The Securities and Exchange Commission has charged another director of Rochester Community Savings Bank and his son with insider trading in the second phase of a growing investigation that has already netted one director and five associates.
The commission accused former Rochester director Robert B. Frame and his son, Duncan M. Frame, of using inside knowledge when they bought 11,000 shares of Rochester stock in the spring of 1993, before the thrift revealed that it had been in secret merger talks, according to a lawsuit filed in U.S. district court in Rochester.
Without admitting or denying guilt, Robert Frame and Duncan Frame agreed to give up their profits of about $10,300 and $50,800, pay prejudgment interest, and pay fines of about $61,000 and $51,000, respectively.
Robert Frame, who is chairman of a private New York State company, resigned from the thrift's board of directors in November 1994.
This is the second lawsuit by the agency against a Rochester director. Last December, the SEC accused Thomas J. Farrell of secretly prompting discussions between Rochester and Buffalo-based First Empire State Corp., buying stock before the talks were announced, and selling it just before the talks were cut off. He also allegedly tipped off five associates to buy shares and then warned them to sell when discussions fell through.
Total profits for those six defendants exceeded $410,000.
"It's a matter between the individuals named in the complaint and the SEC," said Rochester spokesman Richard Dye, adding that the company is not concerned about a wider problem of insider trading by directors.
The five associates have since agreed to surrender their profits and pay fines, but Mr. Farrell, a former top official at Gannett Co., is still holding out.
Mr. Farrell resigned from Gannett in early January. A second defendant, Frank J. Vega, is president and chief executive of Detroit Newspapers Agency, which is partly owned by Gannett.
The SEC claimed that Robert Frame bought shares in March 1993 after he and Mr. Farrell initiated talks between Rochester and First Empire. Then he allegedly tipped off his son, who bought 9,000 shares in April and May, before Rochester revealed that it had received a merger offer.