The former audit director for Chicago-based health IT company Allscripts Healthcare Solutions was hit with civil and criminal charges Wednesday alleging that he earned $286,211 by illegally trading on insider knowledge of the company's financial performance.
Authorities say (PDF) Steven Dombrowski, 49, of Chicago, used a trading account held in his wife's maiden name to secretly buy short positions in Allscripts stock and options to sell the stock for a profit if it dropped below targets—all in the days before an April 26, 2012, quarterly earnings report that triggered a plunge in the company stock price.
By April 27, Allscripts shares on the NASDAQ had dropped 38% after the revelation that the company's earnings were about half what stock analysts had been predicting.
The sudden drop allowed Dombrowski to surreptitiously exploit his 1,000 Allscripts short-sales and another 510 put-option contracts at sizeable profit, according to civil charges filed by the Securities and Exchange Commission and the criminal indictment against him signed by a federal grand jury, all of which were unsealed in federal district court in Chicago on Wednesday.