Investor Relations Firm Employee Michael Lucarelli Indicted
On August 26, 2014, the U.S. Attorney’s Office for the Southern District of New York announced charges against Michael Anthony Dupre Lucarelli. Lucarelli is charged with 13 counts of criminal insider trading over his alleged scheme to trade on announcements in impending news releases in the days before they were made public. According to the allegations, Lucarelli while the director of market intelligence at a Manhattan-based investor relations firm, traded ahead of impending news announcements by more than a dozen of the firm’s clients. According to the charges, Lucarelli garnered nearly $1 million in illicit profits. An SEC investigation and ongoing forensic analysis of Lucarelli’s work computers uncovered that he repeatedly accessed clients’ draft press releases stored on his firm’s computer network prior to public announcements. Earlier this year, Lucarelli was sentenced to 30 months in prison followed by three years of supervised release, and the forfeiture order against him became final.
According to the charges, Lucarelli, who had no legitimate work-related reason to access the draft press releases, routinely purchased stock or call options in advance of favorable news and sold short or bought put options ahead of unfavorable news. Lucarelli traded in securities belonging to companies that his firm was advising in advance of announcing their earnings or other significant events such as a merger or clinical drug trial result. Lucarelli began taking a position in a client’s securities in the days immediately preceding the announcement, although in a few instances he began making his purchases weeks in advance. Lucarelli started divesting himself of his position immediately after the announcement in order to reap instant profits.
According to the allegations, Lucarelli attempted to hide his illicit behavior by lying to brokerage firms where he set up his trading accounts. Lucarelli purposely omitted listing his investor relations firm employment on account-opening applications and instead falsely stated that he was self-employed or retired.
“Lucarelli knew full well that he was prohibited from trading on information contained in draft press releases that had not yet been made public, but he brazenly gave himself a head start on the rest of the investors by trading based on the nonpublic details and exiting his holdings after the news came out,” said Sanjay Wadhwa, senior associate director of the SEC’s New York Regional Office.
Lucarelli was charged with 13 counts of criminal insider trading over his alleged scheme to trade on announcements in impending news releases in the days before they were made public.
For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, by email at [email protected] or visit www.securitieslawyer101.com. This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.
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