Ex-Congressman Profited off T-Mobile Insider Info Obtained While Golfing With Exec: SEC

A former Indiana congressman profited off of inside information he obtained while golfing with an executive at T-Mobile, a company he was lobbying on behalf of in Washington D.C., the SEC said in a complaint filed Monday in federal district court in Manhattan. The alleged insider trading was one of two times the former Republican congressman, Stephen Buyer, illegally benefited from information he obtained through his lobbying activities.

He earned $335,000 in illegal profits as a result of the insider trading, according to the complaint. 

"We are committed to doing all we can to maintain and enhance public trust by leveling the playing field and holding Buyer accountable for illegally profiting from his access,” Gurbir Grewal, the director of the SEC enforcement division, said in a statement.

As part of the action, the Southern District of New York has announced a coordinated set of criminal charges against the ex-congressman.

Members of Congress, including Speaker of the House Nancy Pelosi, have faced increasing questions related to the success of their stock trades. Their investments have become such a source of fascination that traders have created exchange-traded funds that track politicians' moves in hopes of letting common citizens benefit from the information as well. 

As part of the Stop Trading on Congressional Knowledge Act of 2012, members of Congress are supposed to quickly disclose any trades made by them or immediate family members. But news outlets have found dozens of instances in which members of Congress did not follow the rules, and reports that high-profile senators have sold stock after receiving information related to the topics of national importance, like the coronavirus pandemic, have added to the concerns.

Do you know about politicians and their relatives profiting from inside information? We want to hear from you. From a non-work device, contact our reporter at maxwell.strachan@vice.com or via Signal at 310-614-3752 for extra security.

The allegation Monday will likely only lead to more questions about the current Congress, whether justified or not. After leaving Congress in 2011 amid corruption allegations, Buyer had formed a consulting group that lobbied on behalf of companies including T-Mobile, Microsoft, Johnson & Johnson, and Boston Scientific, according to the political tracking website Legistorm. 

The SEC alleges that during a Miami golf trip in March 2018, a T-Mobile executive told former Indiana congressman Steve Buyer that the company was planning to acquire Sprint. Buyer was being paid a consulting fee to lobby on behalf of T-Mobile, and the executive had “received instructions from T-Mobile to begin ‘outreach’ to T-Mobile’s core consultants, including Buyer, regarding the acquisition,” according to the complaint.

Buyer then decided to exploit the information he had been handed by buying up $568,000 worth of Sprint stock using his personal accounts, a joint account he held with his cousin, and the account of a romantic partner. When news of the acquisition finally broke the next month, Buyer netted a quick $107,000 in profit. 

In an attempt to “cover up” the illegal trades, Buyer then printed out a document published by a group called Zacks Investment Research about Sprint and “made handwritten notes on the document to create the false impression” that he had made the trades as a result of that report, not illegal information from a T-Mobile executive.

Reached by Motherboard, T-Mobile said that it was cooperating with the investigation and that while the company “cannot comment on the government's allegations against Mr. Buyer, we follow and fully support enforcement of laws that prohibit insider trading.”

The next year, Buyer purchased more than $1 million worth of stock in a management consulting company called Navigant Consulting, which the former congressman had heard was going to buy one of his consulting clients, Guidehouse, another management consulting company. This time, Buyer not only used his own account and the romantic partner’s account, but his wife’s account and a joint account he held with his wife and son. 

Again, Buyer found a report by Zacks that recommended purchasing Navigant stock and then emailed it to himself and his son “to create the false impression that his purchases were based on information in the Zacks report,” according to the complaint.

The day after news of the acquisition broke, Buyer allegedly sold nearly all the shares, banking another profit of $227,000.

By October 2019, Guidehouse has become aware of the alleged insider trading and soon after began cooperating with both the SEC and the Department of Justice as they started investigating, company CMO Joy Jarrett told Motherboard on Tuesday.

“As soon as we became aware of the alleged wrongdoing, in October 2019, we immediately conducted an internal investigation, determined that no Guidehouse employees participated in these activities, terminated our relationship with Buyer, and self-reported our findings to the appropriate authorities,” Jarrett said.

Buyer’s lawyer, Andrew Goldstein, said in a statement to Motherboard on Monday that his client is innocent.

“His stock trades were lawful. He looks forward to being quickly vindicated,” Goldstein added.

Buyer left Congress in 2011 after nearly two decades in office. At the time, he cited his wife’s “incurable autoimmune disease” as the reason he would not seek re-election. 

But the Republican was also facing accusations of corruption tied to an academic scholarship foundation. The foundation, which had once been run by Buyer’s daughter, had allegedly “not given out a single scholarship” but had received hundreds of thousands in donations from pharmaceutical companies and lobbyists, which had been used to pay for events like golf tournaments in the Bahamas, which Buyer attended with industry lobbyists.

At the time, reporters noted that Buyer had sat on the House Energy and Commerce Committee, which is charged with regulating the same drug industry donating to the academic foundation. As part of his role on the committee, Buyer had pushed to kill a 2007 provision that would have created a ban on advertising new drugs, which drug companies opposed.

This post has been updated to include information provided by Stephen Buyer’s lawyer, T-Mobile, and Guidehouse.