U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 20529 / April 17, 2008

Securities and Exchange Commission v. Michael A. Stummer, Defendant, 1:2008CV03671 (S.D. N.Y)

SEC Files Settled Illegal Trading Charges Against Day Trader Who Traded on Information He Fraudulently Obtained From His Brother-in-Law

The Securities and Exchange Commission announced today that it filed a settled civil action in the U.S. District Court for the Southern District of New York against Michael A. Stummer alleging illegal trading in the common stock of Ryan's Restaurant Group (Ryan's), a restaurant company operating more than 340 restaurants in the Southern and Midwest United States. The settlement is subject to Court approval.

The Commission's complaint charges Stummer with violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder by fraudulently obtaining material, non-public information about the impending acquisition of Ryan and then using that information to trade Ryan's securities. The Commission complaint alleges that on July 21, 2006, Stummer and his family arrived at the New York home of his brother-in-law for an annual weekend gathering. At this time his brother-in-law served as director of the private equity firm advising the acquiring company on the impending Ryan's transaction. During the weekend visit, Stummer snuck into the brother-in-law's bedroom office, where, secretly and without permission, he accessed his brother-in-law's bedroom office computer. By correctly guessing his brother-in-law's password, Stummer deceptively gained unauthorized access to the private equity firm's computer network and read several confidential and nonpublic emails relating to the Ryan transaction.

The Commission's complaint further alleges that Stummer used the information he fraudulently obtained to buy 5,500 shares of Ryan's on July 21, and July 24, 2006. Shortly following the public announcement of the acquisition of Ryan's on July 25, 2006, Stummer sold his entire position realizing a total profit of $22,351.17. On the day of the announcement, the closing price for Ryan's shares increased 40 percent from the prior day's close, reaching a high of $15.70.

Without admitting or denying the Commission's allegations, Stummer consented to the entry of a final judgment permanently enjoining him from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The final judgment also requires Stummer to pay $46,386.66, representing the disgorgement of his illegal trading profits, prejudgment interest, and a civil penalty in an amount equal to the profits.

The Commission acknowledges the assistance of the Financial Industry Regulatory Authority (FINRA) in this matter.