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Classmates from Law School Arrested for Insider Trading
On Thursday, two classmates from law school, one who is working as a lawyer in Colorado, were accused of trading insider information before a $1.2 billion acquisition by IBM in 2009, according to a report in the Wall Street Journal. The accused are David Weishaus and Thomas Conradt, who were employed as stock brokers at Euro Pacific Capital when the incident occurred.
The two men purchased shares of software maker SPSS Inc. prior the deal being announced to the public in July of 2009. They also provided insider tips to their friends who were employed as stock brokers at the time. Lawyers for both men arrested did not return phone calls for comment.
The two men were taken into custody by the FBI on Thursday and then charged with securities fraud. Conradt was taken into custody in Denver and Weishaus was arrested in Baltimore. The two men, who were one year apart in law school, made approximately $131,000 on the deal. The friends they tipped off made over $1 million, according to the lawsuit filed by the SEC Thursday.
The SEC said that Conradt learned of the deal from his roommate, who was an Australian securities analyst who was friends with a lawyer working with the firm advising SPSS in the deal with IBM. The SEC and the prosecutors working on the case said that the lawyer working on the case was employed in the firm’s mergers and acquisitions practice for just four months. He reportedly was worried about his assignment and asked for moral support when he told his friend about the deal at brunch one day.
During instant message conversations, Conradt and Weishaus spoke to each other about getting rich from the trades. Weishaus said, “we need spss to run up i need that lexus,” according to prosecutors.
“Greed isn’t good, and neither is trading on inside information,” said FBI Assistant Director Mary Galligan.
The brokers, including Mr. Weishaus, were fired in November 2009 after the SEC launched an investigation into their trades.
One year later, the lawyer who provided the tip and the analyst found out about the probe by the SEC. The lawyer, not long after his confession regarding him providing the information, said he found out that the analyst was packing his bags. The lawyer was told the following by the analyst after learning about the SEC probe: “that he was leaving the United States and returning to Australia because, in light of the commission’s investigation, it was his ‘best option,’” the SEC said.Classmates from Law School Arrested for Insider Trading by Jim Vassallo