Navy Consultant Settles SEC Insider Trading Case
A New Jersey defense consultant on Wednesday settled insider trading accusations with the Securities and Exchange Commission in a case involving a former assistant secretary of the Navy.
The agency said Charles A. Mills of Beachwood, N.J., who had served as a consultant to the Navy in its program to develop a new generation of blimps, agreed to pay $9,315 to settle a civil complaint filed in U.S. District Court in Washington.
The SEC said it was continuing its investigation. It did not identify the assistant secretary mentioned in the Mills complaint, nor did it suggest that the assistant secretary had done anything wrong.
However, sources speaking on condition of anonymity indicated that it was Melvyn Paisley, who was then-assistant secretary for research, engineering and systems, and who has since been named as the target of a government investigation into defense procurement.
Lawrence Barcella, Paisley’s attorney, said his client has not been subpoenaed or otherwise notified by the SEC that he is the subject of an investigation.
According to the SEC complaint, Mills, in his role as a consultant from February to May, 1987, had access to confidential information about competing bids for a contract worth $168.9 million to develop a prototype of a radar-surveillance blimp for use over Navy fleets.
Through meetings with naval officials, including one on March 13, 1987, attended by “a certain then-assistant secretary of the Navy,” Mills learned that officials favored a bid from a joint venture of Westinghouse Electric Co. and Airship Industries Ltd. of Cardington, England.
John D. Schupper, Mills’ attorney, said his client met once with Paisley and other officials for five or 10 minutes, but was not certain of the date.
The Navy announced the award June 5. A day earlier, according to the SEC, Mills purchased receipts on the over-the-counter market in the United States for the purchase of Airship Industries stock, which is traded in London and Sydney, Australia.
Mills sold the receipts on June 8 and 9, earning a profit of $4,658, the agency said. Without admitting or denying the charges, Mills agreed to return the profits and pay an equal amount as a penalty.
The SEC also said “certain assistant secretaries of the Navy” were briefed on the bid award on June 3 and 4. By that time, Paisley, who was appointed assistant secretary in 1981, was out of government, according to Barcella.
Schupper said Mills had not believed he did anything wrong and cooperated fully with the SEC.