UPDATE 1-SEC accuses Italian man of DRS insider trading

(Adds background, details)

WASHINGTON, May 16 (Reuters) - The U.S. Securities and
Exchange Commission said Friday it charged an Italian machinery
engineer with insider trading of DRS Technologies Inc (DRS.N: Quote, Profile, Research, Stock Buzz)
securities before public disclosure of the company's merger
negotiations.

The SEC said it also obtained an emergency court order
freezing the U.S. brokerage account of Cristian De Colli, a
resident of Rome. The account holds more than $2.1 million in
illicit profits made by De Colli in DRS trades earlier this
month, the agency said.

In a complaint filed in federal court in New York, the SEC
alleged that De Colli bought shares and call options of DRS
common stock, then liquidated all his call options for a profit
five times bigger than his original investment after Italy's
Finmeccanica SpA (SIFI.MI: Quote, Profile, Research, Stock Buzz) agreed to buy DRS for about $3.94
billion.

The SEC said De Colli's older brother worked for
Finmeccanica between 2004 and 2005.

"We will act quickly and decisively against violations of
the U.S. securities laws, no matter where that conduct occurs,
to protect our securities markets and investors," Linda
Thomsen, director of SEC's enforcement division, said in a
statement.

According to the SEC's complaint, De Colli bought 5,700
shares of DRS common stock from April 10 to April 29, and
bought 3,116 call options for DRS common stock between April 15
and May 7. He also bought more than 2,400 of call options on
May 6 and May 7, including ones that were out-of-the-money by
over $6 and which expired 10 days after purchase, the SEC
said.

On April 28, De Colli liquidated securities that he had
purchased in two other companies a week earlier to buy more DRS
options. At that point, 100 percent of the holdings in De
Colli's U.S.-based brokerage account consisted of DRS call
options and DRS stock.

De Colli sold all his call options for a profit of more
than $2.1 million immediately after a May 8 story was published
in the Wall Street Journal about negotiations between DRS and
Finmeccanica, the agency said.

On May 12, Finmeccanica announced it would buy DRS.
(Reporting by Julie Vorman; Editing by Brian Moss)