Dress Barn Finance Department Yields Another SEC Insider Trading Action
The SEC filed another insider trading action as an administrative proceeding – a continuing trend. This action may also represent another trend – it is the second which names as a Respondent a member of the finance department for the Dress Barn subsidiary of Ascena Retail Group, Inc. In the Matter of Nicholas A. Prezioso, Adm. Proc. File No. 3-17124 (February 19, 2016).
Mr. Prezioso was the Assistant Controller of the Dress Barn subsidiary. The Order alleges that he traded on inside information in three instances:
January 5, 2012 press release: This released announced “strong holiday sales’ and raised earnings guidance. Same store sales for December 2011 were up 14% compared the same period one year earlier. Mr. Prezioso had access to Ascena’s electronic repository of sale data. On December 12, 2011 he sent an email to his supervisor that had Dress Barn sales data for the first two weeks of December. It showed that same store sales were up. The next day he purchased 302 call options, two of which he sold a week later. Following the January 5 press release, the Ascena share price increased 12%. The options were sold at a profit of $114,710.
March 1, 2012 press release: The company reported a 15% increase of net sales over the prior year’s second quarter and an 11% increase over the prior year’s six months results after the close of the market. The share price increased 5.55%. Prior to that announcement the Order alleges that Mr. Prezioso accessed the firm’s computer data base, although no specific date is identified. On February 22, 2012 he purchased 300 Ascena call options. An additional 50 contracts were purchased at the close of the market on March 1. Following the announcement the contracts were liquidated at a profit of $71,334.
May 2, 2012 tender offer announcement: The company announced a tender offer for Charming Shoppes Inc., a firm which sold clothing, shoes, accessories, food and gifts. By March 16, 2012 Ascena had taken substantial steps to implement the tender offer. The Order alleges that on or before that date Mr. Prezioso became aware of the possible deal, although it does not specify how. Between March 16 and May 1 Respondent purchased a total of 46,300 shares of Charming Shoppers common stock. After the deal announcement he sold the shares, realizing profits of $76,432.
The Order alleges violations of Exchange Act Sections 10(b) and 14(e). Unlike the company CFO Reid Hackney, who had been named in an SEC insider trading proceeding earlier this year (here), Mr. Prezioso did not settle. The proceeding will be set for hearing.
Program: The Second Annual Dorsey Enforcement Forum will be held on Wednesday February 24, 2016 beginning at 1:00 p.m. Three panels of experts will discuss: 1) Trends in SEC enforcement; 2) FERC and CFTC market manipulation actions; and 3) Current developments in Financial Services Regulatory Enforcement. The program will be video cast, webcast and live in Washington, D.C. at the Willard Office building, 1455 Pennsylvania Ave. Lunch will be available beginning at noon; open bar at the conclusion of the program. No charge but registration is required (here) or if attending in person by emailing my assistant at Romodan.Hanan@dorsey.com