A Texas man pleaded guilty to insider training after he was accused of making $1.7 million in illegal profits by purchasing and selling stocks based on his wife’s work conversations, which he had overheard while she was working remotely at home, federal prosecutors said on Thursday.
The man, Tyler Loudon, of Houston, bought 46,450 shares of stock in the truck stop and travel center company TravelCenters of America after he heard his wife discuss her employer’s proposed acquisition of it, according to a complaint filed in the Southern District of Texas by the U.S. Securities and Exchange Commission.
Mr. Loudon’s wife, who is not named in court documents, was a mergers and acquisitions manager at BP, a British oil and gas company, the complaint said.
On Feb. 16, 2023, TravelCenters of America announced that it had agreed to be acquired by BP, sending its stock prices soaring by 70.8 percent.
Mr. Loudon immediately sold all of his stock, which he had bought without his wife’s knowledge, according to court documents.
“Mr. Loudon made a terrible mistake in judgment for which he has taken full responsibility,” Mr. Loudon’s lawyer, Peter Zeidenberg, said in an email.
Alamdar S. Hamdani, the U.S. attorney for the Southern District of Texas, announced on Thursday that Mr. Loudon had pleaded guilty to securities fraud. Mr. Loudon also reached a partial judgment with the S.E.C., which had filed civil charges against him. BP declined to comment.
Mr. Loudon’s wife had started to work on BP’s proposed acquisition of TravelCenters of America in early 2022, the S.E.C.’s complaint said. She and Mr. Loudon, who is employed at a publicly traded company, often worked in home offices within 20 feet of each other.
Federal prosecutors said that Mr. Loudon either knew, or was “severely reckless in not knowing,” that information he overheard or was told about BP deals was confidential.
Mr. Loudon began buying TravelCenters of America stock on Dec. 27, 2022, and over the next seven weeks, the complaint said, he “methodically” sold approximately $2.16 million in positions from his individual brokerage account and his Roth IRA to purchase more of the company’s stock.
He did not tell his wife, federal prosecutors said.
After the merger was announced publicly, the Financial Industry Regulatory Authority, a private business regulator, requested information from BP in late March 2023 about the deal, the complaint said.
Mr. Loudon’s wife told her husband that a former colleague who had worked on the acquisition had complained to her about BP’s lawyers, who were asking for personal information. Mr. Loudon asked his wife if other employees would be under similar scrutiny and she said that they would.
A week later, Mr. Loudon told his wife that he had bought shares of the stock before the acquisition, but he did not say how many shares or how much money he had made, the complaint said.
Mr. Loudon’s wife was “stunned” by this admission, according to the complaint, and told her supervisor. She was placed on administrative leave and eventually terminated.
BP reviewed Mr. Loudon’s wife’s texts and emails and found no evidence that she knowingly leaked the information or knew about her husband’s trading.
“After Loudon’s confession, Loudon’s wife moved out of their house and generally ceased all contact with Loudon,” the complaint said. Mr. Loudon’s wife initiated divorce proceedings in June 2023.
Mr. Loudon faces a maximum sentence of five years in prison and a possible maximum fine of $250,000, according to prosecutors.
Mr. Loudon also agreed in the plea agreement to forfeit his $1,763,522 profit to the United States. His sentencing is scheduled for May 17.