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Federal prosecutors in New York indicted two Dallas men on insider trading charges Tuesday for alleged illegal use of confidential information about potential mergers, acquisitions and expected earnings involving at least 11 clients of Nationsbank, N.A. In the multicount indictment filed in U.S. District Court in Manhattan, prosecutors contend that between late 1994 and December 1997, Richard A. Svoboda, a former credit policy officer with Nationsbank N.A. misappropriated the information from his employer. He then allegedly passed it on to Michael Robles, a certified public accountant. Both men bought and sold securities based on the data, prosecutors contend. The deals at the center of the three-year insider trading scheme included: Moorco International’s plan to acquire Daniel Industry, which was announced in March 1995; and NPC International Inc., announcing in November 1995 a proposed management buyout of NPC. Other deals included The Rival Company’s February 1996 announcement that it was in talks with Bionaire Inc. to acquire it, and Zurn Industries’ plans to acquire Eljer Industries in December 1996. Information also allegedly was passed on Riddell Sports Inc.’s May 1997 planned acquisition of Varsity Spirit Corp. and Anthem Insurance Companies Inc.’s May 1997 announcement of its possible purchase of Acordia Industries. Finally, prosecutors allege that the two men illegally traded on information about Sun Healthcare Group Inc.’s July 1997 proposal to buy Regency Health Services, and O’Reilly Automotive Inc.’s December 1997 plan to acquire Hi-Lo Automotive. Moorco, NPC, The Rival Co., Eljer, Riddell, Anthem, Acordia, Sun Healthcare and O’Reilly were all clients of Nationsbank. Svoboda, 46, of Plano, Texas, was arrested Tuesday at his home. Robles, also 46, of Dallas, has not been taken into custody yet. If convicted both men face a maximum prison term of five years and a minimum fine of $250,000 on the conspiracy charge. They also face 10 years in prison and at least $1 million in fines on each of the 19 insider trading counts. The U.S. Securities and Exchange Commission filed a related civil lawsuit against the two men. Copyright (c)2000 TDD, LLC. All rights reserved.

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