Insider Trading Defendant Sentenced to Federal Prison
BATON ROUGE, LA – United States Attorney Brandon J. Fremin announced today that U.S. District Judge John W. deGravelles sentenced SALVADOR JOSEPH RUSSO, III, age 35, of Baton Rouge, Louisiana, to 16 months in federal prison following his convictions for securities fraud (insider trading) and conspiracy to commit securities fraud. The Court also sentenced RUSSO to 1 year of supervised release following his term of imprisonment.
In May of this year, a jury found RUSSO and his co-defendants guilty as charged in connection with an insider trading scheme related to the 2012 acquisition of the Shaw Group (“Shaw”) by Chicago Bridge and Iron Company (“CB&I”). According to evidence presented at trial, in mid-2012, Shaw was considering a potential merger opportunity. At the time, Kelly Liu was a Shaw employee working in the Financial Planning and Analysis Department. In July 2012, Shaw and CB&I came to an agreement on an offer for CB&I to buy Shaw. This merger between the two companies was publicly announced on July 30, 2012 (“the public announcement”). As a result of the public announcement, Shaw’s stock price rose by around 55 percent.
At the time of the public announcement, RUSSO, a car salesman in Baton Rouge, had been Liu’s boyfriend for several years.
The evidence at trial established that, prior to the public announcement and through her job at Shaw, Liu had obtained inside information that Shaw was going to be acquired by another company and had passed the inside information to Victory Ho, through another individual, and to RUSSO, for their use in trading Shaw stock and options. Thereafter, Victory Ho and RUSSO purchased Shaw stock and options before the public announcement. Through his timely $5,000 purchase of Shaw stock in a family member’s account, RUSSO secured a profit of approximately $4,000.
During the sentencing hearing, the Court found that RUSSO had obstructed justice through his testimony at the trial.
United States Attorney Fremin stated, “The manipulation of our securities market undermines those honest investors who take great care to play by the rules when investing their hard earned income. This sentence should send a clear message to anyone who uses insider trading information that this type of behavior will not be tolerated by my office. I am grateful for the tireless efforts of our prosecutors and law enforcement partners from the FBI, Secret Service, and IRS who worked diligently on this important matter.”
Co-defendant Victory Ho, a Morgan City businessman and associate of RUSSO, was sentenced to 32 months in federal prison last week following his convictions in the same scheme. Victory Ho was also ordered to forfeit over $300,000 and to pay a $15,000 fine.
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 and Patricia Jones.