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The ex-husband of a former BP merger and acquisition manager was sentenced to two years in federal prison for insider trading that netted him $1.76 million after he overheard her work conversations about the case oil giant buys another company.
The ex-husband, Tyler Loudon, was also sentenced to one year of supervised release and fined $10,000 following his prison term. Judge Sim Lake of the United States District Court in Houston on Monday.
Loudon's attorney, Peter Zeidenberg, asked Lake to sentence him to one year of house arrest followed by two years of supervised release, citing, among other things, the need to care for Loudon's ailing mother.
The prison sentence was at the lower end of the 24- to 30-month range sought by federal prosecutors.
Loudon, as part of his guilty plea against… securities fraud had already agreed in February to forfeit the illegal profits he made in February 2023 from selling the nearly 46,500 shares of TravelCenters of America after that company's share price rose more than 70% on the news that BP had acquired it for approximately $1.3 billion.
The 42-year-old Houston resident, who was an engineer at an oil and gas company, bought TravelCenters shares for about $2 million over several months starting in December 2022.
His purchases began after he secretly listened to his wife's work calls about BP's purchase of TravelCenters and later discussed the deal with her in “normal” conversations with married couples, court records show.
Loudon's wiretapping took place while he and his wife were working remotely “in close proximity” due to the then Covid-19 pandemic, the records show.
'Wracked with guilt and fear', Loudon confessed to his wife what he had done in March 2023 after learning that the Financial Industry Regulatory Authority had asked BP for a list of people who were 'informed' of the TravelCenters deal before it closed. completed, according to the court documents.
Loudon's wife, who was not accused of wrongdoing, reported his actions to her BP supervisor, but she was ultimately fired later, court records show. She also divorced Loudon.
A sentencing memo filed last week by Loudon's attorney states that at the time he purchased the TravelCenters, Loudon was a “frequent stock day trader” whose “marriage was under significant strain due to multiple moves and job changes.” for both him and his wife.
“Mr. Loudon began to fear that his marriage was in danger, an event that was especially on his mind because of the divorce he experienced as a child,” the memo said.
“In the completely misguided belief that money could somehow help address the marital problems the couple was experiencing, Mr. Loudon made the fateful decision to betray his wife's trust, as well as his own sanity” , the memo said.
“Tyler deeply regrets his behavior, has taken responsibility for it and looks forward to putting it behind him and moving on with his life,” Zeidenberg told CNBC on Wednesday.
Zeidenberg noted in his sentencing memo that Loudon had lost his job and his marriage as a result of his actions, and because “of this conviction, [he] has little realistic hope for future employment in his technical field, and his future job prospects are extremely bleak.”
“Regardless of the sentence the Court imposes, Mr. Loudon will have to pay the price for his colossally poor judgment for the rest of his life,” Zeidenberg wrote.
“Insider trading is widespread, extremely difficult to detect, and negatively impacts the integrity of the financial markets and public perception of the markets,” Houston U.S. Attorney Alamdar Hamdani said in a statement.
“These types of violations undermine public confidence in the integrity of the markets and lead to widespread cynicism that the markets are manipulated in favor of a lucky few,” Hamdani said. “Mr. Loudon could only commit this crime because he had an unfair advantage: his wife was an insider who gave him material, non-public information.”
In his sentencing memo, Loudon's attorney argued that insider trading cases involving spouses, where no one other than the spouse is privy to non-public information, are often not charged criminally.
“Indeed, civil, non-criminal remedies are the typical way these types of cases are handled,” the memo said, citing nine Securities and Exchange Commission lawsuits.
“Most, if not all, insider trading cases involving spouses that have resulted in criminal charges typically involve aggravating acts not found here,” Zeidenberg wrote.
Loudon is facing a separate civil lawsuit by the SEC in connection with his insider trading. That civil case, like his criminal case, is overseen by Lake.
Lake on May 3 directed SEC attorneys and Zeidenberg to either agree to a final ruling in that case or submit a schedule for briefing on the agency's request for financial relief within 30 days.
