Former PDA Vice President Sentenced for Insider Trading

Richard J. Smith, a former vice president at PDA Engineering Inc. in Costa Mesa, was sentenced Monday to 15 months in prison for his conviction on charges of insider trading.

Smith, 48, of Nashville also was ordered by U.S. District Judge Harry L. Hupp in Los Angeles to pay $89,000 in restitution and a $5,500 fine.

Smith was found guilty last November of using nonpublic information that PDA would have lower-than-expected fourth-quarter revenue in 1993 to sell all of his stock--50,445 shares--and to sell “short” 35,000 shares. Short sellers borrow shares from brokerages and gain profits only when the price falls.

In addition, Smith’s parents shorted the stock by 12,000 shares during the same time period, April to July 1993. The stock price fell that August when the company announced publicly its fiscal fourth-quarter results.

During the course of the scheme, Smith and his parents had profits exceeding $150,000. The parents were not charged.