Plea, fine settle securities fraud, insider trading case
Charges stem from AMSC’s loss of Chinese wind-turbine customer
A former American Superconductor Corp. executive has agreed to plead guilty to criminal securities fraud and pay $170,000 to settle separate civil charges of insider trading, after profiting on news that the Devens company was losing a major Chinese customer — one it would later accuse of stealing technology.
Joseph M. Tocci, 59, of Belmont, was assistant treasurer at American Superconductor when he learned in March 2011 that there was a problem with the company's largest client, Sinovel Wind Group Co. of Beijing, according to a civil complaint filed Monday by the US Securities and Exchange Commission.
Sinovel had failed to pay for $100 million in past shipments from American Superconductor, which makes software for wind turbines, and was refusing to receive $700 million more in orders.
The company's chief financial officer warned Tocci and other colleagues to keep the Sinovel news confidential, according to the complaint filed in US District Court in Boston. Yet Tocci traded on the information, buying option contracts that would rise in value if the company's stock price fell.
Days later, American Superconductor disclosed the Sinovel news to shareholders, and the stock price plunged 42 percent. Tocci earned illegal profits of about $82,439, the SEC said. In his settlement, Tocci agreed to repay those funds, plus interest and a fine equal to the profits.
The SEC said Tocci also has agreed to plead guilty in a related criminal case brought by the US attorney in Massachusetts, alleging securities fraud. A lawyer for Tocci did not return a call seeking comment.
The insider trading charges follow a long legal battle between American Superconductor and Sinovel over the alleged theft of technology.
American Superconductor has sued Sinovel in China for more than $1.2 billion, alleging that the company copied its software to operate wind turbines.
The Devens company, which does business as AMSC, saw revenue plunge when it lost the Sinovel business and laid off about 60 percent of its 842 workers around the world.
American Superconductor develops software and equipment to regulate the flow of electricity from wind turbines to electrical grids.
The matter sparked outrage among US politicians and in corporate America, which has been pressuring the government to fight back against theft of intellectual property.
In June, a federal grand jury convened in Wisconsin indicted the Chinese wind turbine maker on charges that it stole trade secrets from American Superconductor.
US Attorney John W. Vaudreuil, of the Western District of Wisconsin, called the case at the time "a well-planned attack on an American business by international defendants nothing short of attempted corporate homicide."
Sinovel has denied the charges.