A Texas man earned nearly two million dollars through illegal trading by listening in on his wife's conversations with her BP Plc coworkers about a potential acquisition of TravelCenters of America, per the U.S. Securities and Exchange Commission's (SEC).
Illegal Trading Sanction
According to the U.S. Attorney's office, Loudon, a Houston resident, made one million, seven hundred sixty thousand dollars through illegal trades using inside information about his wife's company's potential acquisition. Set to be sentenced on May 17, Loudon could face up to five years in prison, a $250,000 fine, and agreed to give up the one million, seven hundred and sixty thousand dollars in illegal profits.
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Additionally, the SEC filed a civil complaint against Loudon for the same behavior, which he did not dispute. Loudon's lawyer, Peter Zeidenberg, told CNBC that his client acknowledged his error in judgment and accepted full responsibility.
The TravelCenters of America Acquisition Deal Leakage
The deal for BP to buy TravelCenters of America Inc. for around one point three billion dollars granted the British oil major access to a network of U.S. gas stations. TravelCenters had 281 locations in 44 states at the time.
In December 2022, authorities stated that Loudon learned about BP's confidential plans to acquire TravelCenters while he and his wife worked from a small Airbnb during a trip to Rome due to pandemic-related policies, according to the SEC's complaint filed in Houston federal court.
After their trip to Rome, the couple continued to work remotely in close quarters, with their home offices within 20 feet of each other, according to the SEC.
The SEC mentioned that Loudon's wife admitted to sometimes talking about the acquisition with her husband in regular conversations, which is typical of married couples. However, during the following months, Loudon quietly acquired 46,450 shares of TravelCenters without informing his wife.
Loudon Making a Profit of $1.76 Million
On February 16, 2023, when TravelCenters disclosed the BP acquisition, leading to a 71% surge in its stock, Loudon sold all the positions in his brokerage account and Roth IRA, along with other equities, making a profit of one million seven hundred sixty thousand dollars, as per the U.S. attorney's office. His wife, a BP mergers and acquisitions manager, was unaware of his trading.
In March, the Financial Industry Regulatory Authority (FINRA) asked BP for a list of individuals aware of the TravelCenters acquisition beforehand. A former BP employee involved in the acquisition contacted Loudon's wife, expressing frustration about disclosing personal information to comply with FINRA.
When Loudon's wife mentioned the conversation with the former employee, he inquired if current employees would face similar scrutiny, and she confirmed they would, according to the SEC complaint. A week later, Loudon confessed to his wife that he had traded TravelCenter shares illegally so that she did not have to work long hours anymore, per the SEC. Loudon's wife reported his insider trading to her BP supervisor, resulting in her termination, and later filed for divorce in June.
During the COVID-19 pandemic, the SEC has pursued many insider trading cases linked to information obtained while working remotely with a partner.
