SEC Charges Investor Relations Exec with Insider Trading

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By Patrick Coffee Comment

US-ARCHITECTURE-SEC

In news that points toward the darker side of financial PR, the Securities and Exchange Commission announced this morning that it would charge an executive at a top Manhattan investor relations firm with crimes related to insider trading.

The charge is surprisingly simple: Michael Anthony Dupre Lucarelli, director at Manhattan’s Lippert/Heilshorn Investor Relations, allegedly used clients’ unpublished press releases to guide his own investments — and made more than half a million dollars in the process.

The case is notable in that it differs from the common narrative regarding automated trades made with the help of robotic press releases that may run afoul of the law by giving certain traders an advantage that ultimately adds up to fractions of a second.

From Reuters:

“[Lucarelli] opened several brokerage accounts without divulging his employment at Lippert/Heilshorn, where he had access to the companies’ financial announcements prior to their public release.”

From the SEC’s own release:

“The SEC further alleges that Lucarelli attempted to hide his illicit behavior by lying to brokerage firms where he set up his trading accounts.”

The ethical issue raised by these allegations is clear no matter how the case ends: one cannot simultaneously represent and invest in a client. The only party with more information on the company’s financial status than its investor representatives is the client itself.

[Pic via Brendan Smialowski/AFP/Getty Images]

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