Dive Brief:

• The Securities and Exchange Commission charged a Houston resident with breaking insider trading laws and bagging a $1.76 million windfall after listening to his wife negotiate a planned acquisition by BP of a publicly traded company.
• The SEC alleged Thursday that Tyler Loudon, while working at home within earshot of his spouse, learned of BP’s planned acquisition of TravelCenters of America and bought 46,450 of the company’s shares before the announcement of the merger. After the deal was made public on Feb. 16, 2023, TravelCenters stock soared 70.8% and Loudon sold all of his holdings, according to the SEC.
• “We allege that Mr. Loudon took advantage of his remote working conditions and his wife’s trust to profit from information he knew was confidential,” Eric Werner, director of the SEC’s Fort Worth regional office, said in a statement. “The SEC remains committed to prosecuting such malfeasance.”

Dive Insight:

The SEC has beefed up its enforcement of securities laws under the leadership of Gary Gensler, who was sworn in as chair in April 2021.

In a request to Congress last March, the agency sought an 18% increase in its enforcement division budget compared with fiscal year 2022.

Additional funding for fiscal year 2024 would go toward hiring 50 more staff for market surveillance and the Office of the Whistleblower, and for identifying wrongdoing in “priority areas” such as crypto assets and cybersecurity, the SEC said.

As a result of the most recently announced SEC crackdown, Loudon pleaded guilty to securities fraud and agreed to forfeit the profit from his stock trades, the U.S. attorney for the southern district of Texas said Thursday in a press release.

Loudon’s wife began working at BP as a mergers and acquisition executive in 2021 and, early in 2022, was assigned to focus on the oil giant’s potential acquisition of TravelCenters, the SEC said Thursday in a court filing.

Loudon and his spouse worked in home offices within 20 feet of each other and “frequently overheard and witnessed each other’s work-related conversations and video conferences,” the SEC said.

In late December 2022, they stayed in a small Airbnb rental in Rome, where Loudon’s wife regularly worked on the potential deal as Loudon sat nearby, according to the SEC. That month he began accumulating shares of TravelCenters stock without telling his wife.

When they returned to Houston, Loudon and his wife continued to work at close quarters until the merger was announced in February 2023.

In April last year — after learning that his trades would likely come under scrutiny — Loudon told his wife about his pre-announcement purchases of stock, explaining that “he wanted to make enough money so that she did not have to work long hours anymore,” the SEC said.

“Stunned by this revelation, Loudon’s wife reported the trading to her supervisor at BP,” which placed her on administrative leave, according to the SEC. After reviewing her email and texts and finding no evidence of wrongdoing, “BP nonetheless terminated her employment.”

Loudon’s wife moved out of the marital home and, in June, filed for divorce, the SEC said.

Loudon’s sentencing is scheduled for May 17, the Justice Department said. He faces up to five years in federal prison and a possible maximum fine of $250,000.