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U.S. Securities and Exchange Commission

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.

Litigation Release No. 17786 / October 15, 2002

SECURITIES AND EXCHANGE COMMISSION V. LORENE ELLEN TURPIN and LORA K. MCKINNEY, Civil Action No. 1:02-1247 (S.D.W. Va.) (filed October 15, 2002)

FORMER KEYSTONE BANK EMPLOYEES
SETTLE SEC CHARGES OF INSIDER TRADING

On October 15, 2002, the Commission filed a settled Complaint in the United States District Court for the Southern District of West Virginia alleging that Lorene Ellen Turpin, a former Vice-President of First National Bank of Keystone ("Keystone Bank"), and Lora K. McKinney, a former proof machine operator at Keystone Bank, sold Keystone Bank stock while in possession of material nonpublic information about the adverse financial condition of Keystone Bank and improper activities conducted at the bank. According to the Complaint, between June 18, 1999 and July 8, 1999, Turpin and McKinney each sold 1,050 Keystone Bank shares at $220 per share and thus each avoided losses of $231,000. Both defendants also tried to sell additional Keystone Bank stock but were unsuccessful.

The Commission's Complaint specifically alleges that at the time Turpin and McKinney sold their stock they knew that Keystone Bank had accepted millions of dollars in brokered deposits in violation of a directive from the Office of the Comptroller of the Currency ("OCC") that prohibited Keystone Bank from accepting brokered deposits. Brokered deposits are deposits of money obtained by Keystone Bank through a broker for which the bank pays the broker a fee. Turpin and McKinney also believed that a senior Keystone Bank executive was stealing money from the bank and falsifying bank records to hide the transactions. By June 1999, based on the adverse material nonpublic information that Turpin and McKinney had about Keystone Bank, each knew that the bank was at risk of collapsing.

On September 1, 1999, the OCC declared Keystone Bank to be insolvent, and appointed the Federal Deposit Insurance Corporation as receiver for the bank. The insolvency determination followed the OCC's discovery that the assets of Keystone Bank had been overstated by as much as $515 million.

Simultaneously with the filing of the Commission's Complaint, Turpin and McKinney, without admitting or denying the Commission's allegations, each consented to the entry of a final judgment permanently enjoining them from violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Based upon their sworn representations in their Statements of Financial Condition, no penalties or disgorgement will be obtained from either defendant.

The Commission would like to thank the United States Attorney's office for the Southern District of West Virginia, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation for their cooperation in this investigation.

 

SEC Complaint in this matter

 

http://www.sec.gov/litigation/litreleases/lr17786.htm


Modified: 10/15/2002