A New Zealand attorney at a New York law firm has become
embroiled in a major US insider trading case which could see
a former Australian mate jailed for 20 years.
The Kiwi lawyer, identified only as 'Attorney-1' in court
papers, felt out of his depth when he was tasked with
overseeing an estimated $US1.2 billion acquisition by
computer giant IBM of a Chicago software company.
He confided in his friend, Australian financial analyst Trent
Martin who was working at a Connecticut brokerage firm,
seeking "moral support, reassurance, and advice".
But Martin went behind his mate's back to use the highly
confidential information to buy shares in the firm, SPSS
ahead of its sale to IBM, US prosecutors allege.
He's further accused of passing the hot tip on to other
financial broker friends who allegedly made thousands from
the illicitly gained knowledge.
Now, Martin and two other New York stockbrokers face being
sent to US federal prison for more than 20 years or a maximum
fine of $NZ6m.
US prosecutors say the deal was motivated by greed and only
came after the release of "highly confidential" information
The indictment states that Attorney-1 considered Martin his
"closest friend in New York City".
"Martin and Attorney-1 sought advice from each other and
shared common interests, a common cultural background, and
the common experience of being single men who worked in
demanding industries and lived far from their home countries
of, respectively, Australia and New Zealand," the indictment
Court papers tell how the pair met at a Manhattan cafe in
The papers tell how the lawyer disclosed to Martin the
anticipated "significant" transaction price and the
identities of the acquiring and target companies while he was
describing the magnitude of his assignment.
It's alleged that Martin, 33, then used the non-public
information to buy shares with SPSS ahead of the acquisition.
Martin then allegedly told his Manhattan flatmate Thomas
Conradt about the inside information, who then passed on the
details to friend David Weishaus, who both allegedly pocketed
thousands from the illicit deal.
Two others, codenamed 'CC-1' and 'CC-2' also allegedly
profited $US629,954 and $US254,360 respectively, for a total
profit in excess of $US1 million.
Martin, meanwhile, made just $NZ9500 from the shares'
subsequent sale, it's claimed.
The prosecutors claim Martin told his New Zealand buddy that
he wanted to return home in November 2010 after the US
Securities and Exchange Commission (SEC) launched an
investigation, saying he knew trading offences could lead to
jail, and referred to the much publicised criminal
prosecution of celebrity homemaker Martha Stewart.
The New Zealand Securities Commission helped in the probe.
In September 2011, Martin moved to Hong Kong, but the
authorities finally caught up with him shortly before
Christmas, arresting him on December 22 last year after a
request from the US.
Now he has been charged with one count of conspiracy to
commit securities fraud and one count of securities fraud.
"Martin is a licensed professional who knowingly disregarded
insider trading laws to enrich himself, and then fled the US
when he learned of our investigation," SEC Philadelphia
office director Daniel M. Hawke said.
"Martin could run but he could not hide, as the long arm of
the SEC will extend to those who flee the US hoping to avoid
the consequences of their unlawful conduct."
Martin, from NSW, remains in custody in Hong Kong and awaits
extradition to the US.