Trent Martin Extradited
on SPSS Insider Trading Charges
Trent Martin was Arrested in Hong Kong Pursuant to a Request from the
April 1, 2013
TRENT MARTIN was extradited from Hong Kong yesterday to face insider
trading charges. He was arrested in Hong Kong on December 22, 2012
pursuant to a request from the United States. MARTIN will be presented
in Manhattan federal court before U.S. Magistrate Judge Henry B. Pitman
this afternoon at 2:30 p.m.
MARTIN, a former research analyst at an international financial services
firm, was charged for his alleged involvement in an insider trading
scheme with Thomas C. Conradt and David J. Weishaus, two stock brokers
who were arrested for their roles in the scheme on November 29, 2012.
MARTIN, Conradt, Weishaus, and their co-conspirators allegedly traded on
the basis of material, non-public information (“Inside Information”)
concerning IBM’s acquisition of a software company, SPSS, Inc., in 2009,
earning more than $1 million in profits in the aggregate.
Manhattan U.S. Attorney Preet Bharara said: “Like other insider traders,
Trent Martin allegedly exploited his access to confidential information
to turn an illegal profit. With his arrival here to face charges for his
alleged conduct, he now knows that the long arm of the law will reach
out—even thousands of miles—to hold alleged lawbreakers accountable.”
FBI Assistant Director in Charge George Venizelos said: “As alleged,
Trent Martin acquired information he knew was confidential, and then
traded on it and shared it, which he knew was illegal. In fact, as
alleged, he was aware this conduct could land him in prison. What Martin
may not have realized was that being halfway around the globe did not
insulate him from arrest and prosecution.”
The following allegations are based on the superseding indictment
against MARTIN that was unsealed on December 26, 2012 in Manhattan
federal court, and other court documents:
The Inside Information concerning IBM’s acquisition of SPSS originated
from a corporate lawyer who was part of the legal team that represented
IBM in the transaction (“Attorney-1”) in 2009. On May 31, 2009,
Attorney-1 shared Inside Information concerning the transaction,
including the names of the parties and the fact that IBM was going to
acquire SPSS for a significant premium over SPSS’ market price, with his
close friend, MARTIN. The information was shared in confidence. Based on
their longstanding history of sharing confidences, Attorney-1 expected
that MARTIN would not share the information or use it to trade.
However, in June 2009, MARTIN bought SPSS common stock based on the
Inside Information he was given by Attorney-1 and, in turn, shared the
tip with his roommate, Conradt, who worked as a stock broker at a
securities trading firm (“Securities Trading Firm-1”). Conradt then
bought SPSS common stock and tipped Weishaus, his co-worker at
Securities Trading Firm-1. On June 24, 2009, Weishaus started buying
call option contracts in SPSS. In addition, Conradt and Weishaus tipped
their co-workers at Securities Trading Firm-1 (“CC-1 and CC-2”), who
also bought SPSS call option contracts in June and July 2009 based on
the Inside Information.
On July 23, 2009, MARTIN told Attorney-1 that he had purchased SPSS
common stock and call options on the basis of the Inside Information
that Attorney-1 had disclosed to MARTIN on May 31, 2009.
When IBM announced its acquisition of SPSS on July 28, 2009, the share
price of SPSS common stock rose by 41 percent in one day, from the prior
day’s closing price of $35.09 per share to a closing price of $49.45 per
share. Thereafter, MARTIN, Conradt, Weishaus, CC-1, and CC-2 sold their
SPSS positions, yielding profits of $7,900, $2,538, $129,290, $629,954,
and $254,360, respectively, for a total profit in excess of $1 million.
In the fall of 2010, after the U.S. Securities and Exchange Commission
(“SEC”) had begun investigating insider trading in SPSS, MARTIN told
Attorney-1 that he had profited approximately $8,000 from the Inside
Information concerning IBM’s acquisition of SPSS and had disclosed it to
his roommate, Conradt, before the transaction was publicly announced.
MARTIN also told Attorney-1 that MARTIN believed Conradt had taken a
large position in SPSS before the announcement and had, in turn, shared
the Inside Information with others. MARTIN further stated to Attorney-1
that he was returning to Australia in light of the SEC investigation,
and that he knew that insider trading can result in jail sentences,
referring to the criminal prosecution of Martha Stewart.
33, has been charged with one count of conspiracy to commit securities
fraud and one count of securities fraud. Count one, the conspiracy
charge, carries a maximum potential penalty of five years in prison and
a fine of $250,000 or twice the gross gain or loss from the offense.
Count two, the securities fraud charge, carries a maximum potential
penalty of 20 years in prison and a maximum fine of $5 million.
Following their earlier arrests in the United States, Conradt and
Weishaus pled not guilty on December 7, 2012. The case against MARTIN,
Conradt, and Weishaus is assigned to U.S. District Judge Andrew L.
Carter, Jr. Conradt and Weishaus are scheduled to appear before Judge
Carter next on April 3, 2013, at 12:00 p.m.
Mr. Bharara praised the investigative work of the FBI and thanked
authorities in Hong Kong. He also thanked the SEC and the U.S.
Department of Justice’s Office of International Affairs. Mr. Bharara
noted that the investigation is continuing.
This case is being handled by the Office’s Securities and Commodities
Fraud Task Force. Assistant U.S. Attorneys John T. Zach and David B.
Massey are in charge of the prosecution.