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The Securities and Exchange Commission has filed insider trading charges against three software company founders, alleging they took unfair advantage of incorrect media speculation and analyst reports about the planned sale of the company.

According to the SEC complaint, in March and April of 2011 Richard Lawson, a co-founder and co-chairman of St. Paul, Minnesota-based computer software company Lawson Software Inc., gave non-public information to his brother, William Lawson, and a family friend, John Cerullo, concerning the company’s planned sale to Infor Global Solutions for $11.25 per share.

William Lawson and Cerullo were also co-founders of Lawson Software, which started up in 1975, but they both retired in 2001, according to the SEC. Richard Lawson was still serving as co-chairman of the board of directors when Lawson Software began thinking about a potential sale.

The SEC alleges that Lawson Software’s stock price began to rise in March 2011 following media and analyst reports that the company was thinking about selling and that there were multiple bidders. In fact, there was only one bidder.

This incorrect speculation allowed William Lawson to sell more than one million shares of Lawson Software stock holdings for around $1 per share more than the $11.25 price Infor was about to pay for the company. He also recommended that a third party—unnamed in the complaint—also sell shares. Cerullo offloaded 175,000 company shares at the inflated price. Collectively, the three netted more than $2 million in profits.

“Richard Lawson conveyed material information that was contrary to what was being publicly reported, and his brother and friend made a windfall when they subsequently sold their company shares at inflated prices,” Stephen Cohen, an associate director in the SEC’s Division of Enforcement, said in a statement. “When news surfaces about the possibility of a merger and details of the media reports are incorrect, it is illegal for insiders who know the true facts to trade and profit.”

Following the merger announcement on April 26, Lawson Software stock dropped 8.7 percent to $11.06 per share at market close, according to the SEC.

Richard Lawson has agreed to settle the SEC’s charges for a penalty of more than $1.5 million—equal to the amount gained by both William Lawson and Cerullo from his tip—and a bar from serving as an officer or director of a public company. William Lawson has agreed to a disgorgement payment of just over $1.85 million, along with prejudgment interest of almost $165,000 and a penalty equal to the amount of the disgorgement—$3,869,785.16 in total. Cerullo has agreed to pay a disgorgement of almost $179,000, prejudgment interest of almost $15,700 and a penalty of just over $372,600.