SEC Obtains Final Consent Judgments Against William Walters and Thomas Davis
Litigation Release No. 24125 / April 30, 2018
Securities and Exchange Commission v. William T. Walters, et al., Civil Action No. 1:16-cv-3722 (LSS) (S.D.N.Y.)
On April 17, 2018, the U.S. District Court for the Southern District of New York approved settlement agreements between the SEC and defendants William “Billy” Walters, whom the SEC charged with insider trading, and Thomas C. Davis, who tipped material nonpublic information to Walters.
In its complaint, filed on May 19, 2016, the SEC alleged that Davis, then a board member of Dean Foods Company, owed Walters money. According to the SEC complaint, Davis regularly shared inside information about Dean Foods with Walters in advance of market-moving events, using prepaid cell phones and other methods in an effort to avoid detection. The SEC further alleged that, while Walters made millions of dollars using the confidential information to engage in insider trading, he provided Davis with almost $1 million and other benefits to help Davis address his financial debts. The SEC action was stayed, in part, pending the outcome of a parallel criminal proceeding.
In the parallel criminal proceeding, Walters was convicted of securities fraud and wire fraud and Davis pled guilty to those same offenses, among others. Following the conclusion of the criminal case, the SEC obtained the recently approved settlements from Walters and Davis. The settlement with Walters (1) permanently enjoins him from violating Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder, and (2) orders him to pay disgorgement of $19,004,429.26 and prejudgment interest of $3,552,429.20, but will deem that obligation satisfied if the conditions specified (relating to the parallel criminal proceeding against Walters) occur. The settlement with Davis (1) permanently enjoins him from violating Exchange Act Section 10(b) and Rule 10b-5 thereunder and (2) prohibits him from acting as an officer or director of any issuer that has a class of securities registered pursuant to Exchange Act Section 12 or that is required to file reports pursuant to Exchange Act Section 15(d).
The SEC also voluntarily dismissed its claims against relief defendants The Walters Group and Nature Development B.V, entities controlled by Walters, based on Walters’s settlement agreement with the SEC.