U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20819 / December 2, 2008
Securities and Exchange Commission v. Cristian De Colli, United States District Court for the Southern District of New York, Civil Action No. 08-CIV-4520 (S.D.N.Y. May 15, 2008)
SEC Recovers More Than $2.6 Million Upon Entry of Default Judgment Against Italian Resident For Insider Trading
The Securities and Exchange Commission recovered over $2.6 million as part of the relief ordered against Cristian De Colli, a machinery engineer residing in Rome, Italy, for engaging in insider trading in the securities of DRS Technologies, Inc., prior to the public disclosure of advanced merger negotiations. Final judgment by default was entered after the Commission successfully obtained emergency injunctive relief against De Colli within days of the DRS merger announcement.
On October 22, 2008, the Honorable Paul A. Crotty, United States District Judge in the Southern District of New York, entered final judgment by default against De Colli, based on his failure to answer or otherwise respond to the Commission's complaint. The final judgment directs De Colli's U.S.-based broker to liquidate his account and remit the proceeds - currently more than $2.6 million - to the Court, in partial satisfaction of his obligation under the final judgment to pay $2,161,818.42 in disgorgement, $19,861.72 in prejudgment interest, and $2,161,818.42 in civil penalties. The final judgment permanently enjoins De Colli from violating, directly or indirectly, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
The Commission's complaint alleged that while in possession of material, nonpublic information regarding merger talks between DRS and Finmeccanica S.p.A, Cristian De Colli purchased shares and call options of DRS common stock. The Complaint further alleged that after public disclosure of the merger talks, De Colli liquidated all of his call options for an illicit profit of five times the amount of his original investment.
The SEC's complaint further alleged that immediately following a May 8, 2008 Wall Street Journal article reporting the advanced merger negotiations and after confirmation by DRS that it was engaged in talks regarding a potential strategic transaction, De Colli liquidated all of his call options and made his ill-gotten profit of more than $2.1 million on his initial investment of approximately $422,000. Finmeccanica later announced on May 12, 2008 that it would acquire DRS for $5.2 billion, or $81 a share.
The Commission acknowledges the assistance of the Options Regulatory Surveillance Authority, the New York Stock Exchange, and Italian securities regulator Commissione Nazionale per le Societa e la Borsa in this matter.
For more information about this matter, please see Litigation Release No. 20581 (May 16, 2008).
The Commission's investigation is continuing.