Two ex-brokers accused of running a $1 million insider-trading scheme tied to International Business Machines Corp.’s acquisition of SPSS Inc. were criminally charged and sued by U.S. authorities.
Thomas Conradt, 34, a Denver lawyer, and David Weishaus, 32, described by the government as longtime friends, were arrested Thursday by the Federal Bureau of Investigation, Peter Donald, an FBI spokesman, said.
The Securities and Exchange Commission alleged in a civil suit filed today in federal court in Manhattan that the men learned that IBM had retained a law firm in connection with its possible acquisition of the software company before it was announced.
IBM and SPSS issued a press release on July 27, 2009, on IBM’s plan to buy SPSS for about $1.2 billion, or $50 a share.
The two men had learned of the deal two months earlier from a roommate of Conradt’s who got the information from an associate at a law firm that worked on the deal, the SEC alleges.
Conradt passed the information to Weishaus and at least three others who then traded in SPSS stock in July, the regulators said.
“Ultimately, the trades placed by Conradt, Weishaus and three registered representatives resulted in ill-gotten gains exceeding $1 million,” the SEC alleged.
The case is SEC v. Conradt, 12-cv-8676, Southern District of New York.
© Copyright 2014 Bloomberg News. All rights reserved.