Former Republican Congressman Convicted of Insider Trading in T-Mobile-Sprint Deal
Former Congressman Stephen Buyer has been convicted of insider trading and illegal profiting from T-Mobile’s $26 billion purchase of Sprint. The deal closed in April 2020 and gave T-Mobile control over Sprint’s mid-band 2.5GHz spectrum, shaping the current 5G environment in the US. This deal also forced Verizon and AT&T to spend billions of dollars to obtain mid-band spectrum of their own.
Background on Stephen Buyer and the T-Mobile-Sprint Merger
Buyer was a member of the House of Representatives from Indiana between 1993 and 2011, and after leaving politics, he worked as a corporate consultant. Prosecutors claimed that Buyer purchased shares in Sprint in 2018 after learning about the deal from a T-Mobile executive, turning a profit of over $100,000. He was also accused of profiting by over $200,000 from advance knowledge of the 2019 acquisition of Navigant Consulting Inc. by Guidehouse.
T-Mobile and Sprint first announced their merger on April 18th, 2018. The merger was not about Sprint’s failing wireless operations but about its holdings of 2.5GHz mid-band spectrum. Mid-band airwaves are important for 5G communication as they travel farther than high-band mmWave spectrum and deliver data speeds faster than low-band spectrum.
Defense and Prosecution Arguments
Buyer’s attorneys argued that there was no evidence that his stock purchases were based on non-public information and were obtained through publicly available research. Prosecutors, on the other hand, claimed that Buyer’s purchases were made around the same time that employees at companies who were clients of his consulting firm learned about the deals. Sprint’s shares almost doubled from $4.37 at the end of January 2020 to $8.69 by mid-February, just before the deal was announced.
Buyer was convicted on four counts of security fraud, and a sentencing hearing will be held by Judge Richard Berman on July 11th. The case highlights the importance of ethical business practices and the legal consequences of insider trading.