The former president and chairman of Compucare Inc. and three acquaintances agreed yesterday to pay a total of $81,451.54 to settle Securities and Exchange Commission charges that they violated laws against trading stock on information not available to the public.
The SEC charged that last February, while he was chairman of the Reston firm, Ronald V. Aprahamian told three other people about Compucare's plan to merge with Baxter Travenol Laboratories. The three then bought several hundred shares of Compucare and made a $24,225.77 profit when the stock jumped after the merger.
Aprahamian agreed to pay a civil penalty of $33,000 to settle the SEC charges.
The three men he told about the merger each agreed to pay the government all the profits they made on the Compucare stock purchases, plus civil penalties equal to their profits.
James M. Hildreth of Fairfax agreed to pay $9,750; David S. Nellen of the District agreed to pay $27,777.80, and Stephen F. Saine of Annandale agreed to pay $10,923.74, according to the SEC.
As is customary, the defendants consented to pay the penalties without admitting or denying the charges.
Hildreth said yesterday that he agreed to the settlement because he could not afford an expensive legal battle. He said he "never considered it illegal" to buy Compucare stock after talking to Aprahamian about the company at a social dinner, and described Aprahamian as a "very decent guy."
"Talking to Ron about Compucare is like talking to him about his family. It's like asking him about his kid's baseball team," Hildreth said, adding that he does not know the other individuals in the SEC action.
Saine said he agreed to the judgment because "the cost of defending far outweighed the cost of settling."
Nellen and Aprahamian could not be reached. Aprahamian now works for Travenol Laboratories Inc., Baxter Travenol's principal domestic subsidiary, as chairman of the Travenol Health Care Information Systems business group, of which Compucare is part.
Compucare, which provides information-processing services and software to hospitals and other health-care institutions, agreed March 1 to be acquired by Baxter Travenol, then a $1.8 billion health-care company. The merger was completed May 29, in a stock swap valued at about $75 million.
Compucare and Baxter Travenol began discussing the possibility of a merger in February, and by Friday, Feb. 22, had agreed on tentative terms of a proposed merger.
On Feb. 25, the next business day, Hildreth bought 1,000 shares of Compucare common stock at $6.875 per share, and Nellen bought 1,900 shares at $6.625 per share, the SEC said. The next day, Nellen bought another 600 shares at $6.50 per share, and Saine bought 1,000 Compucare shares at $6.50 per share.
The men made the purchases "while in possession of material nonpublic information concerning Compucare," the SEC said.
After the merger was announced March 1, the price of Compucare stock almost doubled to $12.25 per share. Hildreth made a profit of $4,875, Nellen made a profit of $13,888.90, and Saine made a profit of $5,461.87, the SEC said.
Baxter Travenol, based in Deerfield, Ill., has since agreed to merge with American Hospital Supply Corp.