SEC v. Steven J. Harrold, Central District of California (Mar. 8, 2012) — Complaint

 
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JOHN B. BULGOZDY, Cal. Bar No. 219897 
Email: [email protected]
FINOLA H. MANVELIAN, Cal. Bar No. 180681
Email: [email protected] 
BERNARD B. SMYTH III, Cal. Bar. No. 217741 
Email: [email protected] 
Attorneys for Plaintiff
Securities and Exchange Commission 
Rosalind R. Tyson, Regional Director
John M. McCoy III, Associate Regional Director
John W. Berry, Regional Trial Counsel
5670 Wilshire Boulevard, 11th Floor
Los Angeles, California 90036
Telephone:   (323)   965-3998   
Facsimile:    (323)    965-3908    
UNITED STATES DISTRICT COURT 
CENTRAL DISTRICT OF CALIFORNIA 
SECURITIES AND EXCHANGE 
COMMISSION, 
Plaintiff,          
vs.          
STEVEN J. HARROLD, 
Defendant.          
Case No.  
COMPLAINT FOR VIOLATIONS 
OF THE FEDERAL SECURITIES 
LAWS 

 
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Plaintiff Securities and Exchange Commission (“Commission”) alleges as 
follows: 
SUMMARY OF THE ACTION 
1. This case involves unlawful insider trading by Defendant Steven J. 
Harrold (the “Defendant” or “Harrold”) in the securities of Coca-Cola Enterprises, 
Inc. (“CCE”) shortly before CCE’s February 25, 2010 announcement that it 
planned to enter into a significant transaction with The Coca-Cola Company 
(“KO”).  Harrold, in his capacity as a vice president in CCE’s European Group, 
obtained material nonpublic information regarding CCE’s proposed acquisition of 
KO’s Norwegian and Swedish bottling operations.  As an executive of CCE, 
Harrold had a relationship of trust and confidence with the company and was 
regularly in possession of sensitive and confidential information.  In addition, 
Harrold signed a Non-Disclosure Agreement with CCE confirming that he would 
maintain the confidentiality of all information he learned regarding CCE’s 
proposed acquisition of KO’s Norwegian and Swedish bottling operations.  In 
breach of his duties, Harrold misappropriated the material nonpublic information 
about CCE’s proposed transaction with KO, and used that nonpublic information 
to trade in CCE stock in advance of the public announcement of the proposed KO 
transaction.  As a result of his illegal trading on material nonpublic information, 
Harrold realized illicit profits of approximately $86,850 on the purchase and sale 
of 15,000 shares of CCE stock. 
2. By engaging in the conduct alleged in this Complaint, Harrold 
violated the antifraud provisions of the federal securities laws, specifically Section 
10(b) of the Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. § 
§ 78j(b), and Rule 10b-5(a) and (c) thereunder, 17 C.F.R. § 240.10b-5(a) and (c).  
The Commission requests that the Court permanently enjoin Harrold from further 
violations of the antifraud provisions of the federal securities laws, order him to 
disgorge his unlawful profits and pay prejudgment interest thereon, impose a civil 
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penalty, and enter an order prohibiting him from acting as an officer or director of 
any publicly traded company. 
JURISDICTION AND VENUE 
3. This Court has jurisdiction over this action pursuant to Sections 
21(d)(1), 21(e), 21A, and 27 of the Exchange Act, 15 U.S.C. §§ 78u(d)(1), 78u(e), 
78u-1 & 78aa.  Harrold, directly or indirectly, made use of the means or 
instrumentalities of interstate commerce, or the mails, or the facilities of a national 
securities exchange in connection with the transactions, acts, practices, and 
courses of business alleged in this Complaint. 
4. Venue is proper in this district pursuant to Section 21(d), 21A, and 27 
of the Exchange Act, 15 U.S.C. §§ 78u(d), 78u-1, and 78aa, because the 
Defendant maintains a residence within this district. 
DEFENDANT 
5. Steven J. Harrold, age 53, currently resides in both Los Angeles, 
California and London, United Kingdom. During the relevant time period, 
Harrold was Vice President, Strategy & Innovation, European Group for CCE, 
and was based in London. 
OTHER RELEVANT ENTITES 
6. Coca-Cola Enterprises, Inc. (“CCE”) is a Delaware corporation 
based in Atlanta, Georgia.  CCE’s common stock is registered with the 
Commission pursuant to Section 12(b) of the Exchange Act, and its shares trade 
on the New York Stock Exchange.  CCE is a marketer, producer, and distributor 
of KO beverage products. 
7. The Coca-Cola Company (“KO”) is a Delaware corporation whose 
offices are located in Atlanta, Georgia.  KO is a licensor, marketer, producer, and 
distributor of hundreds of non-alcoholic beverage brands, including Coca-Cola. 
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FACTS
 
A.	 Harrold Had a Special Relationship of Trust and Confidence with 
CCE and Owed a Duty of Confidentiality to CCE 
8. As an employee and executive of CCE, Harrold had a position of 
trust and confidence with CCE and was subject to the company’s policies and 
procedures.  CCE’s internal policies, set forth in its Code of Business Conduct, 
expressly prohibit employees from trading when in the possession of inside 
information.  Moreover, Harrold’s employment contract with CCE required him to 
maintain the confidentiality of nonpublic information regarding the business or 
affairs of CCE.  Harrold understood that he had a responsibility to keep nonpublic 
information regarding CCE confidential and that he was prohibited from trading 
in CCE stock while he was in possession of material nonpublic information.   
9. In his capacity as an executive at CCE, Harrold was regularly in 
possession of sensitive and confidential information.  On numerous occasions, 
Harrold signed non-disclosure agreements with CCE requiring him to keep 
confidential any information he learned regarding potential acquisitions that CCE 
considered.  Harrold also periodically received blackout notices from CCE that 
prohibited him from trading in the company’s stock for a defined period in which 
he was likely to be in possession of material nonpublic information.   
B.	 Harrold Learned that CCE was Acquiring KO’s Norwegian and 
Swedish Bottling Operations 
10. In early January 2010, Harrold was informed that CCE was 
considering the acquisition of KO’s Norwegian and Swedish bottling operations.  
On or about January 8, 2010, Harrold signed a Non-Disclosure Agreement with 
CCE that required him to maintain the confidentiality of any nonpublic 
information he learned regarding the potential transaction between CCE and KO. 
11. On February 16, 2010, Harrold received an email from CCE’s legal 
counsel informing him that he was subject to a blackout period related to the 
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potential transaction with KO and was prohibited from trading in CCE stock “until 
further notice.” 
12. On February 18, 2010, Harrold participated in an internal CCE 
meeting at which the status of the potential transaction with KO was discussed.  
The agenda for the meeting was marked “Strictly Private & Confidential.”  As a 
participant in that meeting, Harrold was provided certain confidential information 
regarding CCE’s proposed acquisition of KO’s Norwegian and Swedish bottling 
operations, including an overview of the valuation of the transaction and a 
description of the financial opportunities for CCE in connection with the potential 
transaction. 
13. CCE’s proposed acquisition of KO’s Norwegian and Swedish 
bottling operations was a substantial transaction internally valued at CCE at over 
$800 million.  It was also a transaction that both CCE and analysts following the 
company viewed as creating significant positive growth opportunities for CCE. 
C. 	Harrold Traded on Material Nonpublic Information in Breach of 
His Duty to CCE 
14. On Wednesday, February 24, 2010, less than a week after attending 
the meeting at which the status of the proposed transaction with KO was discussed 
and while still subject to a blackout period prohibiting him from trading in CCE 
stock, Harrold purchased 15,000 shares of CCE stock at a total cost of 
approximately $289,500.  Harrold paid an average price of approximately $19.30 
per share.  That same day, Harrold placed a limit order to sell all 15,000 shares at 
a price of $22.00 per share. 
15. On the morning of Thursday, February 25, 2010, CCE announced 
that it had agreed to enter into a transaction with KO in which, among other 
things, (a) KO would acquire CCE’s North American bottling operations, and (b) 
CCE would acquire KO’s Norwegian and Swedish bottling operations.  KO also 
agreed to assume approximately $8.9 billion in CCE debt and CCE obtained the 
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future rights to acquire KO’s German bottling operations in 18 to 36 months. 
16. The morning of the announced transaction, CCE’s share price opened 
more than 30% higher than its closing price the day before.  That morning, the 
15,000 shares of CCE that Harrold had purchased the day before were sold 
pursuant to the limit order he placed.  The shares were sold at a per share price of 
approximately $25.09, for total proceeds of approximately $376,350.  Harrold 
realized a profit of approximately $86,850 on his CCE trades. 
17. Harrold made the trades in CCE stock alleged above in a TD 
Ameritrade brokerage account held in his wife’s name.  The account listed the Los 
Angeles address of Harrold and his wife.  He had previously used the same 
brokerage account to trade in CCE stock during times when he was prohibited 
from doing so pursuant to a blackout notice and company policy. 
18. As an employee and executive of CCE, Harrold owed CCE a duty of 
trust and confidence, including the duty to keep CCE business information 
confidential.  Harrold also signed a non-disclosure agreement specifically 
requiring him to keep information regarding CCE’s potential acquisition of KO’s 
Norwegian and Swedish bottling operations confidential.  Moreover, Harrold 
received a blackout notice from CCE’s legal counsel regarding CCE’s proposed 
transaction with KO that specifically prohibited Harrold from trading in CCE 
stock during the time he made the trades alleged above. 
19. In breach of his duty to CCE, Harrold willfully misappropriated 
material nonpublic information about CCE’s proposed acquisition of KO’s 
Norwegian and Swedish bottling operations, and used that information for his own 
benefit to trade in CCE stock in advance of the announcement of the transaction. 
20. On or about September 16, 2010, Harrold was terminated by CCE in 
connection with his trades in CCE stock in advance of the February 25, 2010 
announcement.  Harrold admitted during CCE’s investigation that he placed the 
trades in his wife’s account, and that he had received notice of the blackout period 
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before he purchased the 15,000 shares 
CLAIM FOR RELIEF
 
FRAUD IN CONNECTION WITH THE PURCHASE OR SALE OF 

SECURITIES 

Violations of Section 10(b) of the Exchange Act 

and Rules 10b-5(a) and (c) Thereunder 

21. The Commission realleges and incorporates by reference ¶¶ 1 
through 20, above. 
22. As alleged above, through his employment at CCE, Harrold learned 
material nonpublic information regarding CCE’s proposed transaction with KO.  
At all relevant times, Harrold owed CCE a fiduciary duty, or similar duty of trust 
or confidence, to maintain such information in confidence. 
23. Harrold, in breach of a fiduciary duty, or similar relationship of trust 
or confidence, owed to CCE, misappropriated such material nonpublic 
information by trading on the basis of such information. 
24. The misappropriated information was material because it would be 
important to a reasonable investor in making his or her investment decision to 
know that CCE planned to enter into a transaction in which it would acquire KO’s 
Norwegian and Swedish bottling operations.  There is a substantial likelihood that 
the disclosure of the misappropriated information would have been viewed by a 
reasonable investor as having significantly altered the total mix of information 
available to investors. 
25. At all times relevant to this Complaint, Harrold acted knowingly 
and/or recklessly by misappropriating information about CCE’s proposed 
transaction with KO and trading while in possession of such material nonpublic 
information.  At all relevant times, Harrold acted with scienter. 
26. By engaging in the conduct described above, Harrold, directly or 
indirectly, in connection with the purchase or sale of securities, by the use of 
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means or instrumentalities of interstate commerce, or the mails, or the facilities of 
a national securities exchange, with scienter:  
a. employed devices, schemes, or artifices to defraud; and/or 
b. engaged in acts, practices, or courses of business which 
operated or would  operate as a fraud or deceit upon any person 
in connection with the purchase or sale of any security.  
27. By engaging in the foregoing conduct, Harrold violated, and unless 
enjoined will continue to violate, Section 10(b) of the Exchange Act, 15 U.S.C. 
§ 78j(b), and Rule 10b-5(a) and (c) thereunder, 17 C.F.R. § 240.10b-5(a) and (c). 
PRAYER FOR RELIEF 
WHEREFORE, the Commission respectfully requests that the Court: 
I. 
Issue findings of fact and conclusions of law that Defendant committed the 
alleged violations. 
II. 
Issue a judgment, in a form consistent with Fed. R. Civ. P. 65(d), 
permanently enjoining Defendant and his officers, agents, servants, employees, and 
attorneys, and those persons in active concert or participation with any of them, 
who receive actual notice of the judgment by personal service or otherwise, from 
violating Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5 
(a) and (c) thereunder, 17 C.F.R. § 240.10b-5. 
III. 
Order Defendant to disgorge, with prejudgment interest, the illegal trading 
profits or ill-gotten gains received as a result of the conduct alleged in this 
Complaint. 
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IV. 
Order Defendant to pay a civil penalty under Section 21A of the Exchange 
Act, 15 U.S.C. § 78u-1. 
V. 
Enter an order, pursuant to Section 21(d)(2) of the Exchange Act, 15 U.S.C. 
§ 78u(d)(2), prohibiting Defendant from acting as an officer or director of any 
issuer that has a class of securities registered pursuant to Section 12 of the 
Exchange Act, 15 U.S.C. § 78l, or that is required to file reports pursuant to 
Section 15(d) of the Exchange Act, 15 U.S.C. § 78o(d). 
VI. 
Retain jurisdiction of this action in accordance with the principles of equity 
and the Federal Rules of Civil Procedure in order to implement and carry out the 
terms of all orders and decrees that may be entered, or to entertain any suitable 
application or motion for additional relief within the jurisdiction of this Court. 
VII. 
Grant such other and further relief as this Court may determine to be just and 
necessary. 
DATED:  March 8, 2012 _______________________________ 
JOHN                                                           B.                                                           BULGOZDY                                                           
BERNARD B. SMYTH III 
Attorneys for Plaintiff
Securities and Exchange Commission 
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JOHN B. BULGOZDY, Cal. Bar No. 219897 
Email: [email protected]
FINOLA H. MANVELIAN, Cal. Bar No. 180681
Email: [email protected] 
BERNARD B. SMYTH III, Cal. Bar. No. 217741 
Email: [email protected] 

Attorneys for Plaintiff
Securities and Exchange Commission 
Rosalind R. Tyson, Regional Director
John M. McCoy III, Associate Regional Director
John W. Berry, Regional Trial Counsel
5670 Wilshire Boulevard, 11th Floor
Los Angeles, California 90036
Telephone: (323) 965-3998 
Facsimile: (323) 965-3908 

UNITED STATES DISTRICT COURT 

CENTRAL DISTRICT OF CALIFORNIA 

SECURITIES AND EXCHANGE 
COMMISSION, 

Plaintiff, 

vs. 

STEVEN J. HARROLD, 

Defendant. 

Case No.  

COMPLAINT FOR VIOLATIONS 
OF THE FEDERAL SECURITIES 
LAWS 

mailto:[email protected]
mailto:[email protected]
mailto:[email protected]


 

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Plaintiff Securities and Exchange Commission (“Commission”) alleges as 

follows: 

SUMMARY OF THE ACTION 

1. This case involves unlawful insider trading by Defendant Steven J. 

Harrold (the “Defendant” or “Harrold”) in the securities of Coca-Cola Enterprises, 

Inc. (“CCE”) shortly before CCE’s February 25, 2010 announcement that it 

planned to enter into a significant transaction with The Coca-Cola Company 

(“KO”). Harrold, in his capacity as a vice president in CCE’s European Group, 

obtained material nonpublic information regarding CCE’s proposed acquisition of 

KO’s Norwegian and Swedish bottling operations.  As an executive of CCE, 

Harrold had a relationship of trust and confidence with the company and was 

regularly in possession of sensitive and confidential information.  In addition, 

Harrold signed a Non-Disclosure Agreement with CCE confirming that he would 

maintain the confidentiality of all information he learned regarding CCE’s 

proposed acquisition of KO’s Norwegian and Swedish bottling operations.  In 

breach of his duties, Harrold misappropriated the material nonpublic information 

about CCE’s proposed transaction with KO, and used that nonpublic information 

to trade in CCE stock in advance of the public announcement of the proposed KO 

transaction. As a result of his illegal trading on material nonpublic information, 

Harrold realized illicit profits of approximately $86,850 on the purchase and sale 

of 15,000 shares of CCE stock. 

2. By engaging in the conduct alleged in this Complaint, Harrold 

violated the antifraud provisions of the federal securities laws, specifically Section 

10(b) of the Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. § 

§ 78j(b), and Rule 10b-5(a) and (c) thereunder, 17 C.F.R. § 240.10b-5(a) and (c).  

The Commission requests that the Court permanently enjoin Harrold from further 

violations of the antifraud provisions of the federal securities laws, order him to 

disgorge his unlawful profits and pay prejudgment interest thereon, impose a civil 

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penalty, and enter an order prohibiting him from acting as an officer or director of 

any publicly traded company. 

JURISDICTION AND VENUE 

3. This Court has jurisdiction over this action pursuant to Sections 

21(d)(1), 21(e), 21A, and 27 of the Exchange Act, 15 U.S.C. §§ 78u(d)(1), 78u(e), 

78u-1 & 78aa. Harrold, directly or indirectly, made use of the means or 

instrumentalities of interstate commerce, or the mails, or the facilities of a national 

securities exchange in connection with the transactions, acts, practices, and 

courses of business alleged in this Complaint. 

4. Venue is proper in this district pursuant to Section 21(d), 21A, and 27 

of the Exchange Act, 15 U.S.C. §§ 78u(d), 78u-1, and 78aa, because the 

Defendant maintains a residence within this district. 

DEFENDANT 

5. Steven J. Harrold, age 53, currently resides in both Los Angeles, 

California and London, United Kingdom. During the relevant time period, 

Harrold was Vice President, Strategy & Innovation, European Group for CCE, 

and was based in London. 

OTHER RELEVANT ENTITES 

6. Coca-Cola Enterprises, Inc. (“CCE”) is a Delaware corporation 

based in Atlanta, Georgia. CCE’s common stock is registered with the 

Commission pursuant to Section 12(b) of the Exchange Act, and its shares trade 

on the New York Stock Exchange. CCE is a marketer, producer, and distributor 

of KO beverage products. 

7. The Coca-Cola Company (“KO”) is a Delaware corporation whose 

offices are located in Atlanta, Georgia.  KO is a licensor, marketer, producer, and 

distributor of hundreds of non-alcoholic beverage brands, including Coca-Cola. 

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FACTS
 

A.	 Harrold Had a Special Relationship of Trust and Confidence with 

CCE and Owed a Duty of Confidentiality to CCE 

8. As an employee and executive of CCE, Harrold had a position of 

trust and confidence with CCE and was subject to the company’s policies and 

procedures. CCE’s internal policies, set forth in its Code of Business Conduct, 

expressly prohibit employees from trading when in the possession of inside 

information.  Moreover, Harrold’s employment contract with CCE required him to 

maintain the confidentiality of nonpublic information regarding the business or 

affairs of CCE. Harrold understood that he had a responsibility to keep nonpublic 

information regarding CCE confidential and that he was prohibited from trading 

in CCE stock while he was in possession of material nonpublic information.   

9. In his capacity as an executive at CCE, Harrold was regularly in 

possession of sensitive and confidential information.  On numerous occasions, 

Harrold signed non-disclosure agreements with CCE requiring him to keep 

confidential any information he learned regarding potential acquisitions that CCE 

considered. Harrold also periodically received blackout notices from CCE that 

prohibited him from trading in the company’s stock for a defined period in which 

he was likely to be in possession of material nonpublic information.   

B.	 Harrold Learned that CCE was Acquiring KO’s Norwegian and 

Swedish Bottling Operations 

10. In early January 2010, Harrold was informed that CCE was 

considering the acquisition of KO’s Norwegian and Swedish bottling operations.  

On or about January 8, 2010, Harrold signed a Non-Disclosure Agreement with 

CCE that required him to maintain the confidentiality of any nonpublic 

information he learned regarding the potential transaction between CCE and KO. 

11. On February 16, 2010, Harrold received an email from CCE’s legal 

counsel informing him that he was subject to a blackout period related to the 

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potential transaction with KO and was prohibited from trading in CCE stock “until 

further notice.” 

12. On February 18, 2010, Harrold participated in an internal CCE 

meeting at which the status of the potential transaction with KO was discussed.  

The agenda for the meeting was marked “Strictly Private & Confidential.”  As a 

participant in that meeting, Harrold was provided certain confidential information 

regarding CCE’s proposed acquisition of KO’s Norwegian and Swedish bottling 

operations, including an overview of the valuation of the transaction and a 

description of the financial opportunities for CCE in connection with the potential 

transaction. 

13. CCE’s proposed acquisition of KO’s Norwegian and Swedish 

bottling operations was a substantial transaction internally valued at CCE at over 

$800 million.  It was also a transaction that both CCE and analysts following the 

company viewed as creating significant positive growth opportunities for CCE. 

C. 	 Harrold Traded on Material Nonpublic Information in Breach of 

His Duty to CCE 

14. On Wednesday, February 24, 2010, less than a week after attending 

the meeting at which the status of the proposed transaction with KO was discussed 

and while still subject to a blackout period prohibiting him from trading in CCE 

stock, Harrold purchased 15,000 shares of CCE stock at a total cost of 

approximately $289,500.  Harrold paid an average price of approximately $19.30 

per share. That same day, Harrold placed a limit order to sell all 15,000 shares at 

a price of $22.00 per share. 

15. On the morning of Thursday, February 25, 2010, CCE announced 

that it had agreed to enter into a transaction with KO in which, among other 

things, (a) KO would acquire CCE’s North American bottling operations, and (b) 

CCE would acquire KO’s Norwegian and Swedish bottling operations.  KO also 

agreed to assume approximately $8.9 billion in CCE debt and CCE obtained the 

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future rights to acquire KO’s German bottling operations in 18 to 36 months. 

16. The morning of the announced transaction, CCE’s share price opened 

more than 30% higher than its closing price the day before.  That morning, the 

15,000 shares of CCE that Harrold had purchased the day before were sold 

pursuant to the limit order he placed.  The shares were sold at a per share price of 

approximately $25.09, for total proceeds of approximately $376,350.  Harrold 

realized a profit of approximately $86,850 on his CCE trades. 

17. Harrold made the trades in CCE stock alleged above in a TD 

Ameritrade brokerage account held in his wife’s name.  The account listed the Los 

Angeles address of Harrold and his wife.  He had previously used the same 

brokerage account to trade in CCE stock during times when he was prohibited 

from doing so pursuant to a blackout notice and company policy. 

18. As an employee and executive of CCE, Harrold owed CCE a duty of 

trust and confidence, including the duty to keep CCE business information 

confidential.  Harrold also signed a non-disclosure agreement specifically 

requiring him to keep information regarding CCE’s potential acquisition of KO’s 

Norwegian and Swedish bottling operations confidential.  Moreover, Harrold 

received a blackout notice from CCE’s legal counsel regarding CCE’s proposed 

transaction with KO that specifically prohibited Harrold from trading in CCE 

stock during the time he made the trades alleged above. 

19. In breach of his duty to CCE, Harrold willfully misappropriated 

material nonpublic information about CCE’s proposed acquisition of KO’s 

Norwegian and Swedish bottling operations, and used that information for his own 

benefit to trade in CCE stock in advance of the announcement of the transaction. 

20. On or about September 16, 2010, Harrold was terminated by CCE in 

connection with his trades in CCE stock in advance of the February 25, 2010 

announcement. Harrold admitted during CCE’s investigation that he placed the 

trades in his wife’s account, and that he had received notice of the blackout period 

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before he purchased the 15,000 shares 

CLAIM FOR RELIEF
 

FRAUD IN CONNECTION WITH THE PURCHASE OR SALE OF 


SECURITIES 


Violations of Section 10(b) of the Exchange Act 


and Rules 10b-5(a) and (c) Thereunder 


21. The Commission realleges and incorporates by reference ¶¶ 1 

through 20, above. 

22. As alleged above, through his employment at CCE, Harrold learned 

material nonpublic information regarding CCE’s proposed transaction with KO.  

At all relevant times, Harrold owed CCE a fiduciary duty, or similar duty of trust 

or confidence, to maintain such information in confidence. 

23. Harrold, in breach of a fiduciary duty, or similar relationship of trust 

or confidence, owed to CCE, misappropriated such material nonpublic 

information by trading on the basis of such information. 

24. The misappropriated information was material because it would be 

important to a reasonable investor in making his or her investment decision to 

know that CCE planned to enter into a transaction in which it would acquire KO’s 

Norwegian and Swedish bottling operations.  There is a substantial likelihood that 

the disclosure of the misappropriated information would have been viewed by a 

reasonable investor as having significantly altered the total mix of information 

available to investors. 

25. At all times relevant to this Complaint, Harrold acted knowingly 

and/or recklessly by misappropriating information about CCE’s proposed 

transaction with KO and trading while in possession of such material nonpublic 

information.  At all relevant times, Harrold acted with scienter. 

26. By engaging in the conduct described above, Harrold, directly or 

indirectly, in connection with the purchase or sale of securities, by the use of 

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2

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9

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28

 

 

 

 

 

 

 

means or instrumentalities of interstate commerce, or the mails, or the facilities of 

a national securities exchange, with scienter:  

a. employed devices, schemes, or artifices to defraud; and/or 

b. engaged in acts, practices, or courses of business which 

operated or would operate as a fraud or deceit upon any person 

in connection with the purchase or sale of any security.  

27. By engaging in the foregoing conduct, Harrold violated, and unless 

enjoined will continue to violate, Section 10(b) of the Exchange Act, 15 U.S.C. 

§ 78j(b), and Rule 10b-5(a) and (c) thereunder, 17 C.F.R. § 240.10b-5(a) and (c). 

PRAYER FOR RELIEF 

WHEREFORE, the Commission respectfully requests that the Court: 

I. 

Issue findings of fact and conclusions of law that Defendant committed the 

alleged violations. 

II. 

Issue a judgment, in a form consistent with Fed. R. Civ. P. 65(d), 

permanently enjoining Defendant and his officers, agents, servants, employees, and 

attorneys, and those persons in active concert or participation with any of them, 

who receive actual notice of the judgment by personal service or otherwise, from 

violating Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5 

(a) and (c) thereunder, 17 C.F.R. § 240.10b-5. 

III. 

Order Defendant to disgorge, with prejudgment interest, the illegal trading 

profits or ill-gotten gains received as a result of the conduct alleged in this 

Complaint. 

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28

 

 

 

 

 

 

 
 
 

   
  
  
  
  

IV. 

Order Defendant to pay a civil penalty under Section 21A of the Exchange 

Act, 15 U.S.C. § 78u-1. 

V. 

Enter an order, pursuant to Section 21(d)(2) of the Exchange Act, 15 U.S.C. 

§ 78u(d)(2), prohibiting Defendant from acting as an officer or director of any 

issuer that has a class of securities registered pursuant to Section 12 of the 

Exchange Act, 15 U.S.C. § 78l, or that is required to file reports pursuant to 

Section 15(d) of the Exchange Act, 15 U.S.C. § 78o(d). 

VI. 

Retain jurisdiction of this action in accordance with the principles of equity 

and the Federal Rules of Civil Procedure in order to implement and carry out the 

terms of all orders and decrees that may be entered, or to entertain any suitable 

application or motion for additional relief within the jurisdiction of this Court. 

VII. 

Grant such other and further relief as this Court may determine to be just and 

necessary. 

DATED: March 8, 2012 _______________________________ 

JOHN B. BULGOZDY 
BERNARD B. SMYTH III 
Attorneys for Plaintiff
Securities and Exchange Commission 

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