Insider Trading: How BP employee's husband made millions by snooping on her remote work calls

The worst crime is indeed a breach of trust.

In the latest development, a Texas man made almost $2 million by illegally trading after overhearing his wife’s conversations with her colleagues at an oil company about a takeover of a truck shop operator.

The case has drawn the scrutiny of the US Securities and Exchange Commission (SEC), leading him to give back the money he made on the transactions and pay a fine.

Here’s all we know about the case.

Making money

According to BNN Breaking, Tyler Loudon, 42, allegedly purchased a total of 46,450 shares in TravelCenters of America Inc. over a one-and-a-half-month period.

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He got the idea to purchase TravelCenters, according to lawsuits filed by the SEC and US prosecutors in Texas, after overhearing his wife’s several remote work calls with her BP PLC colleagues.

Loudon was eavesdropping internationally as well, according to the SEC. The SEC claimed that Loudon sat close to his wife while she worked on the TravelCenters deal from a tiny rented flat while they were travelling around Rome.

When BP announced in February 2023 that it was purchasing the truck shop operation at a 74 per cent premium, Loudon realised a profit of $1.76 million (Rs 14.95 crore) on the liquidation of his brokerage and retirement accounts.

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According to the regulator, his wife, who was working on the deal at the time as a BP mergers and acquisitions manager, was not aware of his trading.

Eventually, Loudon confessed about the transaction to his wife, who moved out of the house and later began divorce proceedings.

The SEC claims that once she informed BP about his trades, the company fired her even though there was no proof she intentionally leaked the deal.

Meanwhile, the British oil firm gained access to a network of US petrol stations through the agreement to purchase TravelCenters of America Inc. for approximately $1.3 billion. TravelCenters operated a network of 281 stores in 44 states at the time of the purchase.

Pleading guilty

Loudon pleaded guilty on Thursday to securities fraud in Houston federal court and agreed to forfeit the money he earned from the trades, according to the office of US attorney Alamdar Hamdani in Houston.

The 42-year-old faces up to five years in prison and a $250,000 fine at his scheduled May 17 sentencing before US District Judge Sim Lake, reported Reuters.

He also agreed to settle a related US Securities and Exchange Commission civil case, including by paying a civil fine.

A lawyer for Loudon did not immediately respond to requests for comment. BP did not immediately respond to separate requests.

Similar cases

From the beginning of the COVID-19 pandemic, when the work-from-home period started, several cases of insider-trading involving information seen or overheard while working from home with a significant other have come to light.

A 68-year-old consultant was found guilty of participating in an insider-trading scheme that centered around healthcare device company named Medtronic, according to Health Exec.

Doron “Ron” Tavlin learnt about the non-public information about Medtronic’s $1.6 billion acquisition of Mazer Robotics, where he served as VP of business development prior to the acquisition, in 2018.

Tavlin shared the information with his friend who bought a total of more than $1 million in Mazor stock in August and September 2018 in anticipation of a share price jump post-acquisition.

The friend was also accused of passing the information with a third friend, the alleged co-conspirator who also purchases Mazor shares ahead of the acquisition.

According to the report which cited prosecutors, Afshin “Alex” Farahan and David Gantman netted a combined profit of more tha $500,000 from their stock purchases.

Last year, capital markets regulator Sebi levied penalties totalling Rs 20 lakh on two entities for flouting insider-trading norms in the shares of Rupa and Company Ltd (RCL).

The regulator imposed a fine of Rs 10 lakh each on Sushik Patwari (Independent Director of RCL) and Nagreeka Capital and Infrastructure Ltd (NCIL), as per PTI.

The order came after Sebi conducted an investigation in the scrip of RCL, to ascertain as to whether certain entities have traded in the company during February-June 2021, while in the possession of unpublished price sensitive information (UPSI).

With inputs from agencies