Two investors have been charge with insider trading related to a 2009 purchase of stock a company International Business Machines Corp. (NYSE:IBM) acquired. IBM acquired the IT services firm SPSS Inc in 2009 for $1.2 billion. The news was reported by Reuters this afternoon.

insider trading

The traders have been charged with making more than $1 million in illicit gains relating to that trade. The indictment describes a trail of instant messages between the two traders discussing the case, while also referring to other famed insider trading cases.

Prosecutors said that the case originated with a tip they received from a lawyer at the firm representing International Business Machines Corp. (NYSE:IBM) in the acquisition deal. The prosecutors did not name the law firm in the indictment, but  Cravath Swaine & Moore, a New York firm, revealed that they represented IBM during the deal.

The traders, named Thomas Conradt and David Weishaus, worked at Euro Pacific Capital Inc,, a Connecticut based financial services company, as stock brokers during the transaction. The indictment alleged that the men had engaged in an illegal network of tip offs in order to get rich quickly.

If found guilty of the crime, the two men face up to 20 years in jail and fines of up to $5 million. This is not the first high profile insider trading case to come to light in recent weeks. Allegations that an SAC capital trader led the company to the largest amount of ill gotten gains in history are still being heard in court.

According to the indictment filed by prosecutors, a New Zealand associate, who worked as an associate at the New York Law firm, informed a friend of his that the acquisition was in the pipeline. His friend was, at the time, living with Thomas Conradt and informed him of the deal.

Conradt then relayed the information to Weishaus about the upcoming deal. Weishaus, according to the prosecution, then gave the information to three of his other colleagues who were not named in the indictment.

The instant messages between the two transcribed in  the indictment include warnings that the information should be kept “in the family”, alongside references to Martha Stewart’s time spent in jail for insider trading.

International Business Machines Corp. (NYSE:IBM) appears to have had no role in the insider trading scheme. The company was just an active participant in the transaction, on the back of which, the trading took place. The company was not  available to comment when approached by Reuters.

Insider trading cases have become more public in recent years as public anger at the excesses of the financial industry have become vitriolic. The 2008 financial crisis, blamed largely on the banking industry, brought to light many of the industry’s worst practices. Knowledge of those practices has increased the hatred felt for participants in insider trading and other such illicit market activity.

A date has not yet been set for the opening of the trial against the two traders. Depending on the substance of the the evidence and the disposition of the legal teams, this may fade into obscurity, or become a public spectacle.