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U.S. Securities and Exchange Commission

Litigation Release No. 18640 / March 26, 2004

SECURITIES AND EXCHANGE COMMISSION v. WILLIAM H. BORDERS II, United States District Court for the Western District of Kentucky (Bowling Green), Case No. 1:03 CV-134-R

The Securities and Exchange Commission ("Commission") today announced that, on March 5, 2004, following a five-day trial, a jury in Bowling Green, Kentucky returned a verdict in favor of the defendant, William H. Borders II. The Commission had charged that Mr. Borders, 41, had engaged in insider trading in violation of the federal securities laws, specifically Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. During the relevant time period, Borders was a stockbroker employed by brokerage firm Morgan Keegan & Co., Inc. in its Bowling Green, Kentucky branch office.

This action was filed on March 14, 2000 against Mr. Borders and eighteen other defendants in the U.S. District Court for the Southern District of New York as SEC v. John Freeman, et al., No. 00 Civ. 1963 (VM). Criminal charges were filed on the same day by the United States Attorney for the Southern District of New York against these defendants for the same conduct. Each of the other eighteen defendants was convicted of insider trading by guilty plea or following a criminal trial. Criminal charges against Borders were dismissed, and the SEC's claims against Borders were severed and transferred to the federal district court in Bowling Green, Kentucky for trial. The SEC's claims against the other eighteen defendants have all been resolved.

The Commission alleged that from 1997 through January 2000, Mr. Borders and others engaged in a widespread insider trading scheme that produced over $8 million in illegal profits from trading in the securities of 23 public companies. The Commission alleged that John Freeman, a temporary word-processing employee at Goldman Sachs & Co., Inc. and later Credit Suisse First Boston, tipped a number of defendants about merger and acquisition transactions involving clients of those investment banking firms. The Complaint further alleged that Borders participated in and profited from the scheme through a chain of tipping and trading that originated with Freeman and ultimately led to Morgan Keegan's Bowling Green branch office.

Securities and Exchange Commission v. William H. Borders II, 1:03 CV-134-R (Western District of Kentucky). See also, Securities and Exchange Commission v. John Freeman, James Cooper, Benton Erskine, Anthony Seminara, Norman Lehrman, Linda Karlsen, Timothy Siemers, Norman Grossman, Lawrence Schwartz, Michael Akva, Robert Fricker, Richard Zelman, Bradley Burke, Benjamin Cooper, Chad L. Conner, Deon Benson, Gordon K. Allen, Jr., Jon Geibel, and William H. Borders II, 00 Civ. 1963 (Southern District of New York), Litigation Release No. 18193 (June 18, 2003). See also: L.R. 16469 (March 14, 2000); L.R. 17267 (December 12, 2001); L.R. 17501 (May 2, 2002); L.R. 17912 (January 2, 2003); L.R. 18149 (May 20, 2003); L.R. 18175 (June 5, 2003); L.R. 18502 (December 12, 2003).



Modified: 03/26/2004