UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
SECURITIES AND EXCHANGE COMMISSION,
:
Plaintiff, :
:
v. Civil Action No.
:
:
TIMOTHY P. HORNE, :
Defendant.
COMPLAINT
Plaintiff Securities and Exchange Commission ("Commission") alleges the following
against defendant Timothy P. Horne ("Horne"):
SUMMARY
1. This enforcement action involves Horne's misappropriation of material non-public
information about Central Sprinkler Corp. ("Central Sprinkler") and his undisclosed, self-
serving use of the information to purchase Central Sprinkler stock for his personal
benefit. 2. Horne is the chairman and CEO of Watts Industries ("Watts"), a company
based in Massachusetts. On May 11, 1999, a representative of an investment bank,
Schroders & Co. ("Schroders"), called Horne to inquire confidentially whether Watts
would be interested in acquiring Central Sprinkler. Horne responded that Watts might be
interested and agreed to receive a confidentiality agreement concerning the proposed
transaction. The confidentiality agreement arrived the next day, but Horne did not inform
Watts' board of directors about the potential acquisition. Instead, on May 13, 1999 -
without informing anyone at Watts and inblatant disregard for Watts' policy against
insider trading by its officers, he began buying Central Sprinkler stock in his personal
brokerage account, acquiring a total of 30,000 shares in three days for approximately $17
per share.
3. Horne's insider trading in Central Sprinkler stock was very profitable. On June 16,
1999, Central Sprinkler announced that it was going to be acquired by Tyco International
Ltd. ("Tyco") for $30.00 per share. The price of Central Sprinkler stock immediately
jumped 26%. Three weeks later, Horne sold all his Central Sprinkler stock for
approximately $28 per share, realizing a profit of approximately $318,000.
SNIPPETS:
UNITED STATES DISTRICT COURT
Plaintiff Securities and Exchange Commission alleges the following against defendant Timothy
This enforcement action involves Horne's misappropriation of material non-public information
Horne is the chairman and CEO of Watts Industries,
On May 11, 1999, a representative of an investment bank, Schroders & Co., called Horne to
The confidentiality agreement arrived the next day, but Horne did not inform Watts' board of
Instead, on May 13, 1999 without informing anyone at Watts and inblatant disregard for Watts'
The price of Central Sprinkler stock immediately jumped 26%.
Three weeks later, Horne sold all his Central Sprinkler stock for approximately $28 per
Through the insider trading alleged in this Complaint, Horne engaged in fraud in the purchase
The Commission seeks a permanent injunction and disgorgement pursuant to Section 21of the
The Commission seeks the imposition of a civil monetary penalty pursuant to Section 21A of
The Commission seeks an officer and director bar pursuant to Section 21of the Exchange Act.
Prior to its acquisition by Tyco on August 26, 1999, its common stock was registered with the
On May 11, 1999, Peter Hicks, a Senior Adviser at Schroders, telephoned Watts as part of
At the time of his conversation with Hicks, Horne was already familiar with Schroders,
He did not inform anyone at Watts that he had bought Central Sprinkler stock after receiving
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