The SEC prevailed at trial in an insider trading case against Gregory Gunn in SEC v. Tedder, Case No. 3:08-CV-1013 (N.D. Tex. Filed Jun. 17, 2008). The complaint named two insiders as defendants, employees Robert Tedder and Brian Carr, and two individuals alleged to have been tipped by Mr. Tedder, his father Joseph and business associate Philip Gunn, and one allegedly tipped by Philip, his brother Gregory Gunn. Just before trial all of the defendants agreed to settle except Gregory Gunn.

The case centers on the acquisition by The Boeing Company of Aviall, Inc., announced on May 1, 2006. During the time period Messrs. Tedder and Carr were employed at Aviall. Through their employment the two men observed a series of events at the company, the totality of which constituted inside information according to the SEC. Those included:

• An extended trading blackout at the company;

• An executive tour at Aviall by Boeing executives;

• Repeated closed door meetings involving in-house counsel;

• An e-mail inadvertently sent by Availl’s CEO to 122 employees across the company concerning a conference call involving the directors, outside counsel and the financial advisor regarding due diligence; and

• Rumors.

According to the complaint, each of the defendants traded in advance of the deal announcement. As a result Robert Tedder made profits of over $303,000 while Joseph Tedder, Phillip Gunn and Brian Carr, respectively, had profits of over $163,000, $76,000 and $141,000.

Defendant Gregory Gunn was tipped by his brother Phillip in a telephone call in April 2006, according to the SEC. At the time of the telephone call, Gregory was employed at Primerica Financial Services Investments as a registered representative and was the branch manager of the Oklahoma City office. During the telephone conversation, in which another employee of the brokerage participated, Gregory ordered the liquidation of all of his holdings after being tipped by his brother. Shortly thereafter Gregory Gunn purchased approximately $110,000 of Aviall securities, consisting of about $75,000 in common stock and almost $35,000 of Aviall call options. Those positions were liquidated following the announcement of the deal, yielding over $108,000 in profits.
Following a three-day trial, the jury deliberated less than one hour before returning a verdict in favor of the SEC and against Mr. Gunn. See also Litig. Rel. 21286 (Nov. 6, 2009).