SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.

Litigation Release No. 17360 / February 12, 2002

Securities and Exchange Commission v. Donna Yun and Jerry Burch, Civil Action No. 6:99-CV-117-ORL-22A (M.D,. Fla. February 8, 2002)

The Securities and Exchange Commission announced today that the United States District Court for the Middle District of Florida issued a Memorandum and Order holding real estate broker Donna Yun in civil contempt for failing to pay the $269,000 disgorgement judgment. In December 2000, a jury found her liable for tipping her co-worker Jerry Burch with inside information concerning Scholastic Corporation's forthcoming disappointing earnings announcement.

The Court found Yun's demeanor at the hearing "ironically contemptuous in light of the threat of imprisonment facing her," and that Yun was "largely without credibility, based on her argumentative demeanor with counsel and the Court, her pattern of answering questions with other questions, and her conveniently selective memory." In a 12 page Decision, the Court

• held Yun in civil contempt and ordered that she be incarcerated unless she pays the full amount of disgorgement or secures a bond in that amount within 10 days;

• denied Yun's motion for stay of the judgment pending appeal unless she posts a $500,000 supersedeas bond (covering disgorgement plus her $100,000 penalty and interest) within 10 days; and

• ruled that the Court is not bound by Florida state law which would exempt from execution three $100,000 annuity contracts that Yun funded on the first day of trial.

The Commission's 1999 Complaint alleged that on February 18, 1997, Yun learned from her husband, an officer of Scholastic, the material non-public information that it expected to announce an unanticipated loss of 20-30 cents per share for the quarter ending February 28, 1997, and that the price of Scholastic common stock would likely decline as a result. Yun breached the duty of confidence she undertook to her husband, and disclosed the inside information at a cocktail party that night to Burch. On February 19 and 20, Burch purchased 130 Scholastic put option contracts, including 10 February series contracts which expired on February 21. After release of the earnings announcement on February 20, Scholastic common dropped approximately 40 per cent, from $61.50 to $36.75. On February 21, Burch exercised his options for a net profit of approximately $269,000.

Following the jury verdict, the Court held both Defendants jointly and severally liable for disgorgement of the illegal profits plus prejudgment interest, and imposed a $100,000 civil penalty on each. Both defendants have appealed.