SECURITIES AND EXCHANGE COMMISSION

LITIGATION RELEASE No. 17970 / February 5, 2003

PHARMACEUTICAL COMPANY ACCOUNTING MANAGER CRIMINALLY INDICTED ON INSIDER TRADING CHARGES

SECURITIES AND EXCHANGE COMMISSION v. TIMOTHY J. POTTER AND GEORGE R. POTTER (United States District Court for the District of New Hampshire, C.A. No. C-03-32-M)

The Commission announced today that, on January 30, 2003, Timothy J. Potter of Bedford, New Hampshire, was criminally indicted by the United States Attorney for the District of New Hampshire on insider trading charges. Potter is scheduled to be arraigned on February 13, 2003.

According to the indictment, Potter was employed as a manager in the accounting department of Sepracor, Inc., a publicly-traded pharmaceutical company based in Marlborough, Massachusetts. The indictment alleges that, on October 18, 2000, Potter learned that representatives of Eli Lilly and Company had informed Sepracor they intended to recommend that Lilly terminate an exclusive license agreement with Sepracor concerning an antidepressant drug under development. The indictment further alleges that, on or about October 18, Potter disclosed the material, nonpublic information to a co-conspirator, who used the information to purchase Sepracor put options and made an overnight profit of $55,313 when he sold the options the next day following Sepracor's public announcement of the termination. On April 18, 2001, the co-conspirator used the profits of that transaction to make a $55,000 payment to Potter. According to the indictment, Potter and the co-conspirator made false and misleading statements, under oath, to attorneys on the Commission staff who were investigating the co-conspirator's purchase of the Sepracor put options. The indictment charges Potter with one count each of securities fraud and conspiracy to commit securities fraud, based on the illegal insider trading. If convicted on the criminal charges, Potter faces up to five years imprisonment and a fine of up to $250,000 on each of the counts.

Earlier on January 30, 2003, the Commission filed a civil fraud case charging Timothy Potter and his father, George R. Potter, of Bedford, New Hampshire, with insider trading based on George Potter's October 18, 2000 purchase of Sepracor options after he was tipped by Timothy Potter concerning Eli Lilly's potential license termination. According to the Commission's complaint, by their conduct, the defendants violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission's complaint seeks injunctive relief, disgorgement of the profits from their insider trading, plus prejudgment interest, and civil monetary penalties against each of the defendants of up to three times the amount of their profits from their insider trading. For further information, see Litigation Release No. 17958 (January 30, 2003).