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U.S. Securities and Exchange Commission

SEC Obtains $2.1 Million Emergency Asset Freeze and Charges Rome Resident Within Days of His Alleged Insider Trading


Washington, D.C., May 16, 2008 — The Securities and Exchange Commission has charged an Italian machinery engineer with insider trading and obtained an emergency asset freeze of the more than $2.1 million illicit profit that he made only days ago from highly suspicious trading in his U.S. brokerage account in the securities of DRS Technologies, Inc., prior to the public disclosure of advanced merger negotiations.

The SEC's complaint, filed yesterday in U.S. District Court for the District of New York, alleges 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 and liquidated all of his call options for an illicit profit of five times the amount of his original investment once the information was reported publicly and later confirmed by the company. De Colli is a resident of Rome, Italy.

Linda Chatman Thomsen, Director of the SEC's Division of Enforcement, said, "In today's global markets, we will act quickly and decisively against violations of the U.S. securities laws, no matter where that conduct occurs, to protect our securities markets and investors."

Antonia Chion, Associate Director of the SEC's Division of Enforcement, added, "We are dedicated to preserving the integrity of the securities markets. This action, brought just days after the alleged suspicious trading occurred, demonstrates that we will not allow this integrity to be undermined by the misuse of material, nonpublic information for personal gain."

According to the SEC's complaint, De Colli purchased 5,700 shares of DRS common stock from April 10 to April 29, 2008, and 3,116 call options for the common stock of DRS between April 15 and May 7, 2008. De Colli purchased more than 2,400 of the call options on May 6 and May 7, including certain options that were out-of-the-money by over $6 and which expired 10 days after purchase. On April 28, 2008, De Colli liquidated securities that he had purchased in two other companies a week earlier in order to purchase additional DRS options. At that point, 100 percent of the holdings in De Colli's U.S.-based brokerage account consisted of DRS call options and DRS stock.

The SEC's complaint further alleges that immediately following a May 8 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's complaint further alleges that, in an interview with SEC staff, De Colli stated that no family members, friends, or anyone else he knew had ever worked for Finmeccanica. Contrary to his statement, however, De Colli's older brother worked for Finmeccanica between 2004 and 2005.

Upon application of the Commission, the Honorable Paul A. Crotty, U.S. District Judge in the Southern District of New York, issued a temporary restraining order freezing De Colli's assets in the U.S., including his brokerage account, containing more than $2.1 million in ill-gotten gain from his insider trading. The order also grants expedited discovery, an order permitting alternative means of service, and an order preventing the alteration or destruction of documents.

By virtue of the conduct described above, the Commission alleges in its complaint that De Colli violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks a permanent injunction, disgorgement of ill-gotten gains with prejudgment interest, and civil money penalties.

The Commission acknowledges the assistance of the New York Stock Exchange and the Chicago Board Options Exchange in this matter.

The Commission's investigation is continuing.

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For more information, contact:

Antonia Chion, Associate Director
SEC Division of Enforcement
(202) 551-4842

Daniel Chaudoin, Assistant Director
SEC Division of Enforcement
(202) 551-4952



Modified: 05/16/2008