Kelly Liu, Salvador Russo III, and Victory Ho, Insider Trading, Louisiana 2012

Three Louisiana Residents Convicted of Insider Trading in Connection with Shaw Group Acquisition

A federal jury has unanimously convicted three Louisiana residents of insider trading in connection with the acquisition of the Shaw Group, after a three-week jury trial before United States District Judge John W. deGravelles in the Middle District of Louisiana.

Kelly Liu, 32, Salvador Russo III, 35, both of Baton Rouge, Louisiana, and Victory Ho, 38, of Morgan City, Louisiana, have been convicted of conspiracy to commit securities fraud (insider trading), in violation of Title 18, United States Code, Section 371, and securities fraud (insider trading), in violation of Title 15, United States Code, Sections 78j(b) and 78ff, and Title 17, Code of Federal Regulations, Sections 240.10b-5 and 240.10b5-1.

According to the evidence presented at trial in mid-2012, The Shaw Group (“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 late July 2012, Shaw and Chicago Bridge and Iron Company (“CB&I”) came to an agreement whereby CB&I acquired all outstanding shares of Shaw stock. The 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 substantially.

As the evidence established, prior to the public announcement and through her job at Shaw, Kelly Liu obtained inside information that Shaw was being acquired by another company and passed the inside information to Victory Ho, through another individual, and to Salvador Russo, for their use in trading Shaw securities. Thereafter, Victory Ho and Salvador Russo allegedly purchased Shaw securities before the public announcement. Victory Ho sold his Shaw securities after the public announcement had caused Shaw’s stock price to rise, while Salvador Russo held his Shaw securities, all at the expense of Shaw shareholders and potential Shaw shareholders who were not privy to the inside information.

Victory Ho made approximately $300,000 from their illegal insider trading activities.

Each of the defendants faces a significant term of incarceration, fines, restitution, and supervised release following imprisonment. The defendants’ sentencing dates have not been set.

United States Attorney Brandon J. Fremin stated, “The unanimous guilty verdicts returned by the jury today should send a strong message that corporate and securities fraud by insiders and others will not be tolerated and will be aggressively pursued by my office, together with our partners.

FBI Special Agent-in-Charge Eric J. Rommal stated, “Motivated by greed and self-enrichment, the defendants in today's court case utilized material, non-public information and dishonest tactics in order to manipulate the securities market. The jury’s decision should send a clear message that anyone who uses insider information for profit will not be tolerated.

Source: https://www.justice.gov/usao-mdla/pr/three-louisiana-residents-convicted-insider-trading-connection-shaw-group-acquisition