In the understatement of the year, Keith Lippert said it is “devastating” news that a key executive at 30-year-old Lippert/Heilshorn & Assocs. is charged with 13 counts of insider trading resulting in illicit gains of $1M.
He downplayed the gravity of the situation.
The arrest of Michael Lucarelli, who was director of market intelligence, poses a threat to the survival of the New York-based investor relations firm and the future of its offices in Los Angeles, San Francisco and Tel Aviv.
Lucarelli allegedly accessed clients’ draft press releases and used that inside info to either buy or dump shares.
Not only did he violate LHA policy, he trashed the basic trust that is at the core of PR, especially in sensitive sectors like financial communications where info is more valuable than the most precious jewel.
IR firms control the flow of info that triggers stock transactions worth millions, activity that affects the financial future of investors and job security of people.
Without trust, public relations does not exist. It’s reduced to propaganda or spin.
Securities and Exchange New York regional director Andrew Calamari hit the right note, saying, "Employees of IR firms have access to sensitive information about their clients, and exploiting that information for personal gain is not an option."
The federal complaint cited only one LHA client, TREX, in which Lucarelli allegedly conducted his illegal activity.
Lippert’s initial damage control focuses beyond TREX to include clients such as Vitesse, Universal Electronics, insmed Therapeutics , Chembio Diagnostics, Broadwind Energy, dot Hill and Derma Sciences.
The future of LHA is at stake.
More important, Lucarelli’s alleged illegal activity is a blow to the reputation of the financial communications sector.