U. S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 19112 / March 2, 2005

Federal Judge Permanently Enjoins Seven Employees of Flowers Foods, Inc.

Securities and Exchange Commission v. Patsy J. Aldredge, Robert L. Benton, Jr., Howard M. Courtney, Jerry F. Hancock, II, Herman D. Small, Dan W. Stone, and Charles M. Worthey, United States District Court for the Middle District of Georgia, Thomasville Division, Civil Action File No. 6:05-CV-8

The Securities and Exchange Commission announced that the Honorable W. Louis Sands, United States District Judge for the Middle District of Georgia, Thomasville Division, entered Final Judgments as to Defendants Patsy J. Aldredge (Aldredge), Robert L. Benton, Jr. (Benton), Howard M. Courtney (Courtney), Jerry F. Hancock, II (Hancock), Herman D. Small (Small), Dan W. Stone (Stone) and Charles M. Worthey (Worthey) on February 22, 2005. The defendants were enjoined from future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

The Court also ordered (i) Aldredge to pay disgorgement of $11,940, prejudgment interest of $892 and a civil penalty of $11,940; (ii) Benton to pay disgorgement of $6,200, prejudgment interest of $463 and a civil penalty of $6,200; (iii) Courtney to pay disgorgement of $9,438, prejudgment interest of $705 and a civil penalty of $9,438; (iv) Hancock to pay disgorgement of $5,610, prejudgment interest of $419 and a civil penalty of $5,610; (v) Small to pay disgorgement of $18,824, prejudgment interest of $1,407 and a civil penalty of $18,824; (vi) Stone to pay disgorgement of $2,700, prejudgment interest of $201 and a civil penalty of $2,700; and (vii) Worthey to pay disgorgement of $2,774, prejudgment interest of $207 and a civil penalty of 2,774. The defendants consented to the entries of the judgments against them without admitting or denying any of the allegations of the Commission's complaint.

The Commission's complaint, filed February 10, 2005, alleged that while employed by Flowers Foods, Inc., a publicly-traded baking company located in Thomasville, Georgia, the seven defendants obtained material nonpublic information that they used to earn illegal trading profits. The complaint further alleged that on January 30, 2003, Flowers Foods announced that its expected fiscal fourth quarter 2002 earnings per share would be higher than its previous estimate for the quarter. In a separate but simultaneous press release, Flowers Foods disclosed the sale of its Mrs. Smith's Bakeries's frozen dessert business to Schwan Food Company. After the announcements, Flowers Foods's traded up $6.12 closing at $23.20. The defendants each learned about either the earnings release or the sale of Mrs. Smith's Bakeries frozen dessert business, or both, prior to these announcements and purchased Flowers Foods securities while in possession of this nonpublic, material information.

See also: L.R. 19073 (February 10, 2005).

http://www.sec.gov/litigation/litreleases/lr19112.htm