Ex-Harman Executive Gets Eight Months for Insider Tradingby
Dennis Hamilton pleads guilty after he “did something stupid”
U.S. says Hamilton netted more than $130,000 on insider trades
Insider-trading cases sometimes contain an element of cloak-and-dagger intrigue, like whispered conversations on the golf course or payouts transferred to secret offshore accounts. The case against Dennis Hamilton, a former Harman International Industries Inc. executive, doesn’t fall into that category.
Hamilton, 46, vice president of tax at the Stamford, Connecticut-based company, said he just did “something stupid.” That something was buying Harman shares on the day before the release of the company’s earnings and after he learned what the results were, according to prosecutors.
He was sentenced to eight months in jail Thursday and ordered to pay a fine of $131,958. He pleaded guilty to one count of securities fraud in March.
In the weeks prior to an earnings call in 2013, Hamilton, of Norwalk, had received a draft of the company’s earnings report and press release and listened to a teleconference in which the results were discussed, prosecutors said. Then on Oct. 30, 2013, a day before the company released its earnings, Hamilton bought 17,000 shares of Harman through a Charles Schwab account he held with his wife.
Prosecutors said the illegal transaction netted him more than $130,000.
Harman, which makes audio and video systems for cars and consumers, allows insiders to trade its shares on the open market only during limited time periods, prosecutors said. Hamilton was designated as an insider in August 2013 and was told he could trade shares through the following Sept. 27, prosecutors said. Hamilton faced as long as 20 years in prison.
Hamilton told agents when he was arrested at the company’s headquarters in February that he didn’t specifically recall the trades but said he "did something stupid" when shown a timeline, according to a court document. He was also sued by the U.S. Securities and Exchange Commission, which is continuing to investigate Hamilton’s trades, according to the document.
Hamilton’s attorney, Brian Spears, didn’t immediately respond to a voice-mail message seeking comment on the sentence.
Hamilton’s lawyers had asked the court to sentence him to probation, saying his conduct is in “stark contrast to his otherwise commendable life” as a devoted husband and father and a “hard working and respected” member of the accounting profession. A “significant lapse in judgment” led him to give in to temptation to make money on the confidential earnings information, they said.
“Unlike many other insider-trading cases, Mr. Hamilton did not engage in any scheme to obtain access to inside information for the specific purpose of illegal trading,” his attorneys said in court documents.
The government had pushed for a sentence of 1 1/2 years to two years in prison, saying Hamilton abused his position as a trusted insider and that such a punishment is needed in order to deter others.
“The circumstances under which the defendant made the decision to betray Harman and exploit the securities markets make clear that his actions were motivated by nothing but greed,” prosecutors said in a court filing.
The case is U.S. v. Hamilton, 16-cr-00058, U.S. District Court, District of Connecticut (New Haven).