3 ex-Pa. execs of Consol Energy sued for trading
PITTSBURGH – Three former Consol Energy executives profited or avoided stock losses by using insider information about the company's acquisition of a natural gas and oil exploration business, the Securities and Exchange Commission said in a federal lawsuit Friday.
The executives either sold their stock in advance or bought put option contracts involving their Consol stock just days before Consol announced a $3.74 billion deal to buy the Appalachian exploration business of Dominion Resources Inc., the 15-page lawsuit contends.
The deal caused Consol's stock to drop 10 percent when it was announced in March 2010, so the SEC said the executives either made money or avoided losses because of the alleged insider trades.
The lawsuit doesn't accuse Consol of wrongdoing. In fact, the SEC said that Consol terminated the three men when the company learned of the deals months later.
"Consol Energy takes compliance with federal securities laws seriously and we have policies in place to ensure that our employees abide by these laws," spokeswoman Lynn Seay said in a statement Friday. "In instances of noncompliance, the company takes appropriate action."
None of the men immediately returned calls to their homes Friday.
Charles Mazur Jr., 42, of Eighty-Four, was the company's director of corporate strategy when he allegedly made more than $47,000 by purchasing put option contracts on March 10, five days before the deal was announced. The day after the deal was announced, Mazur sold those options contracts that cost him $53,000 for more than $100,000, the SEC said.
James Poland, 52, of Washington, Pa., avoided $9,500 in losses by selling 2,000 shares of Consol stock from his 401(k) account just days before the price dropped, the SEC said. Poland was the general manager of engineering for Consol's engineering services group.
Joseph Cerenzia, 57, of Canonsburg, was director of public relations and a 30-year veteran employee when he allegedly exercised stock options so he could sell shares and avoided a loss of about $7,500.
Cerenzia's attorney, Paul Tershel, said in a statement that his client cooperated with the SEC investigation and didn't intentionally violate any regulation.
The Dominion acquisition, which closed later that year, gave Canonsburg-based Consol a larger stake in the Marcellus shale, which stretches from New York across Pennsylvania to West Virginia and is believed to contain trillions of cubic feet of natural gas.