Purolator Products, a publicly held manufacturer of automotive parts, was the target of acquisition efforts by Mark IV Industries. Shepard (D) and J. Anthony Aldrich were the sole shareholders of a consulting firm. Aldrich, a member of the board of directors for the target, had nonpublic information that Purolator and Mark IV were involved in negotiations regarding Mark IV's acquisition proposal. Aldrich shared the information with Shepard (D). Shepard (D) agreed not to disclose the information and indicated that he understood his obligation to maintain its confidentiality. Shepard (D) told Sargent (D), his friend and dentist. Sargent (D) contacted his broker and asked him to do some research on Purolator. Sargent (D) purchased a total of 20,400 shares of Purolator. Sargent (D) also notified his close friend Scharn (D) of his purchases in Purolator. Scharn (D) then purchased 5,000 shares of Purolator. Within a few days of the tender offer announcement, Sargent (D) sold all of his Purolator stock at a profit of $141,768. Scharn (D) sold his shares at a profit of $33,100. P charged Ds with tipping and/or trading in violation of Exchange Act Section 10(b), Rule 10b-5, Section 14(e), and Rule 14e-3 and seeking injunctive relief, disgorgement, prejudgment interest, and civil penalties. The district court granted Ds' motion for a directed verdict, holding that there was insufficient evidence that Shepard (D) tipped Sargent (D) on the evening of September 10, 1994. P appealed and the Court remanded the case for a new trial. On remand, the jury found Shepard (D) and Sargent (D) liable for violations of Section 14(e) and Rule 14e-3 but did not find them liable for violations of Section 10(b) and Rule 10b-5. The jury found Scharn (D) not liable on all counts. The district court found Sargent (D) and Shepard (D) jointly and severally liable for disgorgement of Sargent's (D) and Scharn's (D) trading profits, a total of $174,868. It declined to enter an injunction against future violations. The court refused to order prejudgment interest on the disgorgement amount and to assess penalties pursuant to the Insider Trading and Securities Fraud Enforcement Act of 1988. P appealed.