Chicago weed exec, golf buddies charged with insider trading surrounding $413 million acquisition
A former executive of a major Chicago cannabis firm has been indicted on insider trading charges tied to a planned acquisition of another weed firm that devolved into an acrimonious court battle.
Anthony Marsico was executive vice president of Verano when he allegedly used confidential information about the blockbuster plan to take over Minneapolis-based Goodness Growth in order to enrich himself and manipulate Verano’s stock value, according to the indictment filed in federal court in Chicago on Jan. 16.
The indictment also names three of Marsico’s golf buddies. Like Marsico, they allegedly used the insider information to purchase shares of Goodness Growth stock before it ballooned in value.
When the companies announced the planned $413 million, all-stock deal on Feb. 1, 2022, Goodness Growth’s stock value quickly jumped 42%.
At the time, both firms traded on the over-the-counter, or penny stocks, market of the Canadian Stock Exchange.
In hundreds of transactions over the two preceding months, Marsico bought up more than 900,000 shares of Goodness Growth stock totaling nearly $1.5 million, prosecutors say.
He sold the shares before Oct. 14, 2022, when it was announced the deal had been canceled, netting $607,338 in “illegal profits.”
Prosecutors say he also paid other people to post messages on social media in January 2022 that promoted Verano’s stock. That scheme was allegedly aimed at boosting the company’s stock value in an effort to diminish the number of shares needed to close the deal.
Marsico, of Bartlett, faces charges of conspiracy to defraud the United States and using manipulative or deceptive devices to purchase or sell securities.
Arthur Pizzello, Robert Quattrocchi and Timothy Carey — members at the same country club as Marsico — also face conspiracy charges.
They were also named in a civil complaint filed by the U.S. Securities and Exchange Commission on the same day as the indictment.
Marsico worked on real estate acquisitions and zoning and regulatory matters out of Verano’s River North headquarters. He was notably responsible for reviewing and revising “earnings reports and earnings call transcripts in advance of public announcements,” according to prosecutors
A Verano spokesperson said he was fired a year ago, insisting that his alleged schemes “had no material impact on our business and have no bearing on our operations moving forward.
“We strongly condemn the alleged actions taken by a former employee, and upon learning of the alleged conduct, fully cooperated with authorities investigating this matter,” the spokesperson said in a statement.
“We strive to operate our business with a high degree of legal and ethical standards to comply with all applicable securities laws and regulations, including maintaining and requiring employees to adhere to the company’s insider trading policy, employee codes of conduct and mandatory trainings.”
Marsico's attorneys denied his stock transactions were improper.
"Mr. Marsico had a long-term and well-documented history of investing in the cannabis-related financial sector," attorneys Todd Pugh and Patrick Blegen said in a statement. "Our investigation conclusively shows that Mr. Marsico's investment activity was based solely on public and non-proprietary information."
Attorneys for Pizzello and Quattrocchi didn’t immediately respond to requests for comment. Carey couldn’t immediately be reached.
Meanwhile, the two weed companies remain locked in a legal battle over the ill-fated deal.
A week after it was called off, Goodness Growth filed a claim in the Supreme Court of British Columbia alleging that Verano had backed out of the agreement after trying to reduce the sale price.
Goodness Growth initially sought nearly $870 million, but is now seeking unspecified damages, court costs and other relief from the court.
Verano has filed a counter-claim that is specifically seeking nearly $15 million to cover payment of a termination fee.