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SEC LITIGATION RELEASE
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EXTRACTED KEY WORDS
COURT EXCHANGE COMMISSION MISAPPROPRIATION THEORY UNITED STATES DISTRICT SECURITIES UNITED STATES INSIDER TRADING MOTION SUMMARY JUDGMENT TCI LITIGATION HAROLD FITZGERALD LENFEST MARGUERITE EASTERN DISTRICT PENNSYLVANIA COMPLAINT ALLEGES ACQUISITION APPEALS CIR PETITION CERTIORARI PENDING DENYING DISTRICT COURT JUDGE FEDERAL COURTS CLARK SUPPORT HOLDING MATTER |
Securities and Exchange Commission
Washington, D.C.
LITIGATION RELEASE NO. 15200 / December 30, 1996
SECURITIES AND EXCHANGE COMMISSION v. HAROLD FITZGERALD LENFEST
and MARGUERITE LENFEST, United States District Court for the
Eastern District of Pennsylvania, Civil Action No. 95-CV-7597
(JCJ)
The Securities and Exchange Commission today announced that
on December 23, 1996, the United States District Court for the
Eastern District of Pennsylvania denied defendant Marguerite
Lenfest's Motion for Summary Judgment in the above-captioned
insider trading case and upheld the misappropriation theory of
insider trading. In its complaint against Mrs. Lenfest, the
Commission alleges that Mrs. Lenfest purchased stock in Tele-
Communications, Inc.("TCI"), in advance of an announcement that
Bell Atlantic Corp. intended to acquire TCI, while she was in
possession of information about the acquisition plans. The
Complaint alleges that Mrs. Lenfest obtained the information from
her husband and co-defendant, Harold FitzGerald Lenfest, who was
a member of the Board of Directors of Liberty Media Corporation,
a company that was going to be merged into TCI and then acquired
by Bell Atlantic Corp. as part of the TCI acquisition. The
complaint's allegations against Mrs. Lenfest are based on the
misappropriation theory of insider trading. In her Motion for
Summary Judgment, Mrs. Lenfest challenged the misappropriation
theory, relying on decisions of the Fourth and Eighth Circuit
Courts of Appeals. (One of those decisions, United States v.
O'Hagan, 92 F.3d 612 (8th Cir. 1996), is currently being
challenged by the Department of Justice before the Supreme Court,
where a petition for certiorari is pending.)
In denying the motion for summary judgment, United States
District Court Judge J. Curtis Joyner noted that the
misappropriation theory has been adopted by a number of federal
Courts of Appeals and has been applied in various circumstances.
The Court adopted the theory, as articulated in Securities and
Exchange Commission v. Clark, 915 F.2d 439 (9th Cir. 1990), and
found that the misappropriation theory could support holding Mrs.
Lenfest liable for insider trading.
The Commission expects this case to proceed to trial in
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