge of improved projected financial results for Tricon. These improved results were subsequently disclosed in a press release issued by Tricon on August 19, 1998, announcing that it anticipated significantly better-than-expected earnings and profits for the third quarter and for 1998. Lowes's profit on the trades was $25,625. Lowes agreed to settle the case without admitting or denying the Commission's allegations.
The complaint alleges that on August 17, 1998, Lowes purchased Tricon stock after attending an internal financial forecasting meeting during which he learned the nonpublic information that Tricon's profits for the third quarter and for 1998 would be substantially improved and that Tricon's earnings would significantly beat both its own internal forecasts and Wall Street analysts' expectations. On August 19, 1998, Tricon issued a press release announcing these improved forecasts. Tricon's stock price rose $4.50 that day, and the 5000 shares of Tricon stock that Lowes had purchased on August 17, 1998 increased in value by $25,625.
Without admitting or denying the Commission's allegations, Lowes consented to the entry of a final judgment enjoining him from violating Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder and requiring him to pay disgorgement of $25,625, pre-judgment interest of $7,442, and a civil monetary penalty of $25,625, for a total of $58,692.