On February 22, 2024, Texas resident Tyler Loudon pleaded guilty to one count of securities fraud in violation of Title 15, United States Code, Sections 77a(a) and 77x. The criminal information, filed on February 6, 2024 in the US District Court for the Southern District of Texas, alleges that over the course of several months in late 2022 and early 2023, Loudon misappropriated and misused material nonpublic information about an impending acquisition. As detailed in the information, Loudon’s access and exposure to the material nonpublic information was through confidential interspousal communications, and through overhearing conversations about the merger conducted by his wife, who worked — sometimes from home — as a manager in the mergers department of an international energy company. According to the documents, Loudon’s misappropriation of the material nonpublic information violated the duty of confidence and trust he owed to his wife.
As admitted by the defendant as part of his guilty plea, based on the misappropriated information, Loudon secretly made a series of purchases of the shares of the target company’s stock, eventually acquiring 46,450 shares. Following the public announcement of the merger in February 2023, Loudon sold his stock, realizing a profit of over $1.76 million. According to the documents, Loudon’s spouse was unaware of the purchase or the sale of these securities; she reported the transactions to her employer when she learned of them in April 2023.
In parallel with the criminal charges brought by the US Department of Justice, the US Securities and Exchange Commission filed a complaint in the Southern District of Texas based on the same conduct, charging Loudon with violation of Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder (15 USC § 78j(b) and 17 CFR § 240.10b-5, respectively). Loudon agreed to the entry of a partial judgment settling his liability for the SEC’s complaint. The proposed order enjoins Loudon from future violations of the antifraud provisions of the securities laws, prohibits Loudon from serving as an officer or director of a registered company, and reserves for subsequent proceedings resolution of the SEC’s claims for disgorgement of his trading profits, prejudgment interest, and a civil penalty.
Sentencing in the criminal case is scheduled for May 17, 2024. As part of the plea agreement, Loudon has agreed to forfeit the approximately $1.76 million he received in illegal profits.
Press release (DOJ) | Press release (SEC) |
Information | Plea Agreement | Complaint (SEC)