Former Congressman Stephen Buyer walks as Capitol Hill police detain media in the halls of the US Senate. (Photo by TIM SLOAN/AFP via Getty Images)
A former Indiana congressman took advantage of inside information he gained while playing golf with an executive at T-Mobile, a company he lobbied for in Washington DC, the SEC said in a statement. complaint filed Monday in Manhattan Federal District Court. The alleged insider trading was one of two times former Republican Congressman Stephen Buyer illegally benefited from information he obtained through his lobbying activities.
He earned $335,000 in illegal profits as a result of the insider trading, according to the complaint.
“We are committed to doing everything possible to maintain and build public trust by leveling the playing field and holding the buyer accountable for illegally gaining access,” said Gurbir Grewal, Division Director of SEC enforcement, in a statement.
As part of the action, the Southern District of New York announced a coordinated set of criminal charges against the former congressman.
Members of Congress, including House Speaker Nancy Pelosi, have faced growing questions related to the success of their stock trades. Their investments have become such a source of fascination that traders have created exchange-traded funds that track the movements of politicians in hopes of allowing ordinary citizens to benefit from the information as well.
Under the Stop Trading on Congressional Knowledge Act of 2012, members of Congress are expected to promptly disclose all transactions made by themselves or members of their immediate family. But the media found dozens of cases in which members of Congress failed to follow the rules, and reports that senior senators sold stocks after receiving information related to matters of national importance. , such as the coronavirus pandemic, have added to concerns. .
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Monday’s allegation is likely only to spark more questions about the current Congress, whether justified or not. After leaving Congress in 2011 amid corruption allegations, Buyer had formed an advisory group that lobbied on behalf of companies including T-Mobile, Microsoft, Johnson & Johnson and Boston Scientific, according to the website. Legistorm political follow-up.
The SEC alleges that during a golf trip to Miami in March 2018, a T-Mobile executive told former Indiana congressman Steve Buyer that the company planned to acquire Sprint. The buyer was receiving consulting fees to lobby on T-Mobile’s behalf, and the executive had “received instructions from T-Mobile to begin ‘outreach’ of key T-Mobile consultants, including the buyer , regarding the acquisition,” according to the complaint.
The buyer then decided to exploit the information given to him by buying $568,000 worth of Sprint stock using his personal accounts, a joint account he held with his cousin and the account of a romantic partner. . When news of the acquisition finally broke the following month, Buyer made a quick profit of $107,000.
In an attempt to “cover up” the illegal transactions, the buyer then printed a document published by a group called Zacks Investment Research about Sprint and “took handwritten notes on the document to create the false impression” that he had made the transactions as a result of this report, not illegal information from a T-Mobile executive.
Contacted by Motherboard, T-Mobile said it was cooperating with the investigation and that while the company “cannot comment on the government’s allegations against Mr. Buyer, we follow and fully support enforcement of laws that prohibit the insider trading”.
The following year, Buyer bought more than $1 million worth of stock in a management consulting firm called Navigant Consulting, which the former congressman had heard he was going to buy one of his consulting clients, Guidehouse, another management consulting firm. This time, Buyer not only used his own account and that of the romantic partner, but also his wife’s account and a joint account he held with his wife and son.
Again, the buyer found a Zacks report that recommended buying Navigant stock, then emailed it to himself and his son “to create the false impression that his purchases were based on information from the Zacks report,” according to the complaint.
The day after the acquisition was announced, the buyer reportedly sold nearly all of the shares, raking in another profit of $227,000.
In October 2019, Guidehouse became aware of the alleged insider trading and soon after began cooperating with the SEC and the Justice Department as they began to investigate, company CMO Joy Jarrett told Motherboard on Tuesday.
“As soon as we became aware of the alleged wrongdoing, in October 2019, we immediately conducted an internal investigation, determined that no Guidehouse employees had participated in these activities, terminated our relationship with the buyer and reported our findings to the appropriate authorities,” Jarrett said.
The buyer’s attorney, Andrew Goldstein, said in a statement Monday to Motherboard that his client was innocent.
“His stock transactions were legal. He looks forward to a speedy exoneration,” Goldstein added.
The buyer left Congress in 2011 after nearly two decades in office. At the time, he cited his wife’s “incurable autoimmune disease” as the reason he would not run again.
But the Republican was also facing corruption charges related to a college scholarship foundation. The foundation, which had once been led by de Buyer’s daughter, had allegedly ‘not awarded a single scholarship’ but had received hundreds of thousands of donations from pharmaceutical companies and lobbyists, which had been used to pay for events like golf tournaments in the Bahamas. , which Buyer attended with industry lobbyists.
At the time, reporters noted that Buyer served on the House Energy and Commerce Committee, which is responsible for regulating the same pharmaceutical industry that donates to the university foundation. As part of his role on the committee, Buyer had lobbied to remove a 2007 provision that would have created a ban on advertising new drugs, which drug companies have opposed.
This post has been updated to include information provided by Stephen Buyer’s attorney, T-Mobile and Guidehouse.