Ex-Morgan City housing chairman among 3 convicted of insider trading
A federal jury has unanimously convicted three Louisiana residents of insider trading in connection with the acquisition of the Shaw Group after a three-week trial, U.S. Attorney Brandon Fremin said in a Thursday news release.
U.S. District Judge John deGravelles of the Middle District of Louisiana presided over the trial in Baton Rouge.
Victory Ho, 38, of Morgan City; Kelly Liu, 32, and Salvador Russo III, 35, both of Baton Rouge; were convicted of conspiracy to commit securities fraud and securities fraud, commonly known as insider trading, Fremin stated.
Ho made about $300,000 from the illegal insider trading activities, the release said. He was the former Morgan City Housing Authority board chairman. He resigned from the housing authority board in August 2016 following a drug arrest in Morgan City.
Each faces a significant term of incarceration, fines, restitution and supervised release following imprisonment. The defendants’ sentencing dates have not been set, the release stated.
According to the evidence presented at trial, in mid-2012, The Shaw Group was considering a potential merger opportunity. At the time, Liu was a Shaw employee working in the financial planning and analysis department.
In late July 2012, Shaw and Chicago Bridge and Iron Company, known as CB&I, came to an agreement whereby CB&I acquired all outstanding shares of Shaw stock. The merger between the two companies was publicly announced July 30, 2012. As a result of the public announcement, Shaw’s stock price rose substantially, the release said.
As the evidence established, prior to the public announcement and through her job at Shaw, Liu obtained inside information that Shaw was being acquired by another company and passed the inside information to Ho, through another individual, and to Russo, for their use in trading Shaw securities, the news release said.
Thereafter, Ho and Russo allegedly purchased Shaw securities before the public announcement. Ho sold his Shaw securities after the public announcement had caused Shaw’s stock price to rise, while Russo held his Shaw securities, all at the expense of Shaw shareholders and potential Shaw shareholders who were not privy to the inside information.
“The unanimous guilty verdicts returned by the jury today should send a strong message that corporate and securities fraud by insiders and others will not be tolerated and will be aggressively pursued by my office, together with our partners,” Fremin said.
“Liu had inside information that she knew was incredibly valuable, and she violated her corporate duties—and federal securities law—by sharing that inside information with Ho and Russo, knowing that they would all benefit from the unfair advantage they had over the rest of the market,” Fremin said.
“I truly appreciate the efforts of our partners with the FBI, IRS-Criminal Investigations, the U.S. Secret Service, the Securities and Exchange Commission, and the Financial Industry Regulatory Authority, and the prosecutors and staff within this office, who worked tirelessly to uncover, investigate, and present the defendants’ sophisticated scheme to the jury. I thank the jury for their thoughtful consideration and hard work throughout this lengthy and complex trial,” he said.
FBI Special Agent-in-Charge Eric J. Rommal stated, “Motivated by greed and self-enrichment, the defendants in today’s court case utilized material, non-public information and dishonest tactics in order to manipulate the securities market. The jury’s decision should send a clear message that anyone who uses insider information for profit will not be tolerated. The FBI New Orleans Field Office will continue to use all available resources to end this behavior. The FBI, in conjunction with the U.S. Attorney’s Office, and our federal, state, and local partners, will investigate and prosecute all forms of white-collar crime in Louisiana.”
U.S. Secret Service spokesperson Mason Brayman stated, “This case demonstrates the investigative capabilities of the U.S. Secret Service and the collaborative efforts of our law enforcement partners, specifically the U.S. Attorney’s Office for the Middle District of Louisiana, the Federal Bureau of Investigation, and the Criminal Investigative Division of the Internal Revenue Service.”
This matter is being handled by the U.S. Attorney’s Office for the Middle District of Louisiana and the Baton Rouge offices of the FBI, Secret Service, and IRS-Criminal Investigation. It is being prosecuted by Assistant United States Attorneys Chris Dippel, Patricia Jones and Adam Ptashkin.