| NEW YORK, June 25
NEW YORK, June 25 U.S prosecutors in Manhattan
unsealed an indictment on Wednesday against two men they said
participated in a ring of information-sharing that led to
illegal trading in a technology company acquired by IBM
Daryl Payton Jr. and Benjamin Durant III were arrested on
Wednesday morning, a spokesman for the Federal Bureau of
Investigation said. Each faces five counts of securities fraud
and one count of conspiracy to commit securities fraud,
according to the indictment.
Reuters could not reach the two men for comment because they
were in federal custody. Their lawyers could not immediately be
Three people have already admitted to sharing and trading on
secret information provided by a corporate lawyer working on
IBM's purchase of the software maker SPSS Inc in 2009.
Court filings show that prosecutors tacked Wednesday's
indictment onto the earlier case, in which the lawyer shared
information about the SPSS deal with his friend, Trent Martin,
an analyst working for the Royal Bank of Scotland, who
in turn told his roommate, Thomas Conradt.
Conradt and another trader at his firm, Euro Pacific Capital
Inc of Westport, Connecticut, bought call options on SPSS before
IBM's bid was announced. Martin, Conradt and the other trader,
David Weishaus, pleaded guilty to charges related to the trades
Payton and Durant were also working for Euro Pacific at the
time of the trading, according to public records kept by the
Financial Industry Regulatory Authority. FINRA records show that
they left Euro Pacific Capital at the same time the U.S.
Securities and Exchange Commission informed the firm it was
investigating the two men for options trades they made. The firm
is not named in the indictment, which describes it as
"Securities Trading Firm-1."
Wednesday's indictment said Conradt tipped Durant and Payton
to the SPSS deal and the two bought call options on SPSS. Euro
Pacific's compliance department noticed the trades and opened an
When asked how he came to trade in SPSS stock, Durant said
he had heard about SPSS while researching investment
opportunities on Fidelity.com, according to the indictment.
Payton said he had heard about the stock from Durant. They then
refused to answer further questions about the trades and were
fired, according to the indictment.
The case is US v. Benjamin Durant and Daryl Payton, U.S.
District Court, Southern District of New York, No. 12-cr-00887.
(Reporting By Emily Flitter; Additional reporting by Nate
Raymond and Joseph Ax; Editing by Jonathan Oatis)