U.S. Securities and Exchange Commission
LITIGATION RELEASE NO. 18633 / March 23, 2004
SECURITIES AND EXCHANGE COMMISSION V. SEAN S. COGHLAN, PATRICK S. LAY, AND CHRISTOPHER W. LAY,
CIV. ACTION NO. 04-0482-RMC (D.D.C.)
On March 23, 2004, the Securities and Exchange Commission filed a settled insider trading action against Sean S. Coghlan, a Human Resources Director at Kinko's, Inc., Patrick S. Lay, and Christopher W. Lay, for insider trading before the March 3, 2003 announcement that Kinko's would be making a cash tender offer to acquire all the outstanding shares of ImageX, Inc.'s common stock. The action was filed in federal court in the District of Columbia. Kinko's was a privately held Texas corporation with its principal place of business in Dallas, Texas. In a transaction that closed on February 12, 2004, the FedEx Corporation acquired Kinko's.
The SEC's Complaint alleges that on February 28, 2003, Sean Coghlan, 33, a resident of Flower Mound, Texas, provided Patrick Lay, 42, also a resident of Flower Mound, Texas, with confidential information about Kinko's planned tender offer for all the outstanding shares of ImageX before that information was announced to the public. According to the Complaint, Patrick Lay then informed his brother Christopher Lay, 41, a resident of Palm Beach, Florida, about the upcoming acquisition. On March 3, 2003, prior to the announcement being made to the public, Patrick Lay purchased 99,000 shares and Christopher Lay purchased 100,000 shares of ImageX common stock. After the announcement, on March 4, 2003, Patrick and Christopher Lay sold all of their ImageX shares, realizing one-day profits of $21,584 and $21,444 respectively.
Without admitting or denying the allegations in the Complaint, Sean Coghlan, Patrick Lay, and Christopher Lay consented to the entry of a final judgment that would permanently enjoin each of them from future violations of Section 14(e) of the Securities Exchange Act of 1934 and Rule 14e-3 promulgated thereunder. Patrick Lay also agreed to disgorge $21,584 in profits plus prejudgment interest and to pay a civil penalty of $43,029. Christopher Lay also agreed to disgorge $21,444 in profits plus prejudgment interest and to pay a civil penalty of $21,444. Sean Coghlan also agreed to pay a civil penalty of $10,792. In determining to accept Sean Coghlan's offer of settlement, the Commission considered the cooperation he afforded the Commission staff during its investigation.
SEC Complaint in this matter