U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20827 / December 15, 2008
Securities and Exchange Commission v. Rick A. Marano, William Marano and Carl Loizzi, Civil Action No. 04 CV 5828 (S.D.N.Y.)
Former Standard & Poor's Financial Ratings Services Senior Analyst Settles Insider Trading Action; Tippees Also Settle
The Securities and Exchange Commission announced today that on October 24, 2008, the Honorable Laura Taylor Swain, of the United States District Court for the Southern District of New York, entered a final judgment against Carl Loizzi (Loizzi), having previously, on February 26, 2008, entered final judgments against Rick A. Marano and William Marano, in SEC v. Rick A. Marano, William Marano and Carl Loizzi, (Civil Action No. 04 CV 5828 (LTS) (S.D.N.Y.)). The final judgments resolve the Commission's claims against the defendants in the Commission's civil complaint filed on July 27, 2004. The Commission's insider trading action charged that, on two separate occasions, Rick A. Marano, a former senior analyst in the Life Insurance Group at Standard & Poor's Financial Rating Services (S&P), misappropriated material, non-public information obtained through his employment regarding proposed business transactions and tipped that information to his brother, William Marano, and Loizzi, a friend and former business partner of William Marano's. In total, the unlawful trading produced profits of over $1,100,000.
Without admitting or denying the allegations of the complaint, Rick Marano, William Marano and Loizzi each consented to the entry of a final judgment that permanently enjoins them from violating Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Exchange Act Rule 10b-5. The final judgments against Rick Marano and Loizzi require them to pay disgorgement of $45,000 and $305,000, respectively. The final judgments waive the remaining disgorgement and do not impose civil penalties based upon the defendants' sworn representations regarding their financial condition.
The complaint alleged that, in late April 2000, through his employment at S&P, Rick Marano misappropriated material, non-public information regarding a potential acquisition of ReliaStar Financial Corporation (ReliaStar) by ING Groep and, on or about April 27, 2000, tipped that information to William Marano and/or Loizzi. The complaint further alleged that defendants then purchased ReliaStar call option contracts (Loizzi also purchased ReliaStar common stock). The complaint charged that after the proposed acquisition was announced, Loizzi, William Marano and Rick Marano reaped trading profits of approximately $596,000, $200,000 and $83,000, respectively, on their sales of ReliaStar securities. The complaint further alleged that approximately one year later, Rick Marano again misappropriated material, non-public information regarding a potential acquisition of American General Corporation (AGC) by American International Group and tipped William Marano and/or Loizzi, who then purchased AGC call option contracts on April 3, 2001. Finally, the complaint charged that after the proposed acquisition was announced, Loizzi and William Marano reaped trading profits of approximately $253,000 and $20,000, respectively, on the sale of their AGC options.
In parallel criminal proceedings brought by the United States Attorney's Office for the Southern District of New York, Rick Marano, William Marano and Loizzi entered guilty pleas. Rick Marano was sentenced to a prison term of 15 months and fined $5,000, William Marano was sentenced to 24 months probation and fined $1,000 and Loizzi was sentenced to 36 months probation and fined $3,000.
For further information, please see Litigation Release No. 18799 (July 27, 2004).