A 42-year-old Houston man has made a plea deal on a charge of insider trading after he allegedly pocketed about $1.7 million in illegal profits from the purchase and sale of stock market shares based on business conversations of his wife that he overheard.
According to the U.S. Attorney’s Office for the Southern District of Texas, Tyler Loudon pleaded guilty to securities fraud facilitated by his using information he gleaned from his unsuspecting wife at their home.
U.S. Attorney Alamdar S. Hamdani said Loudon’s wife was an associate manager in mergers and acquisitions at the internationally-based oil and gas company BP.
According to a Houston Chronicle report on MSN News, Loudon overheard several conversations about the acquisition that she had while she was working remotely from their home.
When he learned that her company was planning to buy a travel center operator business, he reportedly used the non-public information about the anticipated acquisition to buy 46,450 shares in the business ahead of the public notice.
The oil and gas company announced its acquisition agreement with TravelCenters of America in February of 2023. Following the official announcement of the sale, the travel center operator’s stock price shot up in value by nearly 71%, and Loudon then quickly sold his shares for a profit of $1.76 million.
U.S. District Judge Sim Lake accepted the plea agreement, under which Loudon agreed to forfeit the money he made in illegal proceeds. He now faces up to 5 years in a federal prison and a fine of as much as $250,000.
His sentencing hearing has been set for May 17. Meanwhile, he also faces a pending civil case brought by the Securities and Exchange Commission (SEC), which could lead to an additional fine.
The investigation was conducted by the FBI with assistance from the Financial Industry Regulatory Authority and the SEC. Assistant U.S. Attorney Karen M. Lansden is the prosecutor on the case.
“We allege that Mr. Loudon took advantage of his remote working conditions and his wife’s trust to profit from information he knew was confidential,” said Eric Werner, regional director of the SEC’s Fort Worth office.
The SEC reported that BP placed Loudon’s wife on administrative leave and then fired her after learning of her husband’s charge, even though there was no proof that she knew about his insider trading. Divorce proceedings started in June of 2023.
Prosecutors say a challenge in such cases is determining if the partner who initially was privy to the information was in on the crime. In this case, the determination was that Loudon’s wife was not.
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Are insider trading crimes rising?
Such crimes are on the rise nationally, as well. In fact, many occurred after the onset of the 2020 COVID pandemic, which led to more people working from home and being privy to the business knowledge of a spouse or partner, which some used illegally.
According to The Wall Street Journal, a compliance executive at a payments company was charged with about a dozen counts of insider trading for allegedly snooping for deal details on the laptop of his girlfriend, an executive assistant at the investment bank Morgan Stanley.
Steven Teixeira accessed the laptop of his girlfriend, an unnamed executive assistant at an investment bank, for details on upcoming corporate transactions, then passed them on to a friend, according to the U.S. Justice Department and Securities and Exchange Commission, which brought cases against him.
The prying occurred when the two worked at their shared home in Queens, New York, during the pandemic, the SEC stated.
The Justice Department said Teixeira has pleaded guilty to some of the charges under a cooperation agreement. His friend, stockbroker Jordan Meadow, was also arrested, but the girlfriend was not charged with any wrongdoing.
As part of the plea deal, Teixeira has been cooperating with prosecutors and is set to testify at the trial of Meadow.
Authorities said Teixeira’s girlfriend had access to bank information on public-company mergers and would leave her laptop unattended at their home in Queens while she ran errands so that Teixeira could see if she received any urgent emails and then alert her.
The SEC said he then looked through her work files and browsed her computer apps to learn information pertaining to deals involving the bank where she worked. He also reportedly was aided by a “mouse-jiggler” he purchased that made sure that his girlfriend’s laptop would not lock when she wasn’t using it.
Teixeira then reportedly passed the information on to Meadow, who compensated him for a value of around $29,000, while the stockbroker made over $730,000 in illicit profits, and clients whom he tipped made millions, prosecutors say.
According to the Justice Department’s indictment, Teixeira and his girlfriend, who had planned to marry, are no longer together, and she left her job at the bank.
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Securities fraud often involves “pillow talk”
The Wall Street Journal cited a “rich history” of securities fraud involving “pillow talk,” in which insider traders glean confidential information from romantic partners. The COVID era offered the twist of secrets not being spilled in the bedroom or over a bottle of wine, but rather being gleaned during the humdrum routine of two adults working from home.
“During COVID, there was an uptick in brazen conduct,” Edward Imperatore, a defense lawyer at law firm Morrison & Foerster, told The Journal. “In a work-from-home environment, people acted with more impunity.”
Though men reportedly commit the most such “pillow talk” white-collar crimes, women have also been arrested. In 2002, adult-film actress Kathryn Gannon, billed on screen as Marylin Star, pleaded guilty to trading on tips from an investment bank CEO with whom she was having an affair and was sentenced to 3 months in prison.
Ten years later, former beauty queen turned hedge-fund consultant Danielle Chiesi pleaded guilty to securities fraud for her role in a widespread insider-trading ring. She blamed a toxic relationship with her boss—and lover for 20 years—who urged her to acquire inside information.
Get a Houston insider trading defense lawyer
If you live in the Houston area and face a claim, accusation or charge of insider trading or some other so-called white-collar crime involving non-violent theft, you must get a skilled and experienced Houston criminal defense lawyer to fight for your legal rights.
