- Federal prosecutors allege that a former GOP lawmaker engaged in insider trading.
- The SEC alleges that Stephen Buyer traded on inside knowledge, which included buying stock in Sprint just before its merger with T-Mobile.
- Prosecutors say Buyer heard about the merger during a golf game with a T-Mobile executive.
Federal prosecutors alleged that a former Republican congressman used insider knowledge, including insight gained from playing golf with a T-Mobile vice-president, to buy $1.5 million in stocks and reap the rewards from insider trading.
Stephen Buyer, a former Indiana congressman, learned of T-Mobile’s plan to acquire Sprint during a March 2018 golf outing with an unnamed T-Mobile executive, the Securities and Exchange Commission alleged on Monday. According to a SEC complaint, Buyer then purchased $568,000 of Sprint shares based on the non-public knowledge ahead of the formal announcement of the massive merger.
Buyer left Congress in 2011. He served on Capitol Hill from 1993 to 2011. He was replaced by Todd Rokita who left Congress to become Indiana’s Attorney General.
Prosecutors also allege that Buyer was involved in a similar scheme roughly a year later. At that time, he purchased roughly $1 million worth of stock in Navigant Consulting, Inc. securities ahead of a public announcement of its acquisition by Guidehouse LLC. Guidehouse was also one of Buyer’s clients at the consulting firm he formed after leaving Congress.
Buyer’s status as a former member of Congress was highlighted by prosecutors as one of the reasons in bringing charges against him.
“When insiders like Buyer – an attorney, a former prosecutor, and a retired Congressman – monetize their access to material, nonpublic information, as alleged in this case, they not only violate the federal securities laws, but also undermine public trust and confidence in the fairness of our markets,” Gurbir S. Grewal, director of the SEC Enforcement Division, said in a statement.
Federal investigators want Buyer and his wife, Joni, to be forced to forfeit any proceeds they made on the trades. The SEC wants Buyer to be fined for his actions and to permanently bar him from acting as an officer or director of a publicly traded company.
Members of Congress want to ban themselves from trading stocks
While Buyer is being accused of insider trading outside his time in office, his former colleagues in Washington, DC, are currently debating limits to stock trading by members of Congress and their spouses.
Congress originally passed the Stop Trading on Congressional Knowledge (STOCK) Act of 2012 under the tenure of the Obama administration in an attempt to curb insider trading and provide more transparency to the general public. The law requires members of Congress to publicly report any trades worth more than $1,000 within 45 days of making the trade or risk penalties from the Ethics Committee.
Since 2021, Insider’s “Conflicted Congress” project and other publications have discovered that 66 members of Congress violated the STOCK Act by being late to disclose trades. Insider discovered that at least 182 senior congressional staffers violated the act as well.
Now, a decade after the law’s passing, many members of Congress feel as if the STOCK Act was not enough, and that members shouldn’t be allowed to trade at all.
House Speaker Nancy Pelosi originally opposed the idea, telling Insider’s Bryan Metzger that “we are a free-market economy. They should be able to participate in that.”
Following backlash from members across the aisle, she ultimately acquiesced to a potential ban, saying, “If members want to do that, I’m OK with that.”
But despite several proposed bills from Republicans and Democrats in both chambers, none have been brought to a vote and at least one member of Congress, Rep. Abigail Spanberger, told Insider that she thinks “they’re trying to run out the clock.” The push has been stonewalled by “anyone who has the ability to move” the bills forward, she added,