A former executive of the Shaw Group has pled guilty to engaging in insider trading. The conviction is the result of an ongoing federal investigation into the use of pre-merger confidential information regarding the 2012 acquisition of Shaw by Chicago Bridge and Iron Company (CB&I).
SCOTT DAVID ZERINGUE, age 48, of Baton Rouge, Louisiana, pled guilty before Chief Judge Brian A. Jackson to one count of conspiracy to commit securities fraud in violation of Title 18, United States Code, Section 371. ZERINGUE also agreed to forfeit proceeds derived from the offense.
In the Spring of 2012, Shaw began considering a potential merger. At the time, ZERINGUE was the Vice President of Construction Operations for Shaw’s Plant Services Division. In late July 2012, Shaw and 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. As a result of the announcement, Shaw’s stock price rose substantially.
At today’s proceeding, ZERINGUE admitted that, prior to the public announcement, he received confidential inside information regarding the impending merger which he passed on to a family member with the understanding that the family member would trade in Shaw stock based on such information. Thereafter, ZERINGUE and the family member both used the inside information obtained by ZERINGUE to purchase Shaw stock and stock options. As a result of the insider trading, ZERINGUE and the family member made over $750,000 in profits.
ZERINGUE faces a sentence of up to five years’ imprisonment, a fine of up to $250,000, and up to three years of supervised release following imprisonment.
U.S. Attorney Green stated: “Insider trading undermines the level playing field that is essential to the integrity and fair functioning of the stock market. We will continue to aggressively investigate and prosecute individuals who exploit confidential company information for personal gain at shareholder expense.”
This matter is being investigated by the United States Secret Service, the Federal Bureau of Investigation (FBI), and the Internal Revenue Service, Criminal Investigations. It is being prosecuted by Assistant United States Attorney J. Christopher Dippel, Jr., and Senior Litigation Counsel M. Patricia Jones.
The investigation is continuing. Anyone with information concerning pre-merger insider trading of Shaw stock is urged to contact Special Agent Moe Hattier of the FBI at 225-291-5159 or Special Agent Kevin Bodden of the U.S. Secret Service at 225-925-5436.
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