7
The principals were informed by counsel that if the SEC were
successful against Peters it would rescind his license, and it
would probably turn its attention towards the company and attempt
to revoke its license.
The principals of PGWV were involved in all aspects of the
representation by counsel and in forming a strategy as to how to
proceed; they did not want Peters to make any decisions without
them, especially regarding any settlements with the SEC. Their
efforts were aimed at avoiding litigation. In December 1988, the
SEC filed a complaint against Peters and five other individuals,
alleging acts in violation of the Securities Exchange Act of
1934, and rules promulgated thereunder. PGWV was not named as a
party to the suit. Specifically, the SEC alleged in its
complaint that Peters improperly obtained material nonpublic
information from Ivan's files, which he communicated to Mick and
Lounsbury who were able to profit by buying the stock of ERG
themselves or by supplying the information to others who did so.
Pursuant to such scheme, Peters allegedly received a portion of
those profits in the form of repayment of loans previously made
by him to Mick and Lounsbury. At the time of repayment, Mick had
financial problems.
The case was heard before a jury, which held for Peters.
The SEC appealed to the Tenth Circuit Court of Appeals, which
reversed and remanded to the trial court. SEC v. Peters, 978
F.2d 1162 (10th Cir. 1992). Prior to rehearing, the parties
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