Securities and Exchange Commission v. Texas Gulf Sulphur Co.

Facts

In the late 1950s, the mining firm Texas Gulf Sulphur began exploratory drilling in eastern Canada. Defendant TGS Vice President Richard D. Mollison, supervised the project. Defendant Richard H. Clayton, an electrical engineer, was alone on the site. On October 1963, TGS located a segment of land that looked promising. To preserve the opportunity for the company to buy the land, defendant TGS President Claude O. Stephens ordered company employees to keep drilling results secret. By March 1964, the company had bought enough of the land. From November 1963 to March 1964, several TGS employees and their tippees bought TGS stock and options on stock. While drilling activity was completed, TGS officials were taking steps toward ultimate disclosure of the discovery. Between the time the first press was issued and the dissemination of the TGS official announcement, the only defendants before the court who engaged in market activity were Clayton and Crawfrod and TGS director Coates.