U.S. Securities and Exchange Commission
Litigation Release No. 18158 / May 28, 2003
Former Anadarko Employee and Tippee Charged with Fraud in Houston, Texas Insider Trading Scheme
Securities and Exchange Commission v. Gregory D. Frazier and Stephen A. Hamrick, Defendants, Civil Action No. 03-CV-1718 (USDC/S.D. TX/Houston Div.)
On May 20, 2003, the Commission charged Gregory D. Frazier ("Frazier") and Stephen A. Hamrick ("Hamrick"), both of The Woodlands, Texas, with insider trading. According to the complaint filed in the United States District Court for the Southern District of Texas, Houston Division, Frazier, while employed at Anadarko Petroleum Company ("Anadarko"), obtained material non-public information that Anadarko was planning to acquire Howell Corp. ("Howell"). Based on that information, Frazier purchased 4,000 shares of Howell common stock in September 2002. The complaint further alleges that Frazier tipped his brother-in-law, Hamrick, who purchased 2,000 shares of Howell in September 2002. On September 30, 2002, Anadarko announced the acquisition and Howell's stock price increased approximately 51 percent. Within hours, Frazier and Hamrick sold their entire holdings of Howell shares, earning trading profits of $54,616 and $13,839, respectively.
Simultaneously with the filing of its action, the Commission accepted Frazier's and Hamrick's offers of settlement, in which they agreed, without admitting or denying the allegations in the Commission's complaint, to the entry of an order permanently enjoining them from further violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Additionally, Frazier agreed to pay disgorgement of $54,616 in illegal profits, plus $1,281 in prejudgment interest; and to pay a civil money penalty equal to one-half of his trading profits in the amount of $27,308. Hamrick agreed to pay disgorgement of $13,839 in illegal profits, plus $266 in prejudgment interest; and to pay a civil money penalty equal to his trading profits of $13,839. In assessing the penalty amounts, the Commission considered Frazier's and Hamrick's cooperation in the Commission's investigation.