SECURITIES AND EXCHANGE COMMISSION Washington D.C. LITIGATION RELEASE NO. 15413 / July 16, 1997 SECURITIES AND EXCHANGE COMMISSION V. ROBERT HUNTER, EDWARD R. DUDLIK, JR., THOMAS F. GOLDMAN, W. KENNETH GREENWOOD, JOSEPH MCKEON, KATHY NAUMANN, BENJAMIN PAUL, THOMAS B. PILEGGI, JOHN ROSE, JOHN ROSE, JR., RAYMOND F. WHITE, AND H. CONSTANCE NEFF AS RELIEF DEFENDANT, CIVIL ACTION NO. 97 CV 4621 (Waldman, J) (E.D. Pa.) The Securities and Exchange Commission today announced the filing of a complaint in the United States District Court for the Eastern District of Pennsylvania against twelve individuals for insider trading in the securities of Independence Bancorp, Inc. ("INBC") prior to a public announcement on November 19, 1993, that INBC and CoreStates Financial Corp. had entered into a merger agreement. The defendants allegedly obtained at least $750,000 from their unlawful trading. The Complaint names the following insiders as defendants: * Robert Hunter, 66, resides in Huntingdon Valley, Pa. He is presently incarcerated at the Pennsylvania State Correctional Institution at Dallas as a result of an unrelated criminal conviction. Hunter was a director of INBC and one of its subsidiary banks, Cheltenham Bank. Hunter is also the owner of Hunter Glass Company and the North Philadelphia Aviation Center, Inc., which leases the facilities at the North Philadelphia Airport. * Thomas Pileggi, 52, resides in Dresher, Pa., and was a director of Cheltenham Bank. Pileggi owns Thomas Pileggi Associates, a building and real estate development concern * W. Kenneth Greenwood, 65, resides in Meadowbrook, Pa., and was a director of Cheltenham Bank. He was the owner of a furniture business. The Complaint also names as defendants friends, business associates, or relatives of Hunter whom, the complaint alleges, Hunter tipped regarding the proposed acquisition of INBC by CoreStates: * Edward Dudlik, 48, resides in Rydal, Pa. He is the owner of Dudlik Construction Co. * Thomas Goldman, 55, resides in Newtown, Pa., and is an attorney. * Joseph McKeon, 67, resides in Lafayette Hill, Pa., and is retired from the glass business. * Kathy Naumann, 49, resides in Pottstown, Pa. She is Hunter's niece and is a paper broker. * Benjamin Paul, 67, resides in Philadelphia, Pa., and is an attorney. * John Rose, 51, resides in Southampton, Pa., and is the president of United Discount Auto Parts. * John Rose, Jr., 28, resides in Warminster, Pa. He is the son of Rose, and is employed at United Discount Auto Parts. * Raymond F. White, 72, resides in Philadelphia, Pa. He is Hunter's stockbroker and is employed at the Bryn Mawr Investment Group, Inc. Charged as a relief defendant is H. Constance Neff, Hunter's ex-wife, for trades Hunter allegedly executed and financed on her behalf. The Complaint alleges as follows: In late October or early November 1993, Hunter, Pileggi, and Greenwood learned that CoreStates made an acquisition proposal to INBC. While in possession of this material, nonpublic information, each of them purchased INBC stock. Specifically, Hunter purchased 40,000 shares for $1,151,750, Pileggi purchased 35,000 shares for $996,200, and Greenwood purchased 20,300 shares for $560,087. Hunter, Pileggi, and Greenwood earned profits of $248,250, $228,000, and $150,412, respectively. Hunter executed and financed trades not only for Neff, but also for his now-deceased sister, Carol Cook, and for the daughter of his then- girlfriend, after learning about the CoreStates proposal. In total these trades yielded profits of $18,877.50. The friends and business associates Hunter tipped unlawfully profited from their purchases of INBC shares as follows: Dudlik purchased 6,000 shares for a profit of $22,000; Goldman purchased 2,000 shares for a profit of $9,000; McKeon purchased 900 shares for a profit of $3,035; Paul purchased 1,000 shares for a profit of $6,250; Rose purchased 800 shares for a profit of $3,600; Rose Jr. purchased 260 shares for a profit of $1,170; and White purchased 1,600 shares for a profit of $7,900. White also solicited trades in INBC from his clients, who profited by a total of $29,512.50, and White profited by the amount of his commissions on his clients' purchases. Naumann, Hunter's niece, opened a securities account with White on November 17 and purchased 500 shares of INBC stock after Hunter tipped her about the acquisition proposal. Naumann made a profit of $2,250. Naumann also opened a securities account on that day with White for her business partner, who earned a $600 profit on purchases of INBC. Also on November 17, Naumann tipped her mother, Dorothy Landis, who is Hunter's sister, about the acquisition proposal. Landis then opened a securities account with White, purchased 400 shares of INBC, and profited by $1,800. That evening Naumann tipped her cousin, Lenore Myers, who is also Hunter's niece. The next morning, Myers opened a securities account with White, ======END OF PAGE 2====== purchased 200 shares of INBC stock, and profited by $400. In January 1994, a month after the public announcement of the merger agreement was made, the National Association of Securities Dealers sent a letter to the INBC board enclosing a list of individuals and asking if any of the named individuals had any relationship to INBC or its officers and directors. In response to the inquiry, Hunter failed to disclose that he knew Dudlik. He also minimized his relationship to his sister, Cook, by identifying her as his tenant, which she was not. Further, Hunter suggested to Rose that if contacted by the securities regulators, Rose should state that the reason he bought INBC stock was because of an article Rose had read about the stock and not because Hunter had spoken to Rose about INBC. Finally, Greenwood also traded while in possession of material, nonpublic information in January 1993. At that time, Greenwood sold 15,000 shares of INBC stock, or approximately 95 per cent of his holdings, after learning that INBC had suffered a quarterly loss in earnings and prior to the public release of that information. Greenwood avoided a loss of $33,750 in the value of his INBC investment by selling his stock before the negative earnings report caused a drop in the stock price. The Commission is seeking permanent injunctions from Hunter, Pileggi, Greenwood, Dudlik, Goldman, McKeon, Naumann, Paul, Rose, Rose Jr., and White from future violations of the antifraud provisions of the federal securities laws; disgorgement of profits and the profits of their tippees obtained from their illegal trades in INBC stock; and, in the case of Greenwood, disgorgement of the amount of money equal to his losses avoided from his January 1993 sales of INBC stock; prejudgment interest on those amounts; and civil penalties of up to three times their profits and losses avoided. The Commission is also requesting that Hunter be barred from serving as an officer or director of any public company. The Commission is also seeking that Neff disgorge her profits. Simultaneous with the filing of the complaint, Dudlik, McKeon, Paul, Rose, and Rose Jr. each consented, without admitting or denying the allegations in the Complaint, to the entry of a final judgment of permanent injunction against future violations of the antifraud provisions of the federal securities laws. They agreed to disgorge their profits, totalling approximately $36,000, plus prejudgment interest on those amounts, and to pay civil penalties equal to the amount of their profits. During the investigation of this case, Hunter brought suit against the Commission, Chairman Arthur Levitt, and members of the staff, alleging abuse of governmental power and violation of his civil and constitutional rights relating to the staff's investigation of his trading. Hunter also sought to enjoin the investigation. All of Hunter's claims have been dismissed. In Hunter v. SEC, et al., 879 F. Supp. 494 (E.D. Pa. 1995), the court dismissed Hunter's claim against the Commission, the Chairman, and the supervisory staff, by which Hunter sought to enjoin the Commission from pursuing its investigation into insider trading in the stock of INBC. In Hunter v. Heffernan, 1996 U.S. Dist. LEXIS 14071 at 11 (E.D. Pa. Sept. 30, ======END OF PAGE 3====== 1996), the court dismissed Hunter's claim against the remaining defendant by finding that Hunter had not presented any evidence "remotely sufficient to sustain his claim." ======END OF PAGE 4======