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Saturday, October 9, 2010

Italian Trader Settles SEC Insider Trading Charges

The SEC announced a proposed settlement with Gianluca Di Nardo, an Italian citizen, and his investment vehicle Corralero Holdings, Inc., (“Corralero”) for alleged insider trading in the securities of two issuers, DRS Technologies, Inc. (“DRS”) and American Power Conversion Corp. (“APCC”). DiNardo agreed to settle the charges by paying approximately $3 million in disgorgement and penalties.

According to the SEC, Di Nardo made highly profitable and suspicious purchases of DRS and APCC call options ahead of public disclosures announcing the acquisitions of these companies. Between September 21 and 22, 2006, Di Nardo bought 2,400 APCC call options at a cost of approximately $299,800 while in possession of material, nonpublic information and liquidated all APCC call options and made a profit of approximately $1.4 million following the announcement by Schneider Electric SA on October 30, 2006, that it would acquire all of APCC’s outstanding shares for $31 a share. In addition, the Commission alleges that on April 29, 2008, Di Nardo bought 550 DRS call options that were out-of-the-money and set to expire in the near term and liquidated all DRS call options, reaping a profit of approximately $669,750 following a May 8, 2008, Wall Street Journal article reporting the advanced merger negotiations between Finmeccanica S.p.A. and DRS, and after confirmation by DRS that it was engaged in talks regarding a potential strategic transaction.

Under the terms of the proposed settlement, Di Nardo and Corralero will pay $2,110,600 in disgorgement, $191,345.77 in prejudgment interest, and a civil penalty of $700,000. The settlement remains subject to the approval of the U.S. District Court for the Southern District of New York.

The Commission’s Amended Complaint also identifies and alleges the following individuals and entities as purchasers of DRS call options in advance of the announcements: Oscar Ronzoni, an Italian citizen and manager of Luga Audit & Consulting SA in Lugano, Switzerland; Paolo Busardò, an Italian citizen who works for a subsidiary of Luga in Milan, Luga Audit & Consulting srl; Tatus Corp., a Panamanian corporation, an investment vehicle based in Switzerland for which Busardò is the ultimate beneficial owner and Ronzoni is the formal managing director; and A-Round Investment SA, a consulting firm based in Lugano controlled by Busardò.

 

http://lawprofessors.typepad.com/securities/2010/10/italian-trader-settles-sec-insider-trading-charges.html

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