Former Republican Congressman Convicted of Insider Trading in T-Mobile-Sprint Merger
Former Republican Congressman Stephen Buyer has been convicted of insider trading and illegally profiting from T-Mobile’s $26 billion purchase of Sprint. The deal, which closed in April 2020, gave T-Mobile control over Sprint’s mid-band 2.5GHz spectrum, shaping the current 5G environment in the U.S. Verizon and AT&T were forced to spend tens of billions of dollars to obtain mid-band spectrum of their own.
Background on Stephen Buyer
According to NBC News, Buyer was a member of the House of Representatives representing a district in Indiana between 1993 and 2011. After leaving politics, he became a corporate consultant. Prosecutors said that Buyer purchased shares in Sprint back in 2018 after learning about the deal from a T-Mobile executive. The former congressman allegedly turned a better than $100,000 profit on his “investment” in Sprint.
Conviction and Sentencing
Buyer was convicted on four counts of security fraud and accused of profiting by over $200,000 from advance knowledge of the 2019 acquisition of Navigant Consulting Inc. by Guidehouse. A sentencing hearing will be held by Judge Richard Berman on July 11th.
The T-Mobile-Sprint Merger
T-Mobile and Sprint announced the merger on April 18th, 2018 after years of talk about such a deal. T-Mobile was interested in Sprint’s holdings of 2.5GHz mid-band spectrum, which is important for 5G since it travels farther than high-band mmWave spectrum and delivers download data speeds faster than low-band spectrum (about 10 times faster than LTE).
Buyer’s Defense
Buyer’s attorneys claimed that there was no evidence that the former congressman’s stock purchases were based on non-public information and that the stock purchases were based on publicly available research. However, prosecutors said that Buyer’s purchases were made near the time that employees at companies that were clients of his consulting firm learned about the deals. Sprint’s shares nearly doubled from $4.37 at the end of January 2020 to $8.69 by mid-February of that year.
On the last trading day before the deal was announced, Sprint was trading at $6.50. The terms of the deal called for stockholders to receive $6.62 a share, indicating that others besides Buyer might have been privy to non-public info about the transaction.
