BOSTON (Reuters) - A former employee at proxy adviser Institutional Shareholder Services testified on Tuesday that he leaked details about how its investor clients voted on shareholder proposals to get tickets to sporting events and U2 and Jay-Z concerts.
Brian Bennett, who was fired by ISS in 2012, testified in federal court in Boston as the star witness in the trial of four former employees at proxy solicitation firm Georgeson LLC accused of engaging in a scheme to bribe him for confidential information.
Bennett told jurors the leaking began as a favor to Michael Sedlak, an employee at Georgeson, a unit of Computershare Ltd , who had treated him to free dinners at steakhouses and seafood restaurants since their first meeting in 2006.
Sedlak eventually began regularly seeking information during the annual proxy season, when many companies hold their shareholder meetings and votes on various proposals, said Bennett, who sought something in exchange.
“I remember that I heard someone else mentioning if you ever need to get tickets for entertainment, you should ask him for it,” Bennett said in court.
Prosecutors allege he received $14,000 in tickets. Bennett, who got his master’s degree in sports management, said those tickets included ones for Boston Red Sox baseball games.
Bennett testified as a government witness in the trial of Sedlak and three other ex-Georgeson employees, Donna Ackerly, Charles Garske and Richard Gottcent, who have pleaded not guilty to wire fraud and honest services wire fraud charges.
Bennett pleaded guilty in 2015 and was later sentenced to one year of probation, although he acknowledged he did not tell the truth when federal authorities first questioned him about the scheme in 2012.
“I thought I could talk my way out of it,” he said. “I didn’t think it was that major of an issue, but apparently it is.”
Prosecutors say Bennett, who worked first in Maryland for ISS and later in Boston, from 2007 to 2012, supplied information to Sedlak, who provided it to Ackerly, Garske and Gottcent.
Ackerly and Garske then arranged for clients to be billed for some of the bribes using false descriptions like “courier services,” prosecutors said.
The goal, prosecutors said, was to gain an illegal edge in their work helping companies shape strategies that could affect the outcome of shareholder votes.
The defendants contend the information was not confidential. Georgeson agreed in November to pay $4.5 million and enter into a deferred prosecution agreement to resolve related charges.
Reporting by Nate Raymond in Boston; Editing by Peter Cooney