Companies would expect their investment firm, especially management and Senior members, to not only dissuade insider trading, but to lead by example. Here's a complete failure.
Case in point Mr. Michael Anthony Dupre Lucarelli. The Director of Market Intelligence at a Manhattan-based investor relations firm. Market Intelligence? Serious oxymoron going on there? Maybe not an oxymoron such as "honest politician" or "almost pregnant" but snake in the grass, no doubt (allegedly).
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. The SEC alleges that 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.
Seriously? You're the Director of a firm and you front-run earnings expecting not to be caught? Get a grip slick.
At the same time, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against Lucarelli. Talk about having a bad day! *lol*
“Employees of investor relations firms have access to sensitive information about their clients, and exploiting that information for personal gain is not an option,” said Andrew M. Calamari, director of the SEC’s New York Regional Office.
According to the SEC’s complaint filed in federal court in Manhattan, 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.
It's difficult enough for the individual investor to navigate the investment arena. When companies cannot even trust their advisers, it's time to hide the dangling carrot. Time for corporate America to stand up and examine their internal procedures and ramp up security. It's tough to blame the child when the cookie jar is right in front of them each day.
Read more on the charges at SEC.gov