Member of Multi-Million-Dollar, Cross-Country Insider Trading Ring Admits Using Inside Information
TRENTON, N.J. – A professional day-trader admitted today to repeatedly trading on inside information related to confidentially marketed stock offerings, personally netting hundreds of thousands of dollars in illicit profits, Acting U.S. Attorney William E. Fitzpatrick announced.
Joseph Spera, 56, of Boca Raton, Florida, pleaded guilty before U.S. District Judge Michael A. Shipp in Trenton federal court to an information charging him with one count of conspiracy to commit securities fraud and one count of securities fraud.
According to documents filed in this case and statements made in court:
On numerous occasions between June 2010 and July 2013, Spera and his conspirators short-sold the securities of at least 13 public companies, based on inside information obtained by Spera’s conspirator, Steven Fishoff, and others.
For each of these offerings, Fishoff or other day-traders he employed – including his friend, Ronald Chernin, and his brother-in-law, Steven Costantin – entered into confidentiality or “wall-crossing” agreements as representatives of Fishoff’s trading entities. They agreed not to disclose or trade on inside information concerning the offerings, such as the name of the issuers and the timing and pricing of the transactions, and were “brought over the wall” for the narrow purpose of determining whether to purchase the offered securities. Spera himself entered into a confidentiality agreement and was brought over the wall in connection with one of the offerings.
Spera admitted that in breach of the wall-crossing agreements, Fishoff allegedly tipped Spera, directly or through his conspirator, Paul Petrello, with the inside information about the confidentially marketed offerings. Specifically, he allegedly advised Spera of the stock trading symbols of the companies, and the timing and sometimes the pricing of the upcoming offerings. Spera also received the inside information directly from the issuer for one of the offerings.
Based on this inside information, Spera shorted the stock of the public companies in anticipation of a drop in the stocks’ price when the offerings were disclosed to the public. Spera and his conspirators traded through the accounts of their respective trading entities or through related accounts that they controlled, shorting the securities and covering the short positions after the stocks offerings were publicly announced.
By trading on this valuable, nonpublic information in violation of the confidentiality agreements, Spera and his conspirators made more than $3.9 million in profits over the course of the three-year scheme, with Spera personally making more than $768,000. Spera allegedly split his profits with Fishoff, generally on a 50-50 basis, as compensation to Fishoff for the inside information that he provided.
Spera faces a maximum potential penalty of five years in prison and a fine of $250,000 on the conspiracy count and a maximum potential penalty of 20 years in prison and a fine of $5 million on the securities fraud count. Spera also agreed to pay a forfeiture money judgment of $768,766. He is scheduled to be sentenced April 12, 2018.
In a separate civil action, the U.S. Securities and Exchange Commission (SEC) today filed a complaint against Spera in Trenton federal court.
Fishoff has been indicted, and his trial is scheduled for March 19, 2018. Chernin, Costantin and Petrello have pleaded guilty for their involvement in the scheme and await sentencing.
Acting U.S. Attorney Fitzpatrick credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, with the investigation leading to today’s guilty plea. He also thanked the SEC’s New York Regional Office for its assistance.
The government is represented by Assistant U.S. Attorney Shirley U. Emehelu, Chief of the Asset Recovery and Money Laundering Unit, Assistant U.S. Attorney Nicholas P. Grippo of the Economic Crimes Unit, and Assistant U.S. Attorney Sarah Devlin of the Asset Recovery and Money Laundering Unit.
Defense counsel: Alain Leibman Esq., Princeton, New Jersey