Investment Exec Pleads Guilty to Insider Trading

     (CN) – A former executive at Lippert/Heilshorn & Associates, Inc., an investor relations firm based in New York, pleaded guilty on Wednesday to insider trading.
     Michael Lucarelli, the former director of market intelligence for the company, pleaded guilty to one count of securities fraud. He now faces up to 20 years in prison and a maximum fine of $5 million when he is sentenced in January.
     Appearing before U.S. District Judge Jesse Furman earlier today, Lucarelli explained that he used drafts of press releases he obtained through Lippert/Heilshorn to buy shares in certain companies selling his stock after the announcements were made public.
     Federal prosecutors said the FBI obtained a search warrant for Lucarelli’s office in July looking for evidence of his insider trading activities. During the search they found a draft press release from TREX Co. Inc. in his locked briefcase, but left it there so as not to arouse his suspicion.
     The following day, after the FBI completed the search, Lucarelli started purchasing shares of TREX, ultimately accumulating 37,400 shares.
     Then, on August 4, 2014, TREX issued a press release announcing glowing financial results for the second quarter of the current fiscal year.
     Among other things, TREX announced that sales and earnings before taxes had increased 23 percent and 62 percent, respectively, in comparison with the comparable period in 2013.
     Within two hours of the announcement, prosecutors said, Lucarelli sold 35,058 of his TREX shares for a profit of almost $90,000.
     He was arrested on August 26. All told, prosecutors said, Lucarelli earned at least $538,215 through 13 separate instances of insider trading. His plea agreement also includes Lucarelli’s admission that on at least 18 occasions, he took positions on Lippert/Heilshorn client securities based on inside information, bringing his total illicit earnings to $955,521.
     In a statement Manhattan U.S. Attorney Preet Bharara said, “Michael Lucarelli, in violation of his company’s policies and his clients’ trust, illegally traded on material nonpublic information for his own financial gain.
     “For using his company’s and clients’ secrets for his own personal gain, he now faces time in federal prison and the forfeiture of over $900,000 that he unlawfully obtained. If you are not deterred by the line of convicted felons who engaged in insider trading over the past several years then you will join the line,” he said.

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