Australian financial analyst Trent Martin has been indicted in the U.S. on charges stemming from an alleged insider-trading scheme tied to International Business Machines Corp.’s (NYSE: IBM) $1.2 billion acquisition of SPSS Inc.
Martin was charged with conspiracy and securities fraud, federal prosecutors in Manhattan said yesterday in a statement. Martin also faces a civil suit over the alleged scheme filed by the U.S. Securities and Exchange Commission.
Prosecutors and the SEC didn’t identify where Martin worked when the alleged crimes occurred. According to the SEC’s complaint, Martin left a New York brokerage in September 2009 to join a “related” firm in Stamford, Connecticut, where he remained until November 2010.
Prosecutors said that Martin, 33, learned confidential information from a corporate lawyer, not identified in court papers, who was working on the IBM deal and with whom he was close friends.
Martin bought SPSS stock based on the information in June 2009 and shared the tip with his Manhattan roommate, Thomas Conradt, who worked as a stock broker, according to the government. Contradt in turn tipped off his coworker and friend David Weishaus, who passed the information to two other unidentified brokers they worked with, prosecutors said.
When the companies issued a press release on July 27, 2009, on IBM’s plan to buy SPSS for about $1.2 billion, or almost $50 a share, SPSS’s share price rose by 41 percent in one day. Martin and the brokers earned about $1.2 million in illicit profits from trades based on the information about the deal, prosecutors said.
Conradt and Weishaus were indicted on charges related to the alleged scheme on Nov. 29. They have pleaded not guilty to the charges.
Martin, who was arrested in Hong Kong on Dec. 22, faces as long as 20 years in prison if convicted of the most serious charge, securities fraud.
No information regarding a defense attorney for Martin was available in court records. A spokeswoman for the Manhattan U.S. Attorney’s office said the information for the defense counsel wasn’t yet available.
Martin appeared in a Hong Kong court on Dec. 24 and was remanded in custody, the city’s justice department said in an e-mail. The case was adjourned to Jan. 4 so he can obtain legal advice, the department said.
The corporate lawyer regarded Martin as “his closest friend in New York City” and expected the analyst to keep the information about the deal confidential, according to the indictment.
The case is U.S. v. Martin, 12-cr-887, U.S. District Court, Southern District of New York (Manhattan).
IBM employs an estimated 10,000 people across North Carolina.
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