Aussie analyst charged over IBM insider trading case

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Aussie analyst charged over IBM insider trading case

Insider knowledge of SPSS acquisition.

U.S. authorities have laid charges against a research analyst for trading and tipping others ahead of a 2009 acquisition by computer giant IBM.

Federal prosecutors charged 33-year old Australian citizen Trent Martin, who worked at a Connecticut brokerage firm, for purchasing shares of SPSS before IBM agreed to the US$1.2 billion deal. He was also charged with passing the information to others, including his roommate.

On November 29 the Justice Department and the Securities and Exchange Commission charged two former stockbrokers, including Martin's roommate, for their roles in the alleged insider trading scheme.

The three and others made more than US$1 million by trading ahead of the acquisition, prosecutors said.

Martin was specifically named as the source of the information in instant messages between the two brokers, Thomas Conradt and David Weishaus, authorities said.

In a July 2009 message, referring to Martin by name, Conradt wrote: "holy f*** . . . god trent told me not to tell anyone . . . big mistake," according to the indictment unsealed on Wednesday.

Weishaus responded, "eh, we'll get rich."

Martin, an Australian citizen, was arrested on December 22 in Hong Kong, the Justice Department said. The FBI claims Martin was en route to Australia after learning of the SEC investigation.

He has been charged with one count of conspiracy to commit securities fraud and one count of securities fraud. The conspiracy charge carries a maximum potential penalty of five years in prison and a fine of US$250,000 or twice the gross gain or loss from the offense. The securities fraud charge carries a maximum potential penalty of 20 years in prison and a maximum fine of US$5 million.

Martin could not immediately be reached for comment.

IBM agreed to pay US$50 per share for SPSS, a 42 percent premium to SPSS' closing price on the day before the purchase was announced.

(Reporting by Aruna Viswanatha; Editing by Dan Grebler).

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