U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19247 / June 3, 2005
SECURITIES AND EXCHANGE COMMISSION v. LINDA A. WATSON, ET AL., Civil Action No. CV-03-BE-0270-S (N.D. Ala.) (filed February 6, 2003)
COURT ENTERS FINAL JUDGMENT AGAINST LINDA WATSON AND SCOTT WATSON FOR INSIDER TRADING
DEFENDANTS AGREE TO PAY $120,000 IN DISGORGEMENT
On May 31, 2005, the U.S. District Court for the Southern District of Alabama entered a final judgment against Linda Watson and her former husband, Scott Watson, in connection with insider trading in the securities of Clearnet Communications, Inc., in advance of the public announcement of a tender offer by Telus Corporation on August 21, 2000.
The Commission's complaint, filed in February 2003, alleged that Linda Watson and Scott Watson learned of the pending acquisition of Clearnet on August 10, 2000, from a relative who was a Telus executive. Subsequently, on behalf of herself and Scott Watson, Linda Watson purchased 10,000 Clearnet shares and 20 Clearnet September 30 call options. When Telus announced its tender offer on August 21, 2000, the Watsons sold all of their stock and options, realizing $159,193.75 in illegal profits.
Without admitting or denying the allegations of the complaint, Linda and Scott Watson consented to the entry of a final judgment against them permanently enjoining them from future violations of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder. The final judgment orders Linda Watson and Scott Watson to pay $209,667.54 in disgorgement and prejudgment interest but waives payment of all but $120,000 and does not impose civil penalties based on the Watsons' sworn representations in their Statements of Financial Condition and other documents and information submitted to the Commission.
In a related criminal matter, on October 22, 2004, Linda Watson pled guilty to one count of perjury for providing false testimony to the staff of the Commission. On January 21, 2005, she was sentenced in the U.S. District Court for the District of Columbia to six months of home detention and five years of probation with the special condition, among others, that she comply with all SEC-related obligations, including repayment of funds.
The Commission acknowledges the assistance of the U.S. Attorney's Office for the District of Columbia and the United States Postal Inspection Service.
For additional information, see Litigation Release No. 17972.