UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 40128 / June 25, 1998 ADMINISTRATIVE PROCEEDING File No. 3-9633 : : ORDER INSTITUTING CEASE- In the Matter of : AND-DESIST PROCEEDINGS : PURSUANT TO SECTION 21C OF James D. Scott, : THE SECURITIES EXCHANGE ACT : OF 1934 AND FINDINGS AND Respondent. : ORDER OF THE COMMISSION : I. The Commission deems it appropriate and in the public interest that public administrative proceedings be, and they hereby are, instituted pursuant to Section 21C of the Securities Exchange Act of 1934 ("Exchange Act") to determine whether James D. Scott ( Scott") violated (or caused violations of) Section 16(a) of the Exchange Act and Rules 16a-2 and 16a-3 thereunder. II. In anticipation of the institution of these administrative proceedings, Scott ("the Respondent") has submitted an Offer of Settlement which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceeding brought by or on behalf of the Commission or to which the Commission is a party, the Respondent, without admitting or denying the matters set forth herein, consents to the issuance of this Order Instituting Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934 and Findings and Order of the Commission ("the Order"), and to the entry of the findings, and imposition of the remedial sanctions set forth below. ======END OF PAGE 1====== III. On the basis of this Order and the Respondent's Offer of Settlement, the Commission finds the following: A. FACTS 1. Respondent James Scott, age 60, has been a Director of Trans Financial, Inc. ("Trans Financial") since October 17, 1994. 2. ISSUER Trans Financial, Inc. (formerly Trans Financial Bancorp., Inc., and Kentucky Southern Bancorp., Inc.), a Kentucky corporation with its principal offices in Bowling Green, is a bank holding company. According to Trans Financial's Annual Report on Form 10-K for the year ended December 31, 1997, Trans Financial had total assets of over $2.1 billion and shareholders' equity of over $150 million. As of February 18, 1998, Trans Financial had 11,641,651 shares of common stock issued and outstanding. Trans Financial reported a net income of over $23 million, or $2.09 per share for its 1997 fiscal year. Trans Financial's common stock has been registered with the Commission pursuant to Section 12 of the Exchange Act since June 14, 1985, and is traded on the NASDAQ National Market System. B. APPLICABLE LAW Section 16(a) of the Exchange Act requires that beneficial owners of more than ten percent of any class of any equity security registered pursuant to Section 12 of the Exchange Act and the officers and directors of the issuer of any such security (hereinafter "insider") file a statement with the Commission by the effective date of a registration statement filed pursuant to Section 12 of the Exchange Act, or within ten days of becoming such officer, director or beneficial owner, reporting the amount of all equity securities of such issuer of which they are a beneficial owner. Section 16(a) also requires an insider to file with the Commission within ten days after the close of each calendar month, if there has been a change in the insider's ownership of the issuer's equity securities during such month, a statement indicating such changes. The rules enacted pursuant to Section 16(a) provide that an initial statement by an insider is to be made on a Form 3 and subsequent statements of changes in beneficial ownership are to be made on a Form 4 or a Form 5. C. SCOTT'S VIOLATIONS OF SECTION 16(a) OF THE EXCHANGE ACT AND THE RULES THEREUNDER Scott failed to timely file eight Forms 4 for periods ranging from two ======END OF PAGE 2====== weeks to more than six months reporting changes in his beneficial ownership of Trans Financial's securities. The value of Scott's stock transactions in late Form 4 filings for Trans Financial is approximately $808,545. Scott's history of delinquency, compiled from the ownership reports he has filed with the Commission for Trans Financial, is set forth below: ======END OF PAGE 3====== James D. Scott Forms 3, 4 and 5 Trans Financial, Inc. (formerly Trans Financial Bancorp., Inc. and Kentucky Southern Bancorp., Inc.) October 25, 1994 through April 9, 1998 Date Month Price Due/ Apprx. of No. of Per Total Date Yrs/Mos/ Trans. Type Shares Share* $Value Rec'd Wks.Late Form 3 10-94 Form 3 52,909 10-27-94 T 10-25-94 Forms 4, 5 12-94 Buy 4,000 13.25 53,000 01-10-95 6m2w 3,850 13.25 51,012 07-26-95 38 13.25 503 38 13.25 503 105,018 01-95 Buy 2,500 13.13 32,825 02-10-95 T 02-10-95 02-95 Buy 2,400 15.00 36,000 03-10-95 T 03-10-95 02-95 Other 3,400 N/A N/A 03-10-95 T Acq 03-10-95 04-95 Buy 35 14.50 507 05-10-95 2m2w 07-26-95 06-95 Buy 1,000 15.25 15,250 07-10-95 2w 1,000 15.25 15,250 07-26-95 11,653 15.31 178,407 208,907 ======END OF PAGE 4====== Date Month Price Due/ Apprx. of No. of Per Total Date Yrs/Mos/ Trans. Type Shares Share* $Value Rec'd Wks.Late 06-95 Buy 30 15.25 457 07-10-95 6m1w 675 15.50 10,462 01-17-96 10,919 08-95 Other 25,000 17.00 425,000 09-11-95 4m Acq 01-17-96 09-95 Buy 600 17.87 10,722 10-10-95 3m1w 01-17-96 12-95 Buy 600 17.75 10,650 01-10-96 1m 500 18.00 9,000 02-12-96 19,650 01-96 Buy 1,000 17.88 17,880 02-12-96 T 2,000 17.50 35,000 02-12-96 70 17.50 1,225 02-96 Buy 10,000 16.25 162,500 03-11-96 T 03-08-96 03-96 Buy 780 17.25 13,455 04-10-96 1m 05-08-96 04-96 Buy 97 16.13 1,564 05-10-96 T 43 16.13 693 05-08-96 05-96 Buy 32 15.50 496 06-10-96 T 06-10-96 06-96 Buy 87 18.38 1,599 07-10-96 T 6,000 17.92 107,520 07-10-96 4,000 18.00 72,000 730 18.38 13,417 70 18.13 1,269 5,000 17.50 87,500 35 18.38 643 Date Month Price Due/ Apprx. of No. of Per Total Date Yrs/Mos/ Trans. Type Shares Share* $Value Rec'd Wks.Late ======END OF PAGE 5====== 08-96 Buy 1,000 18.75 18,750 09-10-96 T 09-10-96 08-96 Buy 1,100 18.75 18,750 09-10-96 T 1,900 18.85 35,625 09-10-96 500 18.75 9,375 300 18.75 5,625 200 18.75 3,750 09-96 Buy 875 19.13 16,739 10-10-96 T 30 19.25 578 10-10-96 75 19.13 1,435 12-96 Buy 672 21.38 14,367 01-10-97 1m1w 02-18-97 FY-96 Form 5 02-14-97 T 02-18-97 01-97 Acq 487 22.25 10,835 02-10-97 T (services performed) 02-10-97 01-97 Buy 1,045 24.13 25,215 02-10-97 T 02-11-97 03-97 Buy 800 24.13 19,304 04-10-97 T 04-11-97 05-97 Buy 40 25.00 1,000 06-10-97 T 20 24.00 480 06-10-97 06-97 Buy 1,850 26.63 49,266 07-10-97 T 150 26.75 4,013 07-11-97 210 28.00 5,880 09-97 Buy 100 32.00 3,200 10-10-97 T 615 31.69 19,489 10-09-97 Date Month Price Due/ Apprx. of No. of Per Total Date Yrs/Mos/ Trans. Type Shares Share* $Value Rec'd Wks.Late ======END OF PAGE 6====== 12-97 Buy 39 38.25 1,492 01-12-98 T 52 38.25 1,989 01-12-98 725 38.25 27,731 640 36.00 23,040 01-98 Acq 467 38.31 17,890 02-10-98 T (services performed) 02-10-98 02-98 Buy 950 40.88 38,836 03-10-98 T 03-11-98 03-98 Buy 500 43.75 21,875 04-10-98 T 04-09-98 Total value late reported transactions: $ 808,545 * = Price per share rounded off Acq = Acquired EBP = Employee Benefit Plan N/A = Non-Applicable Opt = Option ======END OF PAGE 7====== IV. FINDINGS Based on the above, the Commission finds that Scott violated Section 16(a) of the Exchange Act, Rules 16a-2 and 16a-3 promulgated thereunder. V. OFFER OF SETTLEMENT Scott has submitted an Offer of Settlement in this proceeding which the Commission has determined to accept. Scott, in his Offer, consents to this Order making findings, as set forth above, and ordering him to cease and desist from committing or causing any violation of, and committing or causing any future violation of, Section 16(a) of the Exchange Act and Rules 16a-2 and 16a-3 promulgated thereunder. VI. ORDER Accordingly, IT IS HEREBY ORDERED, pursuant to Section 21C of the Exchange Act, that Scott cease and desist from committing or causing any violation of, and committing or causing any future violation of, Section 16(a) of the Exchange Act and Rules 16a-2 and 16a-3 promulgated thereunder. By the Commission. Jonathan G. Katz Secretary ======END OF PAGE 8======