U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 19588 / March 3, 2006

SEC v. Kevin Hobbs et al., (United States District Court for the District of New Hampshire, Civil Action No. 04-425-JM , filed November 16, 2004)

Court Enters Final Judgments by Consent in Insider Trading Case Against Two New Hampshire Residents

The Commission announced today that on February 16, 2006 the Honorable James R. Muirhead, of the United States District Court for the District of New Hampshire, entered final judgments against Kevin J. Hobbs of Mont Vernon, New Hampshire, and Bruce C. Mayhew of Manchester, New Hampshire, defendants in an insider trading case filed by the Commission in November 2004. The defendants consented to the judgments, without admitting or denying the allegations in the Commission's complaint.

The Commission's complaint, filed November 16, 2004, alleged that Hobbs and Mayhew engaged in illegal insider trading in the securities of Granite State Bankshares, Inc., formerly a publicly-traded New Hampshire bank. The Commission's complaint alleged that Hobbs, then an administrative vice president and director of internal audit for Granite State, obtained material, nonpublic information in late October and early November 2002 concerning the upcoming acquisition of Granite State by Chittenden Corp., a bank holding company based in Vermont. According to the complaint, Hobbs tipped Mayhew, his friend and partner in an investment club, and both Hobbs and Mayhew thereafter bought shares of Granite State prior to the public announcement of the acquisition. On November 7, 2002, Granite State and Chittenden announced the acquisition, causing Granite State's stock price to rise by over $7 per share. According to the complaint, the defendants' illegal insider trading netted profits totaling approximately $146,000.

To settle the Commission's charges, Hobbs and Mayhew have consented, without admitting or denying the allegations in the Commission's complaint, to the entry of a final judgment permanently enjoining each of them from committing future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The judgment against Hobbs orders disgorgement of $95,109, plus prejudgment interest in the amount of $15,475, for a total of $110,584, but waives payment of all but $65,000 of the disgorgement and prejudgment interest and does not impose a civil monetary penalty based on Hobbs' sworn representations in his statement of financial condition and his sworn testimony. The judgment against Mayhew orders disgorgement of $51,241, which will be paid pursuant to a three year payment plan, but waives prejudgment interest and does not impose a civil monetary penalty based on Mayhew's sworn representations in his statement of financial condition.

For further information see Litigation Release No. 18977 (November 17, 2004).

http://www.sec.gov/litigation/litreleases/lr19588.htm