SECURITIES AND EXCHANGE COMMISSION Washington, D.C. LITIGATION Release No. 15549 / November 4, 1997 SECURITIES AND EXCHANGE COMMISSION v. ANDREW S. LANE, JACK LANE, JACK O. SCHER, DEBORAH S. GAMES, CRAIG L. SAMPSON, BRUCE SAMPSON, and TRACY ANN STODDART, 97 Civ. 8144. The Securities and Exchange Commission ("Commission") today filed an insider trading complaint against Andrew S. Lane ("Lane"), 34, and Jack Lane, 69, of Stamford, Connecticut; Jack Scher, 70, of Faber, Virginia; Deborah S. Games, 29, of Greenwich, Connecticut; Craig L. Sampson, 43, of White Plains, New York; Bruce Sampson, 70, of Trumbull, Connecticut; and Tracy Ann Stoddart, 36, of Santa Fe, New Mexico. The Commission's Complaint charges the defendants with insider trading and/or tipping others to trade in the securities of The MEDSTAT Group, Inc. ("Medstat") in advance of a tender offer for Medstat by The Thomson Corporation ("Thomson"). Simultaneous with the filing of the Complaint, Andrew and Jack Lane, Scher, Games and Craig and Bruce Sampson consented to the entry of permanent injunctions against them and agreed to pay a total of $888,665.67 in disgorgement of illegal profits, prejudgment interest and penalties, without admitting or denying the allegations in the Commission's complaint. According to the Commission's Complaint, by at least August 1, 1994, Lane, who was then the Director of Finance at Thomson Business Information, a Thomson operating group, learned of Thomson's plans to acquire Medstat. The Complaint alleges that from August 1 through November 14 Lane bought a total of 3,000 shares of Medstat in a series of small purchases. The Complaint also alleges that Lane tipped his father Jack Lane, his family friend Scher, his then-roommate Games, his former girlfriend Stoddart, and his friend Craig Sampson concerning the planned tender offer. The Complaint further alleges that Craig Sampson tipped his father Bruce Sampson. As to Scher, the Complaint alleges that Lane communicated with Scher approximately 12 times as the Medstat-Thomson deal unfolded, tipped him concerning the planned tender offer and that at propitious times in the course of the negotiations Scher bought Medstat stock for himself and recommended it to others. Specifically, the Complaint alleges that Scher bought a total of 6,500 shares of Medstat for himself in three transactions, first in August, and again on two occasions in October when the deal negotiations intensified after a brief hiatus. The Complaint further alleges that while in possession of material nonpublic information he obtained from Lane, Scher recommended Medstat as an investment to a total of 21 family members, friends and colleagues with sufficient fervor to induce each of them to purchase Medstat, and that four of Scher's friends and colleagues passed his Medstat recommendation to others who also bought Medstat. In all, the Complaint alleges that 37 persons trading ======END OF PAGE 1====== directly or indirectly on Scher's recommendation bought a total of approximately 34,000 shares of Medstat. As to Lane's other tippees the Complaint alleges that: Jack Lane bought 500 shares of Medstat; that Games bought a total of 3,250 shares of Medstat, 1,650 of which she sold at a profit before the tender offer announcement; that Stoddart bought a total of 1906 shares of Medstat for herself 700 of which she sold before the tender offer announcement, and that she recommended Medstat to a family member who bought 235 shares; and that Craig Sampson passed the material nonpublic information he received from Lane to his father Bruce Sampson, who bought 1,500 shares of Medstat. The Complaint alleges that as a result of their insider trading and tipping, each of the defendants violated Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5 and 14e-3 thereunder. As relief it seeks a permanent injunction against future violations of these provisions, and an order requiring defendants to disgorge their illegal trading profits plus prejudgment interest and to pay civil penalties. Simultaneously with the filing of the Complaint, five of the six defendants consented to the entry of final judgments against them without admitting or denying the allegations in the Complaint. Each of the settling defendants consented to the entry of the requested injunction. Scher agreed to disgorge all of his own trading profits and those of the 37 persons whose trades resulted directly or indirectly from his recommendations, together with prejudgment interest for a total of $511,334.99. Scher also agreed to pay a penalty of $282,924, equal to the his own profits and those of the 21 persons to whom he directly recommended Medstat. Lane agreed to disgorge $71,712.56, representing his own profits and other trading profits, not otherwise disgorged, that he is responsible for, with all but $50,000 waived in light of his demonstrated inability to pay based on his sworn representations in his statement of financial condition. Jack Lane agreed to disgorge his profits together with prejudgment interest in the total amount of $7,664.86, and to pay a civil penalty equal to his profits of $6,000.82. Bruce Sampson agreed to disgorge his profits together with prejudgment interest in the amount of $17,242.13 and to pay a civil penalty equal to his profits of $13,498.87. Games agreed to disgorge her profits of $17,814.42, which amount is waived in light of her demonstrated inability to pay based on her sworn representations in her statement of financial condition. This is the Commission's second enforcement action alleging insider trading in advance of the November 16, 1994 announcement of a tender offer for Medstat. See SEC v. William J. Rauwerdink, (S.D.N.Y.), Lit. Rel. 14731 (November 27, 1995). The Commission's investigation in this matter is continuing. ======END OF PAGE 2======