[ by Howard Haykin and Melanie Gretchen ]

A former NY-based registered rep with Euro Pacific Capital, who held his Series 7 license for all of 8 months, pled guilty to federal prosecutors on grounds of sharing insider information. 

The Defendant.  Thomas Conradt, 35, joined Wall Street with Euro Pacific Capital, Inc. in September 2008.  He obtained his Series 63 State Agent License 3 months laters and in February 2009 earned his Series 7 General Rep License. By October 2009 - less than 8 months later - he was U-5'd by Euro Pacific.  His prior experience included one year in law school down in Fort Lauderdale, FL, and miscellaneous not financial jobs.

Other defendants in this insider case, who dealt with the regulatory charges and federal criminal counts dealt with regulators and federal prosecutors separate and apart from Conradt.  They are mentioned because they were integrally involved in the facts and circumstances involving Thomas Conradt.  Their names are: 

• Trent Martin, Conradt's roommate, who was a financial analyst with ABN Amro in New York and then RBS Securities in Stamford.
• David Weishaus was Thomas Conradt's friend and fellow broker at Euro Pacfic.

Federal Prosecutors Findings and Allegations.   Conradt learned from his roommate, Trent Martin, about an unannounced deal, where IBM would acquire SPSS Inc. for $1.2 billion.  Martin learned about the deal from an unidentified lawyer friend who told Martin about the deal during the course of a casual conversation.  The lawyer had asked Martin to keep the confidential information to himself and expected Martin not to trade on the insider information.  The lawyer friend foolishly disclosed the insider information about the deal because he wanted to explain to Martin about the kinds of legal projects he was being assigned. 

The very next day, however, Martin tried to buy SPSS securities but his 3 orders were canceled because he (presumably) had little or no margin buying power in the account.  That prompted his to wire about $50K from his bank checking account to the brokerage account - and Martin finally was able to buy the SPSS bought securities. 

Conradt apparently traded on the information, also, and he passed the confidential information to a fellow broker at Euro Pacific, David Weishaus.  Weishaus purchases SPSS securities, as well.  It's our understanding that, on a combined basis, the three of them generated about $1 million in illicit profits. 

Dont' know dates of trades or when IBM made the announcement.  However, on 11/29/09, the SEC charged both brokers - Conradt and Weishaus - with insider trading.  Hearing about the bust, Trent Martin left the country and went down to Australia.  Between 2009 and 2013, he eventually ended up in Hong Kong, and it was from Hong Kong that Martin was extradited to the Unitied States in March 2013.  Following his extradition, Martin, an Aussie citizen, pleaded not guilty to conspiracy and securities fraud.

Conradt Pleads Guilty.  During the court appearance at which he pled guilty, Thomas Conradt told Federal Judge Andrew Carter, Jr. the following:  “I understood this information was inside information and that it was not publically available. I can assure the court that I will never put myself in this position again.”  The judge set sentencing for 6 months away - on 10/3/13.

The case: U.S. v. Martin, 12-cr-00887, U.S. District Court, Southern District of New York (Manhattan).

For further details, go to [Bloomberg, 4/3/13].

The authors can be contacted at:   Howard: Howard@compliance-insights.com;  Melanie: Melanie@compliance-insights.com.