Australian Research Analyst Extradited on Insider Trading Charges
Trent Martin was Arrested in Hong Kong Pursuant to a Request from the United States

Preet Bharara, the United States Attorney for the Southern District of New York, and George Venizelos, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the arrival of TRENT MARTIN, who was extradited from Hong Kong yesterday to face insider trading charges. He was arrested in Hong Kong on December 22, 2012 pursuant to a request from the United States. MARTIN will be presented in Manhattan federal court before U.S. Magistrate Judge Henry B. Pitman this afternoon at 2:30 p.m.

MARTIN, a former research analyst at an international financial services firm, was charged for his alleged involvement in an insider trading scheme with Thomas C. Conradt and David J. Weishaus, two stock brokers who were arrested for their roles in the scheme on November 29, 2012. MARTIN, Conradt, Weishaus, and their co-conspirators allegedly traded on the basis of material, non-public information (“Inside Information”) concerning IBM’s acquisition of a software company, SPSS, Inc., in 2009, earning more than $1 million in profits in the aggregate.

Manhattan U.S. Attorney Preet Bharara said: “Like other insider traders, Trent Martin allegedly exploited his access to confidential information to turn an illegal profit. With his arrival here to face charges for his alleged conduct, he now knows that the long arm of the law will reach out—even thousands of miles—to hold alleged lawbreakers accountable.”

FBI Assistant Director in Charge George Venizelos said: “As alleged, Trent Martin acquired information he knew was confidential, and then traded on it and shared it, which he knew was illegal. In fact, as alleged, he was aware this conduct could land him in prison. What Martin may not have realized was that being halfway around the globe did not insulate him from arrest and prosecution.”

The following allegations are based on the superseding indictment against MARTIN that was unsealed on December 26, 2012 in Manhattan federal court, and other court documents:

The Inside Information concerning IBM’s acquisition of SPSS originated from a corporate lawyer who was part of the legal team that represented IBM in the transaction (“Attorney-1”) in 2009. On May 31, 2009, Attorney-1 shared Inside Information concerning the transaction, including the names of the parties and the fact that IBM was going to acquire SPSS for a significant premium over SPSS’ market price, with his close friend, MARTIN. The information was shared in confidence. Based on their longstanding history of sharing confidences, Attorney-1 expected that MARTIN would not share the information or use it to trade.

However, in June 2009, MARTIN bought SPSS common stock based on the Inside Information he was given by Attorney-1 and, in turn, shared the tip with his roommate, Conradt, who worked as a stock broker at a securities trading firm (“Securities Trading Firm-1”). Conradt then bought SPSS common stock and tipped Weishaus, his co-worker at Securities Trading Firm-1. On June 24, 2009, Weishaus started buying call option contracts in SPSS. In addition, Conradt and Weishaus tipped their co-workers at Securities Trading Firm-1 (“CC-1 and CC-2”), who also bought SPSS call option contracts in June and July 2009 based on the Inside Information.

On July 23, 2009, MARTIN told Attorney-1 that he had purchased SPSS common stock and call options on the basis of the Inside Information that Attorney-1 had disclosed to MARTIN on May 31, 2009.

When IBM announced its acquisition of SPSS on July 28, 2009, the share price of SPSS common stock rose by 41 percent in one day, from the prior day’s closing price of $35.09 per share to a closing price of $49.45 per share. Thereafter, MARTIN, Conradt, Weishaus, CC-1, and CC-2 sold their SPSS positions, yielding profits of $7,900, $2,538, $129,290, $629,954, and $254,360, respectively, for a total profit in excess of $1 million.

In the fall of 2010, after the U.S. Securities and Exchange Commission (“SEC”) had begun investigating insider trading in SPSS, MARTIN told Attorney-1 that he had profited approximately $8,000 from the Inside Information concerning IBM’s acquisition of SPSS and had disclosed it to his roommate, Conradt, before the transaction was publicly announced. MARTIN also told Attorney-1 that MARTIN believed Conradt had taken a large position in SPSS before the announcement and had, in turn, shared the Inside Information with others. MARTIN further stated to Attorney-1 that he was returning to Australia in light of the SEC investigation, and that he knew that insider trading can result in jail sentences, referring to the criminal prosecution of Martha Stewart.

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MARTIN, 33, has been charged with one count of conspiracy to commit securities fraud and one count of securities fraud. Count one, the conspiracy charge, carries a maximum potential penalty of five years in prison and a fine of $250,000 or twice the gross gain or loss from the offense. Count two, the securities fraud charge, carries a maximum potential penalty of 20 years in prison and a maximum fine of $5 million.

Following their earlier arrests in the United States, Conradt and Weishaus pled not guilty on December 7, 2012. The case against MARTIN, Conradt, and Weishaus is assigned to U.S. District Judge Andrew L. Carter, Jr. Conradt and Weishaus are scheduled to appear before Judge Carter next on April 3, 2013, at 12:00 p.m.

Mr. Bharara praised the investigative work of the FBI and thanked authorities in Hong Kong. He also thanked the SEC and the U.S. Department of Justice’s Office of International Affairs. Mr. Bharara noted that the investigation is continuing.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys John T. Zach and David B. Massey are in charge of the prosecution.

The charges contained in the indictments are merely accusations, and the defendants are presumed innocent unless and until proven guilty.