A director at New York-based Lippert/Heilshorn & Associates Investor Relations has been charged by the SEC on accusations of gaining almost $1 mn by trading stock ahead of announcements by clients.
Michael Anthony Dupre Lucarelli, a director of market intelligence at the firm, was accused of accessing press releases that his company was preparing for clients and ‘routinely’ buying stock or call options ahead of good news and shorting or buying put options ahead of bad news, the SEC says in a press release.
The commission says Lucarelli, who had no professional reasons to access the press releases, would take advantage of upcoming news on client earnings or announcements such as drug trial results and merger plans to take a position in clients’ securities ‘immediately’ before resulting share-price changes and undo his positions ‘immediately’ after the announcement for instant profit.
‘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 non-public details and exiting his holdings after the news came out,’ Sanjay Wadhwa, senior associate director of the SEC’s New York regional office, says in a press release.
The SEC says Lucarelli lied to brokerage firms he was using to trade by saying he was retired or self-employed and intentionally omitted saying that he was working for an investor relations firm.
The commission says the investigation, which included forensic analysis of Lucarelli’s work computers, showed he would occasionally start taking a position in clients’ stocks weeks before an announcement but generally built a position in a matter of days before the releases were made public.
Lippert/Heilshorn & Associates Investor Relations, or LHA Investor Relations, says on its website that it works for companies in health care, technology, consumer products, financial services and other areas.
