Tyler Loudon and his wife lived in Houston, where she was a manager in mergers and acquisitions for BP, the international oil and gas company. They both worked at home from separate offices about 20 feet apart.
In late 2022 BP was considering buying truck stop operator TravelCenters of America, and Loudon’s wife was assigned to work on the deal. Loudon started eavesdropping on his wife’s business telephone calls and video chats, and then began buying TA stock. Without telling his wife, over the next seven weeks Loudon bought 46,450 shares of TA stock. When the TA-BP merger was announced on February 16, 2023, TA stock shot up nearly 71 percent, and Loudon allegedly immediately sold all of his TA shares for a profit of $1.76 million.
At the end of March 2023 Loudon’s wife told him that federal regulators had asked BP for a list of all employees who had been “in the know” on the TA acquisition. The next week, Loudon confessed to his wife that he had traded in TA stock before the acquisition, claiming that he wanted to make enough money so that she would not have to work such long hours. She was stunned by the revelation, and immediately called her supervisor to report it. She also moved out of the house. BP put her on administrative leave and did a thorough internal investigation, concluding that she had not knowingly leaked the TA acquisition to her husband and did not know anything about his stock trades. Nevertheless, BP terminated her employment. She filed for divorce in June 2023, rebuffing Loudon’s apology and attempts to reconcile.
In February 2024, all of this came to light when Loudon pleaded guilty to federal criminal charges of insider trading and signed an agreement settling a civil lawsuit brought by securities regulators. As part of the plea bargain, Loudon agreed to forfeit the $1.7 million in illegal proceeds. He also faces up to five years in federal prison and a possible $250,000 fine. In the civil suit, Loudon consented to a permanent injunction, disgorging his profits with prejudgment interest, and a civil penalty in an amount to be determined by the Court.
United States v. Loudon, Cr. 4-24-57, Docket Nos. 1, 13 (S.D.Tex. 2024); Securities and Exchange Commission v. Loudon, Docket Nos, 1,3 Civ. No. 24-622 (S.D. Tex. 2024)
What this means to you:
In a statement announcing the civil settlement, the Securities and Exchange Commission’s regional director said: “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. The SEC remains committed to prosecuting such malfeasance.”
The case is a powerful reminder that securing confidential information is absolutely essential when working from home. While most of us could never imagine our family members using confidential information for their own (secret!) profit, this is one of several similar “pillow talk” insider trading cases being pursued by prosecutors and regulators.
Protecting confidential information is one of the topics your managers will cover in our Managing a Hybrid Workforcewebinar. This fast-paced 60-minute session prepares managers to meet the daily challenges and opportunities of managing both offsite and onsite teams, including the pitfalls of electronic communication. Call us today at 800-458-2778 or email us for more information.
Finally, a word to the wise: If you overhear your teleworking spouse talking business, don’t call your broker!
Updated 04-05-2024
Information here is correct at the time it is posted. Case decisions cited here may be reversed. Please do not rely on this information without consulting an attorney first.
