U.S. charges investor relations executive with insider trading (updated)

Gadsden Properties

26/08/2014 22:02

(Adds details of investigation, bail hearing and comment from 
firm founder) 
    By Joseph Ax and Nate Raymond 
    NEW YORK, Aug 26 (Reuters) - U.S. prosecutors on Tuesday 
charged an executive of a New York investor relations firm with 
insider trading, accusing him of using nonpublic information to 
earn more than $538,000 in illicit profits. 
    Michael Lucarelli, a former director of market intelligence 
at Lippert/Heilshorn & Associates, was arrested early Tuesday 
morning at his Manhattan apartment, a spokesman for the FBI  
said. A criminal complaint made public in federal court charged 
Lucarelli with 13 counts of securities fraud. 
    A separate civil lawsuit by the U.S. Securities and Exchange 
Commission charged Lucarelli with an even broader insider 
trading scheme in which the regulator said he amassed more than 
$950,000 in illegal profits. 
    The case is the latest in a string of insider trading 
prosecutions under Manhattan U.S. Attorney Preet Bharara, whose 
office has since October 2009 secured convictions of 81 people. 
    Bharara said in a statement that despite the "well-known 
parade" of convictions, Lucarelli "was not deterred and violated 
both his company's policies and his responsibility to its 
clients by trading on material nonpublic information for his 
personal financial gain." 
    The criminal complaint said Lucarelli's illegal trades began 
in August 2013 and continued until earlier this month. 
    Oscar Michelen, Lucarelli's lawyer, declined to discuss the 
case in detail and said he wanted to review it with his client. 
    Lucarelli, 51, appeared in court and was released on 
$500,000 bail. 
    Lucarelli is accused of trading in several companies that 
were clients of his firm, including TREX Co Inc  TREX.N , FAB 
Universal Corp  FABU.PK , PhotoMedex Inc  PHMD.O , LCA-Vision 
Inc, Pacific Ethanol Inc  PEIX.O , Dot Hill Systems Corp 
 HILL.O  and Lifetime Brands Inc  LCUT.O . 
    Authorities said Lucarelli opened several brokerage accounts 
without divulging his employment at Lippert/Heilshorn, where he 
had access to the companies' financial announcements before they 
were publicly released. 
    Keith Lippert, a founder of Lippert/Heilshorn, in an 
interview said the FBI first approached him July 22. The firm 
cooperated in the probe, following authorities' request to not 
immediately fire Lucarelli, he said. 
    "They strongly suggested that we keep business as usual so 
they could conduct their activities," he said. 
    According to the complaint, federal agents obtained a search 
warrant for Lucarelli's office and on July 24 found a draft copy 
of a press release from TREX containing its second quarter 
results dated Aug. 4, 2014 in his locked briefcase. 
    The investigators photographed the release and returned it 
to the briefcase in order to keep Lucarelli unaware of the 
probe, the complaint said. 
    During the following week, one of Lucarelli's brokerage 
accounts purchased more than 37,000 shares of TREX. Most of the  
shares were sold on Aug. 4 for a profit of nearly $90,000, the 
complaint said. 
    The case is U.S. v. Lucarelli, U.S. District Court, Southern 
District of New York, No. 14-mj-1878. 
 
 (Editing by Grant McCool) 
 ((joseph.ax@thomsonreuters.com; 1-646-223-6594 1-917-848-0813; 
Reuters Messaging: joseph.ax.thomsonreuters.com@reuters.net)) 
 
Keywords: USA INSIDERTRADING/INVESTORRELATIONS (UPDATE 2, PI