July 12, 2022

NJ resident reaches settlement with SEC to resolve insider trading charges

On July 11, 2022, the US District Court for the District of New Jersey approved a final judgment concerning New Jersey resident Daniel Moscatiello, who was charged with insider trading by the US Securities and Exchange Commission in connection with improper trades placed by Moscatiello in Virtusa Corporation, a Massachusetts-based information technology company, in advance of a public announcement regarding an agreement by Baring Private Equity Asia to acquire of Virtusa in an all-cash transaction.  

According to the SEC’s complaint, Moscatiello’s domestic partner, who worked for Virtusa’s marketing department at the time, worked from the home that she shared with Moscatiello.  The SEC reports that, on September 8, 2020, Moscatiello’s domestic partner was asked during a telephone call with a member of Virtusa’s management team to begin working on a public announcement regarding the impending acquisition.  Moscatiello allegedly overheard this conversation and misappropriated the material nonpublic information by purchasing more than $27,000 worth of out-of-the-money Virtusa call options the following day.  According to the SEC, this was the first time Moscatiello had ever purchased Virtusa securities, and his purchases accounted for 100 percent of the total Virtusa options trade volume for the day.  After the acquisition was publically announced by Virtusa on September 10, 2020, Virtusa’s stock price rose by nearly 25 percent.  Within minutes of the market opening that day, Moscatiello allegedly sold all of his Virtusa securities and realized almost $90,000 in illicit profits.

Moscatiello was charged by the SEC with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder for allegedly breaching the duty of trust and confidence owed to his domestic partner.  Moscatiello agreed to the entry of a final judgment against him without admitting or denying the allegations in the complaint. Under the terms of the settlement, Moscatiello agreed to be permanently enjoined from further violations of the antifraud provisions, and to pay disgorgement, prejudgment interest and civil penalties totaling more than $180,000.

Final Judgment | SEC Press Release | SEC Complaint