A Texas man has reportedly used insider trading secrets to earn a quick buck.
Working from home at the time, Tyler Loudon eavesdropped on his wife's phone calls, who was a mergers and acquisitions manager at BP Plc.
According to an SEC filing, Loudon overheard that the oil company was in discussion about acquiring TravelCenters of America Inc.
He's then said to have used all the gathered information and purchased 46,450 shares of truck stop operator TravelCenters stock ahead of the official merger announcement.
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When the share price hit 71%, he sold all of his shares and acquired a total of $1.76 million.
As a result of his actions, the Houston-based man is now facing insider trading charges and jail time on the grounds of 'violating the antifraud provisions of the federal securities laws.'
The Securities and Exchange Commission on February 22 charged Houston-based Tyler Loudon after he became aware that BP, where his wife was a mergers and acquisitions manager, planned to acquire truck stop operator TravelCenters of America, according to an SEC filing.
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Regional director of the SEC’s Fort Worth regional office, Eric Werner, stated: 'We allege that Mr. Loudon took advantage of his remote working conditions and his wife’s trust to profit from information he knew was confidential. The SEC remains committed to prosecuting such malfeasance.'
'Mr. Loudon made a serious mistake in judgment which he deeply regrets and for which he has taken full responsibility,' said Loudon's lawyer, Peter Zeidenberg.
Loudon's wife had no knowledge about his purchases and sales.
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He later confessed his wrongdoings to her and BP lawyers requested her home address and personal information. He also apologised for violating her trust in a handwritten note which she ignored entirely.
She reported the trading to her supervisor and was later terminated from the company, according to the filing.
Loudon's wife has since moved out of their shared home and initiated divorce proceedings a few months after the case was filed.
The Texas man has pleaded guilty and agreed to forfeit his $1,76 million. However, despite the punishment of Loudon, his actions will prevent him from taking up certain senior company roles.
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According to an NBC report, the Texas man will be sentenced on May 17 and could face up to five years in prison, as well as a $250,000 maximum fine.