Two Men Charged With Insider Trading in BayBanks Stock

Business Wire, July 1, 1998

BOSTON--(BUSINESS WIRE)--July 1, 1998--A federal grand jury returned a nine-count indictment yesterday charging two men with insider trading in the stock of BayBanks, Inc. hours before the bank announced its December 1995 merger with Bank of Boston.

United States Attorney Donald K. Stern and Barry W. Mawn, Special Agent in Charge of the Boston Office of the FBI, announced today that the Indictment charges James L. D'Angelo, of Wolfeboro, New Hampshire and John C. Larrabee, of Boxford, with nine counts of securities fraud in connection with the insider trading.

U.S. Attorney Stern stated: "Insider trading shakes every investor's sense of the fairness of the securities markets. We will vigorously prosecute those who use confidential inside information to trade for their own personal advantage. We also wish to thank the Securities and Exchange Commission for its cooperation with this office and the FBI."

The Indictment charges that Larrabee, 51, was, in December 1995, the Director ofFiduciary Services for the Boston law firm of Bingham, Dana & Gould.

D'Angelo, 58 years old, was a stockbroker at PaineWebber, Inc. Larrabee, a non-lawyer, was in charge of the department that administered trusts of the firm's clients. In that role, he chose the stockbrokers who would execute the securities trades in those trust accounts. For a number of years, Larrabee had been referring the majority of that business to D'Angelo, for whom those accounts were an important source of business. From at least 1991 through 1995, D'Angelo had secretly given money to and made payments on behalf of Larrabee, including college tuition payments for Larrabee's children. Those payments violated the conflict-of-interest policies of both Bingham Dana and PaineWebber.

In early December 1995, the Bank of Boston retained Bingham Dana to represent it in connection with its confidential proposed merger with BayBanks. The Indictment alleges that Larrabee learned of the pending deal, and, on the afternoon of December 12, 1995, tipped D'Angelo. D'Angelo promptly purchased $870,048 worth of BayBanks stock in eight accounts that he and his family controlled and a ninth account of his girlfriend's. Bank of Boston and BayBanks publicly announced the merger that evening. The next morning, D'Angelo sold all of the stock for an $86,750 profit.

Each defendant faces a maximum sentence of 10 years of imprisonment and a $1,000,000 fine on each of the nine counts of securities fraud.

The case was investigated by the Federal Bureau of Investigation. It is being prosecuted by Assistant U.S. Attorney John J. Falvey, Jr. of Stern's Economic Crimes Unit.

    CONTACT: U.S. Attorney's Office
              Amy Rindskopf, (617) 223-9445