SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE No. 17970 / February 5, 2003
PHARMACEUTICAL COMPANY ACCOUNTING MANAGER CRIMINALLY INDICTED ON
INSIDER TRADING CHARGES
The Commission announced today that, on January 30, 2003, Timothy J.
Potter of Bedford, New Hampshire, was criminally indicted by the
United States Attorney for the District of New Hampshire on insider
trading charges. Potter is scheduled to be arraigned on February 13,
2003.
According to the indictment, Potter was employed as a manager in the
accounting department of Sepracor, Inc., a publicly-traded
pharmaceutical company based in Marlborough, Massachusetts. The
indictment alleges that, on October 18, 2000, Potter learned that
representatives of Eli Lilly and Company had informed Sepracor they
intended to recommend that Lilly terminate an exclusive license
agreement with Sepracor concerning an antidepressant drug under
development. The indictment further alleges that, on or about October
18, Potter disclosed the material, nonpublic information to a
co-conspirator, who used the information to purchase Sepracor put
options and made an overnight profit of $55,313 when he sold the
options the next day following Sepracor's public announcement of the
termination. On April 18, 2001, the co-conspirator used the profits of
that transaction to make a $55,000 payment to Potter. According to the
indictment, Potter and the co-conspirator made false and misleading
statements, under oath, to attorneys on the Commission staff who were
investigating the co-conspirator's purchase of the Sepracor put
options. The indictment charges Potter with one count each of
securities fraud and conspiracy to commit securities fraud, based on
the illegal insider trading. If convicted on the criminal charges,
Potter faces up to five years imprisonment and a fine of up to
$250,000 on each of the counts.
Earlier on January 30, 2003, the Commission filed a civil fraud case
charging Timothy Potter and his father, George R. Potter, of Bedford,
New Hampshire, with insider trading based on George Potter's October
18, 2000 purchase of Sepracor options after he was tipped by Timothy
Potter concerning Eli Lilly's potential license termination. According
to the Commission's complaint, by their conduct, the defendants
violated Section 10(b) of the Securities Exchange Act of 1934 and Rule
10b-5 thereunder. The Commission's complaint seeks injunctive relief,
disgorgement of the profits from their insider trading, plus
prejudgment interest, and civil monetary penalties against each of the
defendants of up to three times the amount of their profits from their
insider trading. For further information, see Litigation Release No.
SNIPPETS:
SECURITIES AND EXCHANGE COMMISSION
PHARMACEUTICAL COMPANY ACCOUNTING MANAGER CRIMINALLY INDICTED ON INSIDER TRADING CHARGES
The Commission announced today that, on January 30, 2003, Timothy J. Potter of Bedford, New
Potter is scheduled to be arraigned on February 13,
According to the indictment, Potter was employed as a manager in the accounting department of
The indictment alleges that, on October 18, 2000, Potter learned that representatives of Eli
options the next day following Sepracor's public announcement of the termination.
On April 18, 2001, the co-conspirator used the profits of that transaction to make a $55,000
According to the indictment, Potter and the co-conspirator made false and misleading
The indictment charges Potter with one count each of securities fraud and conspiracy to
Earlier on January 30, 2003, the Commission filed a civil fraud case charging Timothy Potter
According to the Commission's complaint, by their conduct, the defendants violated Section
The Commission's complaint seeks injunctive relief, disgorgement of the profits from their
For further information, see Litigation Release No. 17958.
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