The Securities and Exchange Commission on Tuesday filed a federal lawsuit, alleging that a former director of Community Bancorp and his son used inside information to profit from trading in Valley Bancorp shares.
The lawsuit accuses the defendants, Charles and Chad Norton, of profiting from buying and selling shares of Valley Bancorp, which Community announced it intended to buy in June 2006.
The SEC claims that former Community director Charles Norton heard about the acquisition at a May 2006 Community Bancorp board meeting and later informed his son.
On the first day of trading after the announcement, Valley Bancorp shares increased by 13 percent. Chad Norton later sold Valley Bancorp shares for a profit of $35,000.
To settle the SEC charges, Charles and Chad Norton agreed to pay $38,000, representing their illegal trading profits and prejudgment interest. In addition, the defendants each will pay a civil penalty of $35,000 and will be enjoined against violations of the antifraud provisions of the Securities Exchange Act of 1934. Charles North will be barred from serving as an officer or director of a public company for five years.
Defense attorney Michael Proctor said his client Chad Norton cooperated with the SEC but didn’t admit any wrongdoing in settling the case.
Federal officials often file lawsuits after a case has been settled to officially enter the matter in court records.