Two Lake County brothers are at the center of a federal investigation into possible insider trading.
According to a probable cause affidavit unsealed Monday in the U.S. District Court in Hammond, the brothers, their mother and two other people made suspicious trades, which later made them more than $500,000 in profit, just before the international technology company SAP SE announced it was going to buy Washington-based Concur Technologies in September 2014.
Federal attorneys filed the affidavit in support of a request for a warrant to allow them to seize all the funds in three bank accounts connected to a SAP vice president who they say tipped the others off about the sale.
According to the affidavit, SAP started negotiating with Concur last summer to buy the company. At the same time, the vice president made a call to one of the brothers, the affidavit says records show. A few days later, the two brothers, who live in Munster and Dyer, opened trading accounts with the brokerage firm Scottrade.
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SAP and Concur eventually agreed on Aug. 23, 2014, for SAP to buy Concur at $129 a share. At that time, the company’s stock was trading for about $100 a share.
The next day, the affidavit claims, the vice president called one of the brothers again, and the brothers soon started working on buying options for Concur stock.
They, their mother and two others also connected to the brothers eventually bought 397 options in Concur stock, all before the sale to SAP was publicly announced on Sept. 18, 2014, the affidavit says.
During this time frame, federal investigators say, the vice president made numerous calls to them, mostly to the same brother he had talked to before, and even accessed some of their trading accounts from his home in California.
The price of Concur’s spiked to $127 after the sale was announced, and the brothers and the three others sold all their options for a profit $505,000.
All five of them wrote checks or sent money orders to the vice president totalling at least $80,000, according to the affidavit.
It adds that the Concur stock options were the only trading done through their Scottrade accounts since then and that they all cashed out their trading accounts soon after they sold the options.
It was not clear as of Monday afternoon if the seizure warrant was approved. No charges have appeared to be filed against any of the people named in the affidavit.
Contact Teresa Auch Schultz at [email protected].