A former member of Congress was charged by the Securities and Exchange Commission Monday for potential insider trading.
What Happened: The SEC announced charges against former U.S. Representative Stephen Buyer, a Republican who represented the state of Indiana.
The complaint alleges Buyer used insider information to buy $1.5 million in stocks.
After leaving Congress in 2011, a consulting firm was created called the Steve Buyer Group. Among the clients that Buyer worked with was T-Mobile US (NASDAQ:TMUS).
Buyer was told of a plan by T-Mobile to buy Sprint, which was not public information, in March 2018. Buyer began accumulating shares of Sprint the day after the golf outing with a T-Mobile executive where he first learned the news.
Buyer bought $568,000 in Sprint shares through personal accounts, a joint account with a cousin and the account of an acquaintance.
When the merger news between T-Mobile and Sprint leaked, Buyer’s stock position in Sprint was up $107,000.
In 2019, Buyer purchased over $1 million in shares of Navigent Consulting Inc prior to an announcement that the company would be acquired by Guidehouse LLP, a consulting client of Buyer’s company.
Buyer used multiple accounts to make the stock purchases, including joint accounts with his wife and son, his wife’s personal account and an acquaintance’s account, according to the complaint.
After the Navigent acquisition was announced, Buyer sold his shares from the multiple accounts for a profit of $227,000.
Buyer previously served as a member of Congress from 1993 to 2011 representing the state of Indiana.
Related Link: 10 Best Stock Traders In Congress In 2021 (Spoiler: Nancy Pelosi Isn't No. 1)
Why It’s Important: The complaint seeks gains plus interest from Buyer along with potential penalties, a permanent injunction and a director bar against Buyer. The complaint also seeks damages from Buyer’s wife Joni Lynn Buyer.
“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,” Director of SEC Enforcement Gurbir S. Grewal said.
Along with the SEC complaint, the U.S. Attorney’s Office for the Southern District of New York filed related criminal charges against Buyer.
The insider trading charges come over a decade after Buyer served as a member of Congress, but during a time when there is increased pressure from the public and several members of Congress to ban the buying and selling of stocks and options by publicly elected officials while serving in office.
A recent trade by Speaker of the House Nancy Pelosi’s husband to exercise options of NVIDIA Corp (NASDAQ:NVDA) prior to the voting of the CHIPS Act by Congress has faced scrutiny. Pelosi has denied that her husband has ever received information from her about any companies.
