by A Texas man pleaded guilty to insider trading after being accused of making $1.7 million in illegal profits by buying and selling stocks based on his wife’s work conversations, which he had overheard while she was working remotely at his home, federal prosecutors said Thursday.
The man, Tyler Loudon of Houston, bought 46,450 shares of truck stop and travel center company TravelCenters of America after listening to his wife discuss her employer’s proposed acquisition of it, according to a complaint filed in the Southern District of Texas by the United States Securities and Exchange Commission.
Loudon’s wife, whose name does not appear in court documents, was a mergers and acquisitions manager at BP, a British oil and gas company, according to the complaint.
On February 16, 2023, TravelCenters of America announced that it had agreed to be acquired by BP, causing its stock prices to soar 70.8 percent.
Loudon immediately sold all of his shares, which he had purchased without his wife’s knowledge, according to court documents.
“Mr. Loudon made a terrible error in judgment for which he took full responsibility,” Loudon’s attorney, Peter Zeidenberg, said in an email.
Alamdar S. Hamdani, U.S. Attorney for the Southern District of Texas, announced Thursday that Loudon had pleaded guilty to securities fraud. Loudon also reached a partial ruling before the SEC, which had filed civil charges against him. BP declined to comment.
Mr. Loudon’s wife had begun working on BP’s proposed acquisition of TravelCenters of America in early 2022, according to the SEC complaint. She and Mr. Loudon, who works at a publicly traded company, often worked in home offices less than 20 feet away from each other.
Federal prosecutors said Loudon knew, or was “very reckless in not knowing,” that information he heard or was told about the BP deals was confidential.
Loudon began purchasing TravelCenters of America stock on Dec. 27, 2022, and over the next seven weeks, according to the complaint, he “methodically” sold approximately $2.16 million in positions from his individual brokerage account and his Roth IRA to buy more of the company’s shares.
He did not tell his wife, federal prosecutors said.
After the merger was publicly announced, the Financial Industry Regulatory Authority, a regulator of private companies, requested information from BP in late March 2023 about the deal, according to the complaint.
Mr. Loudon’s wife told her husband that a former colleague who had worked on the acquisition had complained to her that BP lawyers were asking for personal information. Loudon asked his wife if other employees would be under similar scrutiny and she said yes.
A week later, Loudon told his wife that he had purchased shares before the acquisition, but did not say how many shares or how much money he had made, according to the complaint.
Mr. Loudon’s wife was “stunned” by this admission, according to the complaint, and told her supervisor. She was placed on administrative leave and eventually fired.
BP reviewed text messages and emails from Mr. Loudon’s wife and found no evidence that she knowingly leaked the information or knew about her husband’s operations.
“Following Loudon’s confession, Loudon’s wife moved out of their home and generally ceased all contact with Loudon,” the complaint states. Mr. Loudon’s wife began divorce proceedings in June 2023.
Loudon faces a maximum sentence of five years in prison and a possible maximum fine of $250,000, according to prosecutors.
Mr. Loudon also agreed in the plea agreement to turn over his earnings of $1,763,522 to the United States. His sentencing is scheduled for May 17.
