Presstek settles SEC complaint

Former Presstek Inc. chief executive Edward Marino leaked a poor quarterly performance to a major investor in 2006 resulting in a massive sell-off the day before announcing the bad news to the public, the U.S. Securities and Exchange Commission charged Tuesday in a complaint filed against Marino and his former company in U.S. District Court in Boston.

Presstek agreed to settle the charges for $400,000, while the charges against Marino are ongoing. The SEC credited the company -- now based in Connecticut but with substantial facilities still in Hudson -- for mending its ways, and changing its management.

“This investigation related to matters that occurred prior to the changes in executive leadership which took place in 2007,” said Jeff Jacobson, Presstek's chairman, president and chief executive in a press release. “We feel very strongly about corporate governance, and we are pleased to put this legacy issue behind us.”

Marino, 58, was a Presstek board member from 1999 to 2002, when he became chief executive. He was “terminated” by Presstek in May 2007, according to the SEC. Marino, who now lives in Boston, could not be reached by NHBR deadline.

According to the complaint, Marino received a call from Michael Barone on the morning of Sept. 28, 2006, 10 days after learning that the company’s quarterly forecast had “dipped precipitously.”

Barone, was the managing partner of Sidus Investment Management, an investment manager controlling funds that held 500,000 shares of Presstek stock.

Marino told Barone that the summer was “not as vibrant as expected” and that it was “overall a mixed picture” according to Barone’s handwritten notes, the SEC said.

According to the complaint, during the phone call Barone sent a text message to an associate that the news he was receiving “sounds like a disaster,” and three minutes after he hung up Barone texted a Sidus trader instructing him to “sell all prst,” referring to the company’s trading symbol.

Sidus sold 391,765 shares, and the share price plummeted 19 percent to $6.23 a share that day.

Although Presstek had not planned to release the results until October, it disclosed that its performances would be below prior estimates the following day. The price then dropped to as low as $4.83 before recovering to $5.39, another 10 percent drop.

Presstek had announced the SEC began an informal inquiry into third-quarter results in March 2007 and that it received a formal order of investigation in February 2008. The company had worked out preliminary settlement last summer, and it fully reserved it on the company's financial statements in the third quarter of 2009.

That will be all the company will have to pay in the matter, Tim McCauley, Presstek’s director of business planning and investor relations. The company would not be responsible for Marino’s legal cost, though the company’s directors and officers liability policy would cover some of his expenses.

“From our perspective, this is good news,” McCauley said. “It’s another hurdle to get behind us before we move forward.” – BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW