U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20934 / March 6, 2009
Securities and Exchange Commission v. Gary Richetelli (United States District Court for the District of Connecticut, Civil Action 3:09-CV-00361 (CFD)
SEC CHARGES GARY RICHETELLI WITH SCHEME TO OBTAIN STOCK IN THE NEWALLIANCE BANCSHARES IPO
The Securities and Exchange Commission today announced the filing of civil fraud charges on March 5, 2009, against Gary Richetelli in connection with the initial public offering of Connecticut-based NewAlliance Bancshares, Inc. The Commission previously filed similar charges against eight other individuals in connection with the NewAlliance IPO. The most recent charges arise out of a scheme by Richetelli in which he illegally funded the purchase of NewAlliance stock during its IPO in violation of the federal securities laws. The SEC's action was brought in the United States District Court for the District of Connecticut.
According to the Commission's complaint, the action arises out of the April 2004 conversion of New Haven Savings Bank ("NHSB") from a mutual form of organization to a stock form of organization. Because mutual banks are owned by their depositors, the depositors are given first priority in receiving the shares arising out of the conversion's initial public offering. The Commission's complaint alleges that Richetelli entered into illegal arrangements with six NHSB depositors (which were hidden from NHSB) pursuant to which he funded their purchase of shares of NewAlliance stock in exchange for 90% of the profits earned on the sales of such shares. The complaint further alleges that Richetelli also illegally funded the purchase of additional shares of the stock using his mother's NHSB account, retaining 100% of the profits derived from the sales of those shares. The complaint further alleges that, through his scheme and at the expense of other NHSB bank depositors, Richetelli illegally obtained hundreds of thousands in proceeds from the sale of New Alliance stock that had been purchased in the IPO.
In its complaint, the Commission alleges that Richetelli violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and seeks a permanent injunction, disgorgement of ill-gotten gains plus prejudgment interest, and a civil penalty.
Today's actions are the result of ongoing investigations by the SEC, the U.S. Attorney for the District of Connecticut, and the New Haven Division of the Federal Bureau of Investigation. The SEC also acknowledges the assistance and cooperation of the Connecticut Department of Banking, Securities and Business Investment Division.
[For further information, please see Litigation Release No. 19288 (June 28, 2005), Litigation Release No. 19444 (October 25, 2005), Litigation Release No. 19714 (June 1, 2006), Litigation Release No. 19797 (August 9, 2006), and the Investor Alert the Commission issued on June 28, 2005. The Investor Alert is available at: www.sec.gov/investor/pubs/mutualconversion.htm.