LITIGATION NO. 17545 / June 5, 2002
SECUTITIES AND EXCHANGE COMMISSION v. BRUCE D. LE DUC, U.S. District Court for the District of Minnesota 02-CV-1185 (Erickson, J.) (May 30, 2002)
COMMISSION FILES COMPLAINT AGAINST BRUCE D. LE DUC FOR AIDING AND ABETTING REPORTING AND SHORT SALE VIOLATIONS COMMITTED BY GEORGE KLINE
The Commission announced today that it filed and simultaneously settled an injunctive action against Bruce D. Le Duc for aiding and abetting certain securities violations committed by George Kline. On April 17, 2002 George Kline was criminally sentenced to 6 ½ years in prison for insider trading, reporting and short sale violations. George Kline was ordered to pay approximately $5.25 million. He also consented in an injunctive action filed by the Commission to the entry of an injunction and to a bar from serving as an officer or director. Kline's sons, Erich and Christian, were also sentenced to 2 years in prison and 4 years of probation, respectively, for similar violations. Erich Kline was ordered to pay $450,000, and Christian Kline was ordered to pay $475,000. On May 30, 2002, Le Duc was criminally convicted and sentenced to 4 years of probation for his conduct and was ordered to pay a fine of $80,000.
The complaint alleges that Le Duc effected securities transactions on behalf of George Kline knowing that Kline sat on the boards of some of the companies he was trading. The complaint further alleges that Le Duc assisted Kline in illegal short sales of stock in a company, knowing that Kline was a member of the board of directors for that company. The complaint also alleges that Le Duc engaged in various securities transactions in his own brokerage accounts at the same time that George Kline directed him to effect securities transactions in the account of a company that Le Duc and Kline jointly owned. The complaint further alleges that Le Duc knew at the time that these transactions involved the stock of companies on which Kline served as a member of the Board of Directors and had access to material, non-public information.
Le Duc consented, without admitting or denying the allegations in the complaint, to the entry of a permanent injunction enjoining him from violating Sections 16(a) and 16(c) of the Securities and Exchange Act of 1934, and Rule 16a-3 thereunder. Le Duc also consented to the entry of an Order barring him from association with any broker or dealer or investment adviser with a right to reapply in three (3) years.
The complaint notes that the Commission did not seek disgorgement and penalties against Le Duc because the plea agreement reached between Le Duc and the U.S. Attorney's Office provided for the payment of $80,000.
The Commission wishes to thank the Office of the United States Attorney for the District of Minnesota for its assistance and cooperation in this matter.