U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 19628 / March 29, 2006

SEC v. Terry F. Favilla and Gary R. Dowell, Civil Action No. 06-333 (JKG) filed March 29, 2006)

SEC Files Settled Insider Trading Charges Relating to the Acquisition of F&M Bancorp

The U.S. Securities and Exchange Commission today filed a civil action in the U.S. District Court for the Eastern District of Pennsylvania alleging that Terry F. Favilla violated Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder by buying F&M Bancorp common stock on the basis of nonpublic information that his employer, Susquehanna Bancshares, Inc., was exploring a possible acquisition of F&M and by tipping his friend, Gary R. Dowell, about that possible acquisition. The complaint further alleges that Dowell violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder by buying F&M based on this information.

The Commission's complaint alleges that during a meeting at Susquehanna on February 19, 2003, Favilla, a vice-president for liability management, learned of Susquehanna's interest in acquiring F&M and was asked to participate in Susquehanna's due diligence efforts. Shortly thereafter, in connection with this assignment, Favilla reviewed confidential F&M documents and signed a confidentiality agreement. The complaint alleges that the information that he learned concerning F&M was material and nonpublic and that Favilla misappropriated this information by purchasing shares of F&M common stock and by tipping Dowell. The complaint further alleges that Favilla and Dowell sold their F&M shares for a profit after the public announcement that Susquehanna's competitor, Mercantile Bankshares Corporation, would acquire F&M. The complaint also alleges that, after Dowell had sold most of his shares, he sent Favilla a money order for $1,000.

Without admitting or denying the allegations in the Commission's complaint, each of the defendants has consented to entry of a proposed final judgment permanently enjoining him from further violations of Section 10(b) of the Exchange Act and Rule 10b 5 thereunder. Additionally, the proposed final judgment against Favilla orders him to disgorge his trading profits of $6,105 and the payment he received from Dowell of $1,000, together with prejudgment interest thereon of $1,055.51, and to pay a civil penalty of $10,000. The proposed final judgment against Dowell orders him to disgorge his trading profits of $104,133, together with prejudgment interest thereon of $14,853.57, and to pay a civil penalty of $104,133.

SEC Complaint in this matter