Former Indiana Rep. Buyer charged with insider trading

Alleged profits topped $300,000; lawyer says trades were legal

The Securities and Exchange Commission accused former Indiana Rep. Stephen Buyer of profiting off of insider information he received as a consultant.  (Bill Clark/CQ Roll Call file photo)
The Securities and Exchange Commission accused former Indiana Rep. Stephen Buyer of profiting off of insider information he received as a consultant. (Bill Clark/CQ Roll Call file photo)
Posted July 25, 2022 at 4:05pm

Stephen Buyer, a former nine-term Republican congressman from Indiana who now works as a consultant, faces civil and criminal insider trading charges in two cases involving clients of his consulting business, including T-Mobile, which went on to acquire Sprint Corp.

The Securities and Exchange Commission on Monday said Buyer, 63, earned over $300,000 from illegal trading, tried to hide his tracks with handwritten notes, and spread the activity over accounts of his wife, son, cousin, and a woman with whom he had a romantic relationship. He left Congress after the 2010 election.

In addition to the SEC charges, the U.S. Attorney for the Southern District of New York charged Buyer with four counts of securities fraud. Each carries a maximum 20-year prison sentence.

Buyer’s lawyer said the activity was legal.

“Congressman Buyer is innocent,” Andrew Goldstein, a partner at Cooley LLP, said. “His stock trades were lawful. He looks forward to being quickly vindicated.”

The SEC said Buyer was working as a consultant for T-Mobile when he received nonpublic information about the company’s plans to buy Sprint. He began purchasing stock in Sprint the next day, acquiring about $568,000 worth in a joint account with a cousin and the romantic partner, the agency said. It did not name her, only referring to her as "friend-1."

When news of the merger leaked in April 2018, Buyer made an “immediate profit” of $107,000, the SEC said. The agency said a T-Mobile employee provided the merger information to Buyer for purposes of Buyer’s work for the company. T-Mobile explained to its consultants, including Buyer, that they were to keep the information private, the SEC added.

In a second case, Buyer purchased more than $1 million in securities in Navigant Consulting Inc. after learning that another company, Guidehouse LLP, was going to buy Navigant. Guidehouse also was a client of Buyer’s consulting services.

Buyer “spread the purchases across several accounts,” according to the SEC, including accounts with his wife and son, and the same acquaintance. He made a profit of $227,000 on the day of the announcement of the Navigant acquisition, the SEC said.

The SEC is charging him with violations of Section 10(b) of the Securities Act of 1933, and Rule 10b-5. The agency is seeking disgorgement, which is a retrieval of ill-gotten gains, from Buyer and his wife, Joni Lynn Buyer. The SEC has not charged her.

According to the SEC, Buyer owed a duty to T-Mobile and Guidehouse to keep the information about their acquisition plans private.

"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," the top enforcement official at the SEC, Gurbir Grewal, said in a statement.

Buyer tried to cover his tracks, the SEC alleges, by printing out information from a private investment research company, and adding handwritten notes to these, intended to make it seem the research was the reason he made the stock trades.

Buyer invoked the Fifth Amendment privilege against self-incrimination when the SEC was investigating, the agency said.

Buyer was first elected to Congress in 1992.