Boston-Area Real Estate Developer Charged in Insider Trading Conspiracy
BOSTON—A Boston-area real real estate developer was arrested today and charged with participating in an insider trading conspiracy for buying—and later selling—shares of Wainwright Bank & Trust Company based on a tip that the company would be acquired. Prior to the acquisition, shares of Wainwright traded on the NASDAQ Stock Market.
Robert H. Bray, 77, of Watertown, was charged in a criminal complaint with conspiracy to commit securities fraud. As set forth in the complaint, Bray worked for, and at one time owned, R&B Construction, a construction and real estate development company.
According to the complaint, in June 2010, Bray was tipped by friend who was an executive at Boston-based Eastern Bank Corp. that Wainwright would be acquired. The tip—more than two weeks before the acquisition was publicly announced—occurred during a face-to-face encounter in a bar at the Watertown country club where both men are members. On the next trading day, Bray called his broker to ask how he could buy 25,000 shares of Wainwright stock, which he acknowledged “kinda sounds crazy,” given how thinly the stock traded. Bray ultimately purchased a total of 31,000 Wainwright shares over the next two weeks, at prices between $8.85 and $9.90 per share, single-handedly accounting for some 56 percent of the total trading volume in Wainwright shares during that period. On June 29, 2010, Eastern Bank announced its agreement to acquire Wainwright for $19 per share in cash, a premium of nearly 100% over the stock’s prior closing price. Bray ultimately sold his shares for a profit of more than $300,000.
“Whether overheard in a board room, bar room, or county club, trading on insider information is a federal felony,” said United States Attorney Carmen M. Ortiz. “Today’s arrest makes clear our commitment to keeping the financial markets fair for everyone—and to protecting investors who put their money to work in the markets each and every day, without the benefit of well-placed friends willing to tip them off about pending deals.”
“As alleged, Mr. Bray engaged in the scheme to get rich quick,” said Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division. “Time and time again FBI agents arrest those who trade on insider information. Today’s arrest is another example of the FBI’s efforts to protect the integrity and transparency of the financial markets.”
The maximum sentence under the statute is five years in prison, three years of supervised release and a fine of the greater of $250,00 or twice the gross gain or loss. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
U.S. Attorney Ortiz and SAC Lisi made the announcement today. The United States Attorney’s Office received valuable assistance from the Securities & Exchange Commission in the course of investigating this case. The case is being prosecuted by Assistant U.S. Attorneys Stephen E. Frank and Eric P. Christofferson of Ortiz’s Economic Crimes Unit.
The details contained in the complaint are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.