Former Indiana Republican Rep. Stephen Buyer was arrested Monday and federally charged with insider trading, and the Securities and Exchange Commission (SEC) also announced a parallel civil complaint covering the same allegedly unlawful conduct, as CNBC reports.
According to the outlet, Buyer is accused of using a series of investment accounts owned by himself alone or together with his spouse, his son, a cousin, and a former mistress to engage in stock transactions made on the basis of material, nonpublic information he secured while working as a consultant following his 2011 departure from Congress.
The criminal complaint against Buyer also alleges that he concocted detailed schemes to mask the true source of the information on which his trades were based, and in that case, he faces four counts of securities fraud, as CNBC noted.
An SEC press release detailed Buyer’s alleged misconduct, explaining that after he left the House in 2011, the former legislator founded a consulting firm, clients of which included T-Mobile, among others, and through that work became privy to information about the telephone giant’s plans to acquire rival Sprint – before the general public had such knowledge.
Almost immediately, Buyer started purchasing Sprint shares, amassing a large number of the company’s securities in his own accounts as well as those co-owned with others, and once news of the merger became public, he reaped a substantial profit.
The SEC further outlined the manner in which Buyer used inside information regarding the acquisition of Navigant Conslulting by another of his firm’s clients, Guidehouse, LLP, in a series of events that ultimately brought him a profit of roughly $227,000.
In announcing the agency’s charges against the former Indiana lawmaker, Gurbir Grewal, Director of the SEC’s Enforcement Division, stated, “When insiders like Buyer – an attorney, a former prosecutor, and a retired Congressman – monetize their access to material, nonpublic information, as alleged in this case, they not only violate the federal securities laws, but also undermine public trust and confidence in the fairness of our markets.”
“We are committed to doing all we can to maintain and enhance public trust by leveling the playing field and holding Buyer accountable for illegally profiting from his access,” Grewal added.
If Buyer did indeed run afoul of the law by profiting from his access to material, nonpublic information in connection to securities transactions, he should indeed be called to account, but it would be nice if the principles articulated by Grewal would somehow get the attention of House Speaker Nancy Pelosi (D-CA) and her husband, Paul, who seem to have an uncanny knack for orchestrating stock windfalls that are curiously well-timed in terms of what is happening on Capitol Hill.