CHICAGO — A former financial analyst for a north suburban medical waste management company used insider information to trade shares of the company ahead of an earnings report, according to a federal criminal charge filed today by the U.S. Attorney’s Office in Chicago.
In April 2016, MATTHEW C. BRUNSTRUM earned $158,707 in profits and avoided losses of $1,194 from the purchase and sale of securities in Lake Forest-based Stericycle Inc., where he worked as a financial analyst, according to a criminal information filed in federal court in Chicago. Brunstrum used material, non-public information to make the trades ahead of a public announcement by Stericycle regarding its lower-than-projected earnings for the first quarter of 2016, the information states. Brunstrum also directed or encouraged a relative to make similar trades ahead of the earnings announcement, the information alleges. The relative allegedly made profits of $146,028, and avoided losses of $24,224.
The information charges Brunstrum, 26, of Chicago, with one count of securities fraud by insider trading. The charge was filed by the Securities and Commodities Fraud Section of the U.S. Attorney’s Office in Chicago. During the investigation, authorities seized $328,959 in illegal profits.
The charge was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The U.S. Securities and Exchange Commission, which today filed a civil enforcement action against Brunstrum, provided valuable assistance.
The charge alleges that certain Stericycle personnel, including Brunstrum, became aware of the company’s first quarter earnings results in mid-April 2016. When trading on the Nasdaq Stock Market closed on April 28, 2016, Stericycle’s share price was $121.74. After the close of trading that day, Stericycle publicly announced the earnings results and its executives participated in a conference call with outside analysts. During the call, Stericycle’s chief financial officer acknowledged that earnings per share were approximately 5% lower than the company had projected. The following trading day, Stericycle’s stock price fell more than 20%, closing at approximately $95.56 per share.
The charge alleges that Brunstrum and his relative sold nearly 1,050 shares of Stericyle stock prior to the public earnings announcement. The pair also purchased more than 180 near-term, out-of-the-money put options for Stericycle shortly before the earnings announcement, and then sold those options at a profit after Stericycle’s stock declined, the information states.
The public is reminded that an information is not evidence of guilt. The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Arraignment is set for Aug. 2, 2018, at 1:30 p.m., before U.S. Magistrate Judge Jeffrey T. Gilbert. Securities fraud by insider trading is punishable by up to 20 years in prison. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.
Assistant U.S. Attorney Paul H. Tzur represents the government in the criminal case.