INDIANAPOLIS — A former U.S. congressman who represented the state of Indiana has been charged with insider trading based on inside information he reportedly received during his work with his consulting firm.
The United States Attorney for the Southern District of New York and New York Office of the FBI announced federal charges Monday for Stephen Buyer, 63, of Noblesville.
Buyer, who represented Indiana as a Republican in Congress from 1993 to 2011, is accused of engaging in insider trading schemes linked to the $26.5 billion merger of T-Mobile and Sprint, as well as the Navigant Consulting-Guidehouse merger.
According to court documents filed by the U.S. Attorney, Buyer made more than $108,000 by selling Sprint shares he bought after receiving misappropriated “material non-public information” of T-Mobile’s plan to acquire Sprint. He also reportedly profited $227,000 from illegal Navigant trades.
Timeline of insider trading Pt. 1 (Sprint shares)
A timeline presented by the Securities and Exchange Commission (SEC) show that Buyer’s consulting company, the Buyer Group, took on T-Mobile as a client in December of 2016.
Buyer learned about T-Mobile’s planned merger with Sprint during a golf outing in Florida with a T-Mobile executive on March 28, 2018. The executive reportedly told Buyer the information confidentially to be used only for the purposes of Buyer’s consulting work.
The SEC says just one day later on March 29, 2018, Buyer began purchasing stocks of Sprint. From March 29 to April 5, 2018, Buyer bought “112,675 shares of Sprint stock, at a cost of more than $568,000,” according to court documents.
Buyer used four accounts to buy the shares, including a joint account he shared with a cousin and an IRA owned by someone the SEC identified as “a woman with whom he had a romantic relationship.”
The SEC also accuses Buyer of trying to cover up the fact the Sprint stocks were bought based off insider information. According to the SEC, Buyer printed out a document by an investment research company about Sprint stock and made handwritten notes to create the “false impression” he was buying the stock based on information from the document.
T-Mobile and Sprint publicly announced their merger on April 29, 2018.
Buyer sold all of his Sprint stocks in August of 2018, making $126,404, according to the SEC.
Timeline of insider trading Pt. 2 (Navigant shares)
Buyer’s company began representing Guidehouse in November 2015.
Around May of 2019, consulting firm Guidehouse and Navigant Consulting began confidential talks of a merger.
An executive for Guidehouse contacted Buyer on June 12, 2019, to inquire about the impact a merger (although the specific company was seemingly not named) would have on the U.S. Department of Veterans Affairs (VA).
Buyer then spoke to a contact at the VA who told him that a merger could increase the projected revenue cycle management (the financial process that healthcare facilities use to track patient care from initial appointment through final payment) by hundreds of millions of dollars.
The SEC says Buyer ascertained his client was planning to buy Navigant.
On June 13 (one day after he was contacted by the Guidehouse exec), Buyer began buying stock of Navigant. He bought 46,654 shares of Navigant stock, at a cost of more than $1 million, from June 13 to August 1, 2019 across six accounts.
The SEC says Buyer tried to cover up the insider trading by emailing himself and his son an online report recommending Navigant as a stock to purchase.
Guidehouse publicly announced its acquisition of Navigant on August 2, 2019. That same day, Buyer sold all but 954 shares of the Navigant stock. The remaining shares were sold in September, and the SEC says Buyer made an overall profit of $227,774.
Buyer was charged with four counts of securities fraud, each of which carries a maximum term of 20 years.
His lawyer, Andrew Goldstein, said in a statement: “Congressman Buyer is innocent. His stock trades were lawful. He looks forward to being quickly vindicated.”
Federal investigators arrested eight other individuals Monday in three other separate insider trading cases, including a former FBI agent trainee and a former investment banker.