Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Friday, February 22, 2008

SEC Settles Charges Against Former Stock Options Administrator

The SEC announced today that it settled its enforcement action with Vencent A. Donlan ("Donlan"), former stock options administrator at Wireless Facilities, Inc. ("WFI") (now Kratos Defense & Security Solutions, Inc.) for his violations of the federal securities laws in fraudulently obtaining stock and stock options from WFI. The SEC also settled with Donlan's wife, Robin D. Colls Donlan ("Colls"), who was named as a relief defendant to recover proceeds from the fraud.  The SEC alleged that between November 2002 and November 2003, Donlan abused his position as WFI's stock options administrator to issue and transfer over 700,000 shares of WFI stock and stock options to a brokerage account, which he sold for a net gain of approximately $6.3 million.

The federal district court for the Southern District of California entered a permanent injunction against Donlan and ordered him to pay disgorgement in the amount of $6,252,715.42, plus prejudgment interest thereon in the amount of $153,611.23, but payment was waived for the amount exceeding $5.5 million and civil penalties were not imposed against Donlan based on his sworn representation of his financial condition. Colls was held jointly and severally liable for the disgorgement and prejudgment interest, and she also made a sworn representation of financial condition. On October 26, 2007, Donlan began serving a forty-six month prison sentence for federal wire fraud and tax evasion violations related to his fraudulent scheme.

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