July 18, 2014 — Two more brokers have been charged with trading on inside information in advance of the 2009 acquisition by IBM Corporation of SPSS Inc. Sharing or trading on nonpublic information is a crime that undermines the public’s trust in the markets. To protect investors, the U.S. Congress initiated a whistleblower program in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Tipsters who notify the Securities and Exchange Commission (SEC) about illegal trading on nonpublic information may be rewarded for collaborating with the SEC. Whistleblowers could be rewarded with compensation equivalent to thirty percent of the amount the government recovers, so long as the total recovery exceeds $1 million.
Brokers Allegedly Traded On Tip Friend Received From Roommate
When working as brokers in the New York office of a Connecticut broker-dealer, Benjamin Durant III and Daryl M. Payton allegedly received a tip from a fellow broker at the firm about the upcoming acquisition of SPSS by IBM. The tip, which included the anticipated transaction price, came from Thomas C. Conradt, who had received the information from his roommate, Trent Martin. Martin, a research analyst, misappropriated the nonpublic information from a lawyer who was working on the deal. The lawyer had shared information with Martin, but expected him to remain silent about it and did not anticipate that anyone would use the information to make trades. Insider trading is illegal.
Not only did Martin trade on the information himself, he tipped his roommate, Conradt, who also traded on it and went on to tip Durant and Payton, as well as others. When the public announcement of IBM’s acquisition of SPSS was made, Durant and Payton met with others in a Manhattan hotel room to conceive a plan should any of them be contacted by law enforcement concerning their trading in shares of SPSS.
The SEC has filed a complaint against Durant and Payton, which demands return of $300,000 in ill-gotten gains as well as financial penalties and interest. Criminal charges have also been filed against the two.
Whistleblowers Collaborate With SEC On Insider Trading
Company insiders with information about insider trading schemes should consider speaking with a qui tam lawyer to familiarize themselves with the Dodd-Frank whistleblower process before they notify the SEC. While Waters & Kraus is not handling this particular case, we are handling similar cases. If you have similar claims against different brokers or broker-dealer firm, contact us or call our attorneys at 855.784.0268. Gary Paul and Michael Armitage, partners in the firm’s Los Angeles office, Waters Kraus Paul & Siegel, have the experience necessary to protect whistleblowers in insider trading cases.
Contact us by email or phone our securities fraud attorneys at 855.784.0268 to learn how we can work together in SEC fraud cases.
