The U.S. Securities and Exchange Commission is set to take to trial Daryl Payton and Benjamin Durant, former traders at Euro Pacific Capital, at the Manhattan federal court. The case involved the ex-traders alleged placing of trades prior to a deal announcement from IBM Corp. with SPSS, Inc.
Payton and Durant were stockbrokers from IBM who were charged with one count of conspiracy and five counts of securities fraud in 2014, Bloomberg News reported. The illegal acts were connected to a $1.2 billion acquisition deal between IBM and SPSS.
The two were reportedly part of a group of five who all received a tip in 2009 to trade on SPSS prior to an IBM deal announcement. Both Payton and Durant pleaded not guilty. They were arrested and subsequently released after paying a total bond of $500,000.
Last September, a Manhattan judge ruled that Payton and Durant should still be tried for the illegal trading charges filed by the SEC, Reuters reported. The ruling was a dismissal of the two defendants' argument that the case should be thrown out after a December 2014 ruling by the 2nd U.S. Circuit Court of Appeals in New York disallowed regulators to push through with insider trading lawsuits.
The ruling involved the cases of hedge fund managers Todd Newman and Anthony Chiasson which favored them after they filed an appeal. Newman and Chiasson successfully argued that the trading should not be considered illegal if no benefit was taken by the tipper.
Currently, Payton and Durant's cases were still being pursued by the SEC, Reuters reported. The jury selection was set the same day. The regulator said that it has gathered sufficient material to have the two be proven guilty of illegal trading.
The case is filed as No. 14-04644, Securities and Exchange Commission v. Payton et al at the U.S. District Court, Southern District of New York. The civil case will be tried under U.S. District Judge Jed Rakoff.
