Facts

The Securities and Exchange Commission (SEC) sued John Todd and Robert Manza for alleged violations of federal securities law. The SEC claimed Todd and Manza engaged in a fraudulent revenue and earnings manipulation scheme to meet analysts' expectations for their company, Gateway Inc. As a result, Gateway's investors were deprived of material information regarding the business' success.

PLAINTIFFS' CONTENTIONS:
The plaintiffs contended defendants made material omissions and misrepresentations in their accounting and reported revenue. The plaintiffs also contended that the defendants misled investors by announcing increased consumer sales without disclosing the sales were made to risky credit candidates in order to prop up sales.

DEFENDANTS' CONTENTIONS:
The defendants denied the charges.

Damages

The plaintiffs sought permanent injunctions, disgorgement and civil penalties.

Result

For plaintiff. Remedy to be determined.

Other Information

On May 30, 2007, the court granted defendant Todd's motion for judgment as a matter of law as to the section 17(a), 10(b), Rule 10b-5 and Rule 13b2-2 claims. The court granted defendant Manza's motion for judgment as a matter of law as to the section 10(b), Rule 10b-5 and Rule 13b2-2 claims. The court granted plaintiff SEC's motion for relief as to civil penalties in the amount of $10,5000 against Manza and $16,500 against Todd. The court denied the SEC's motion for permanent injunction, officer and director bar and disgorgement and denied their motion for a new trial as to the Section 17(a), 10(b) and Rule 10b-(5) claims without prejudice, and the remaining claims with prejudice.

Deliberation

one day

Poll

8-0

Length

three weeks