United States Securities and Exchange Commission

Litigation Release No. 16436 / February 14, 2000

U.S. v. James L. D´Angelo and John C. Larrabee., Cr. No. 98-10208-MLW (D.MA.)

Former Law Firm Employee and Stockbroker Sentenced to Prison for Insider Trading

The U.S. Attorney's Office for the District of Massachusetts announced on February 11, 2000 that John C. Larrabee of Boxford, Massachusetts, and James L. D'Angelo of Wolfeboro, New Hampshire, were both sentenced to 1 year and 9 months in prison. In addition, each was fined $20,000 and $5,000, respectively. The two were convicted on nine counts of insider trading in separate trials before U.S. District Court Judge Douglass P. Woodlock in November 1999. Larrabee, the former Director of Fiduciary Services for the Boston law firm of Bingham Dana, LLP, was convicted of tipping D´Angelo, a former stockbroker with PaineWebber Inc., concerning Bank of Boston´s plan to merge with Baybanks, Inc. hours before the public announcement of the merger on December 12, 1995.

At trial, prosecutors proved that in early December 1995, Bank of Boston retained Bingham Dana to represent it in connection with its confidential proposed merger with BayBanks. Larrabee learned of the pending deal, and on the afternoon of December 12, 1995, tipped D'Angelo. D'Angelo promptly purchased $870,048 worth of Baybanks stock in eight accounts that he and his family controlled and a ninth account in the name of his girlfriend. Bank of Boston and BayBanks publicly announced the merger that evening. The next morning, D'Angelo sold all of the stock for an $86,750 profit.

On March 25, 1997, the Securities and Exchange Commission filed an insider trading complaint against D'Angelo and Larrabee in the United States District Court for the District of Massachusetts. Simultaneously with the filing of the complaint, and without admitting or denying the Commission's allegations, D'Angelo consented to a permanent injunction against future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and paid disgorgement of $86,750, plus prejudgment interest in the amount of $8,552 and a civil penalty of $86,750, for a total of $182,052. In addition, the Commission barred D'Angelo, with his consent, from association with any broker, dealer, municipal securities dealer, investment adviser or investment company (See Exchange Act Release No. 38524, April 18, 1997). The Commission's civil action against Larrabee was stayed during the criminal proceedings and is still pending.

For further information, see Litigation Release Nos. 15306 (March 25, 1997) and 16370 (November 24, 1999).