U.S. Securities and Exchange Commission
Litigation Release No. 17330 / January 22, 2002
Securities and Exchange Commission v. Daniel J. Wooten III, Civil Action No. 02-00581 TJH (FMOx) (C.D. Cal.)
Civil and Criminal Insider Trading Charges Filed in Connection with Acquisition of Times Mirror by Tribune Company
On January 22, 2002, the Securities and Exchange Commission ("Commission") filed a complaint in federal court in Los Angeles, California alleging illegal insider trading by Daniel J. Wooten III, age 38, a resident of Torrance, California and former Controller for Rustic Canyon Group. The complaint alleges that Wooten obtained material nonpublic information during his employment for Rustic Canyon Group regarding the 2000 acquisition of Times Mirror Company by the Tribune Company, and that he used that information to trade in Times Mirror Company securities.
Also on January 22, 2002, the United States Attorney for the Central District of California filed criminal charges against Wooten based on the same conduct alleged in the Commission's complaint. Wooten has agreed to plead guilty to the charges.
The Commission's complaint alleges that on or about March 6, 2000, Wooten learned that the Tribune Company planned to acquire Times Mirror Company. The complaint alleges that Wooten acquired this information at a meeting he attended at Rustic Canyon Group, a Los Angeles-based venture capital firm hired to assist in the acquisition. Wooten was informed that the planned acquisition of Times Mirror was not yet public during this meeting. On March 13, 2000, Times Mirror and Tribune publicly announced their merger agreement. The price of Times Mirror stock rose 37 11/16 per share or 78% on news of the announcement. The complaint further alleges that on March 8, 2000, and on March 10, 2000, Wooten purchased a total of 2,285 shares of Times Mirror stock, ultimately realizing illegal profits of over $76,000. Wooten has admitted the allegations set forth in the Commission's complaint.
The Commission charged Wooten with insider trading in violation of the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks an injunction against Wooten from future antifraud violations. Wooten consented to the entry of a permanent injunction barring him from committing further violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
The complaint does not seek disgorgement from Wooten of his insider trading profits because he agreed to pay restitution, in the amount of $76,652, in the related criminal action. The complaint also does not seek civil penalties from Wooten.
In the related criminal action, Wooten has agreed to plead guilty to one count of securities fraud for engaging in insider trading. In a plea agreement with Wooten, the United States Attorney's Office has agreed to recommend a sentence of three years probation, including six months home detention, and a fine of $3,000.
Wooten has been unemployed since June, 2001. During the criminal investigation, he promptly accepted responsibility for his conduct. He also cooperated with the Commission in this investigation.
The Commission acknowledges the valuable assistance of the United States Attorney's Office for the Central District of California and the Federal Bureau of Investigation in Los Angeles in bringing this case.
SEC Complaint in this matter.