Norwalk Man Enters Plea in $130,000 Stamford Securities Fraud Case

NORWALK, CT - Dennis W. Hamilton, 45, a former tax vice president at Harman International Industries, Inc. in Stamford, pleaded guilty Monday to one count of securities fraud in connection with a $130,000 insider trading case from 2013, according to United States Attorney Deirdre M. Daly.

Hamilton, a Norwalk resident, was accused of using insider information about Harman International to profit from the purchase and sale of 17,000 shares of Harman International stock, according to Daly and Patricia M. Ferrick, Special Agent in Charge of the New Haven Division of the Federal Bureau of Investigation.

"In October 2013, Hamilton received material, non-public information about Harman’s financial results for the first quarter for the fiscal year ending 2014, including drafts of Harman’s Form 10-Q filing and an earnings press release," said Daly in a statement. "He and other Harman executives also participated in a conference call with Harman’s Audit Committee, during which a draft resolution declaring a quarterly cash dividend on Harman’s common stock was discussed.

"On October 30, 2013, Hamilton, an insider in possession of material, non-public information, purchased 17,000 shares of [Harman International which trades under the symbol HAR] for between $72.07 and $72.67 per share, through a Charles Schwab account in the name of Hamilton and his wife. On October 30, 2013, the closing price of HAR was $72.02. On October 31, 2013, Harman announced positive first quarter earnings for fiscal year 2014. On that date, the closing price of HAR was $81.02.

"Between October 31, 2013 and November 5, 2013, through his Charles Schwab account, Hamilton wrote at least 200 covered calls on HAR at a strike price of $70.00 with an expiration date of November 16, 2013 for a premium of $203,366. Through the use of some of these covered calls, Hamilton realized a gain of $131,958 on the 17,000 shares of HAR he had purchased on October 30, 2013."

Beginning in 2009, Hamilton and other executives were allowed to buy or sell Harman securities "in the public market only during a declared trading window period." On September 27, 2013, Hamilton and other Harman employees "were advised via email that the 'window period' within which they may engage in open market purchases or sales of Harman securities had closed," which made the October trades illegal.

In a separate but parallel case against Hamilton, the Securities and Exchange Commission also has filed civil charges against him.

Hamilton was arrested in early February of this year and now is scheduled to be sentenced by U.S. District Judge Alvin W. Thompson on June 10, 2016. He is free on bond, and at sentencing, he faces a maximum prison term of 20 years and a fine of up to $5 million.

The criminal investigation is being conducted by the Federal Bureau of Investigation with assistance from Harman International Industries. The case is being prosecuted by Assistant U.S. Attorney Heather Cherry.