A US citizen has confessed he had inside information about IBM?s acquisition of Lotus, allowing him and others to buy shares at a price that doubled after news of the deal broke.
Robert Kowalskie was not convicted of insider trading but instead was charged under an obscure clause of federal law, that forbids "telling his friends to lie" to the US financial regulator, the Securities and Exchange Commission (SEC). Kowalskie also admitted to a federal court that he himself lied to the SEC.
The US views such breaches seriously and the defendant could receive up to five years in jail and a fine of $250,000 for the little known offence. One of Kowalskie?s friends admitted he lied to the SEC in April and is still awaiting sentence. Kowalskie is at liberty on $50,000 bail. He made over $100,000 on the deal.
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