U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22926 / February 12, 2014
Securities and Exchange Commission v. Thomas C. Conradt, et al., Civil Action No. 12-8676-JSR (S.D.N.Y.)
Court Enters Judgments Against All Defendants in Insider Trading Action
The Securities and Exchange Commission announced today that, on January 27, 2014, the United States District Court for the Southern District of New York signed a final judgment by consent against defendant David J. Weishaus ("Weishaus") in the SEC's insider trading case, SEC v. Thomas C. Conradt, et al., Civil Action No. 12-8676-JSR (S.D.N.Y.). Previously, on December 26, 2013, the Court entered judgments by consent against the other two defendants in the action, Thomas C. Conradt ("Conradt") and Trent Martin ("Martin").
Each of the judgments permanently enjoins the respective defendant from violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The final judgment entered against Weishaus orders him to disgorge his trading profits of $227,485, plus prejudgment interest of $20,414.24, and to pay a civil penalty of $227,485. Under the judgments entered against Conradt and Martin, Conradt is ordered to disgorge his trading profits of $2,533.60 plus prejudgment interest of $333.40, and Martin is ordered to disgorge his trading profits of $7,625, plus prejudgment interest of $1,111.46. The Court reserved the issue of whether to impose a civil penalty on Conradt and Martin pending their continued cooperation with the Commission.
The Commission's complaint alleged, among other things, that Martin misappropriated material nonpublic information about International Business Machines Corporation's 2009 acquisition of SPSS Inc. from his friend, an associate at a large law firm; illegally traded on the basis of that information; and tipped that information to his roommate, Conradt. The Commission further alleged that Conradt used that information to illegally trade, and also tipped the information to Weishaus who traded. The Commission alleged that, by knowingly or recklessly engaging in the conduct described in the complaint, Martin, Conradt, and Weishaus violated Section 10(b) of the Exchange Act, and Rule 10b-5 thereunder.
Each of these defendants also pled guilty to criminal charges brought by the United States Attorney's Office for the Southern District of New York ("USAO") based on the same conduct alleged in the Commission's complaint. U.S. v. Conradt,et al., 12 Cr. 887.
In related administrative proceedings, the Commission permanently suspended each of the defendants by consent from association with any broker, dealer, investment adviser, municipal securities dealer, or transfer agent; and bars him from participating in any offering of a penny stock. In the Matter of Trent Martin, Admin. Proc. File No. 3-15682 (January 23, 2014); In the Matter of Thomas C. Conradt, Admin. Proc. File No. 34-71429 (January 28, 2014); In the Matter of David J. Weishaus, Admin. Proc. File No. 3-15743 (February 6, 2014). Conradt was also suspended by consent from appearing or practicing before the Commission as an attorney. In the Matter of Thomas C. Conradt, Esq., Admin. Proc. File No. 34-71428 (January 28, 2014).
The SEC's litigation was conducted by Catherine E. Pappas and G. Jeffrey Boujoukos of the Philadelphia Regional Office. The SEC's investigation was conducted by enforcement staff Kristina Littman and Kingdon Kase, under the supervision of Daniel M. Hawke, Chief of the Division of Enforcement's Market Abuse Unit and Director of the Philadelphia Regional Office.
The Commission acknowledges the assistance and cooperation of the USAO and the Federal Bureau of Investigation in this matter