Monday, August 24, 2009
The SEC today settled charges against Nancy Jewell, Kristin Mays, and Matthew B. Murphy, III, alleging that the defendants violated Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder by buying First Indiana Corporation (First Indiana) common stock on the basis of material nonpublic information ahead of a public announcement that First Indiana had entered into a merger agreement.
The Commission's complaint alleges that on July 6, 2007, a member of First Indiana's Board of Directors received a phone call advising him of a special Board meeting scheduled for Sunday, July 8, 2007. The Director had a longstanding relationship and a history of sharing confidences with each of the defendants. The complaint further alleges that the Director complained to each of the defendants that he was upset that a special First Indiana Board meeting was taking place on Sunday and ruining his scheduled plans for that day. The complaint alleges that the defendants then each misappropriated that information from the Director by purchasing First Indiana common stock that same day on the basis of the information. Before the start of trading on July 9, 2007, First Indiana announced that it had agreed to be acquired by Marshall & Ilsley Corporation at a price per share that represented a 42% premium over the Friday, July 6, closing price for First Indiana common stock.
Pursuant to the proposed settlements, Jewell would pay disgorgement of $8,888, with prejudgment interest of $943.56, and a civil penalty of $8,888; Mays would pay $7,960, with prejudgment interest of $845.03, and civil penalty of $7,960; and Murphy would pay $9,078, with prejudgment interest of $963.72, and a civil penalty of $9,078. The proposed settlements are subject to the approval of the District Court.