Securities Law Prof Blog

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

Thursday, February 26, 2009

Former Zomax CEO Settles Insider Trading Charges

On February 17, 2009, the U.S. District Court for the District of Minnesota entered a Final Judgment against James T. Anderson, the co-founder and former CEO of Zomax, Inc. The Commission's complaint, which was filed on June 6, 2005, alleged that Anderson made false and misleading disclosures concerning Zomax's projected revenue and earnings for the third quarter of 2000 and engaged in insider trading. The Commission's complaint alleged that Anderson sold his entire holdings of Zomax stock in advance of the company's announcement of substantially lower-than-expected revenues and earnings for the quarter, thereby avoiding millions of dollars in losses, as the price of the stock dropped sharply following the announcement.

Without admitting or denying the allegations in the complaint, Anderson consented to the entry of a Final Judgment in which he is permanently enjoined from future violations of Section 17(a) of the Securities Act of 1933 and Sections 10(b), 13(a), and 16(a) of the Securities Exchange Act of 1934 and Rules 10b-5, 12b-20, 13a-13, 16a-3 and 16a-8(b)(3)(i) thereunder. The Final Judgment also prohibits Anderson from serving as an officer or director of any publicly traded company. Pursuant to the Final Judgment, Anderson is liable for disgorgement of $6,701,400 plus prejudgment interest of $1,340,280, for a total of $8,041,680. As part of the Final Judgment, any amounts paid by Anderson toward satisfaction of the restitution, forfeiture, and fines totaling $3,427,937.50 that Anderson was ordered to pay in a related criminal proceeding styled as United States v. James T. Anderson et al., Case No. 05-cr-249 (D. Minn.), shall be credited dollar-for-dollar toward the satisfaction of the total monetary judgment in the Commission's case.

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