US jail threat for Australian analyst
AN AUSTRALIAN financial analyst is facing up to 25 years in a US jail for allegedly pocketing $7600 in an insider-trading scheme.
Trent Martin, 33, from NSW, was arrested in Hong Kong last Saturday on US charges relating to an alleged insider-trading scheme linked to IBM's $US1.2 billion ($1.16 billion) purchase of the software company SPSS in 2009.
He faces charges of securities fraud and conspiracy to commit securities fraud, the US Attorney's Office in New York said on Wednesday, and could spend up to five years in prison on the conspiracy charge and up to 20 years on the securities fraud charge if convicted.
"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," said Daniel Hawke of the US Securities and Exchange Commission.
"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."
A Department of Foreign Affairs and Trade spokesman said the Australian government was aware of Mr Martin's arrest and officials from the consulate-general in Hong Kong had planned to visit him in prison on Friday to offer assistance.
It is understood Mr Martin is on "administrative leave" from his employer, Nomura International. He joined Nomura in September 2011, and previously worked at the Royal Bank of Scotland in New York and Sydney from 2009-11.
Mr Martin was alleged to have learnt confidential information from an unidentified New Zealand lawyer working on the IBM deal, on May 31, 2009, when they were in New York. The pair were identified in SEC documents as being "very close friends", with the lawyer expecting Mr Martin not to share the information or use it to trade.
The SEC said: "As two young professionals living in a foreign country far from home, they quickly became very close friends ... The [lawyer] considered [Mr Martin] to be his closest friend in New York."
The SEC said Mr Martin "attempted to purchase SPSS common stock on the very first business day after learning the non-public information from his friend" in June 2009. He also shared the information with his flatmate in Manhattan, stockbroker Thomas Conradt, 34, who in turn told his co-worker David Weishaus, 32, the SEC alleged.
Before the IBM deal, Mr Conradt said in an instant message conversation with Mr Weishaus that "Trent told me not to tell anyone".
On the same day, Mr Martin allegedly told his lawyer friend he bought SPSS common stock and call options based on the information he shared with him. The lawyer "expressed outrage and demanded that Martin sell all of his SPSS securities immediately", the SEC alleged.
The IBM deal was announced on July 28, 2009, and SPSS common stock rose 41 per cent in one day. All five alleged participants gained a total of $US1.2 million in profits, the US Attorney's Office said, adding that Mr Martin gained $US7900, Mr Conradt $US2538 and Mr Weishaus $US129,290. The other two unidentified brokers allegedly yielded profits of $US629,954 and $US254,360.
In late 2010, Mr Martin allegedly told the lawyer he profited by almost $US8000 from the information, as the SEC started its investigation into the suspected insider trading.
"Martin further stated to [the lawyer] that he was returning to Australia in light of the SEC investigation, and that he knew that insider trading can result in jail sentences, referring to the criminal prosecution of Martha Stewart," the US Attorney's Office said.
Mr Martin appeared in a Hong Kong court on Monday and was remanded in custody, the city's justice department said. The department said that the case was adjourned to January 4 so Mr Martin could obtain legal advice.