Cocktail Napkin Tip Leads to Insider Trading Conviction For Watertown Man

WATERTOWN, MA - An insider tip written on a cocktail napkin led to the federal insider trading conviction for a 78-year-old Watertown man, the Department of Justice said.

Robert H. Bray was convicted Wednesday of engaging in insider trading after a sneaky tip prompted him to buy and quickly sell shares of Wainwright Bank & Trust Company, according to a statement from the Department of Justice.

The government proved in a trial that Bray, the owner of R&B construction, was tipped off by a friend who was an executive at Boston-based Eastern Bank Corp. that Wainwright would be acquired, the Department of Justice said.

The tip was written on a cocktail napkin in June 2010, and passed to Bray over drinks at the bar of the Watertown Country Club, the Department of Justice reported.

The tip came two weeks before the acquisition was publicly announced. During this time, Bray called his broker to ask how he could buy 25,000 shares of Wainwright stock, adding that it “kinda sounds crazy,” according to the Department of Justice.

Bray purchased a total of 31,000 Wainwright shares over the next two weeks at prices between $8.85 and $9.90 per share, the Department of Justice said.

On June 29, 2010, Eastern Bank announced its agreement to acquire Wainwright for $19 per share in cash, allowing Bray to sell his shares for about $300,000, the Department of Justice said.

“Today’s conviction underscores our commitment to making sure that there is a level playing field for all securities investors – and that those who would pass on confidential corporate information on napkins at bars, in whispered conversations on golf courses or in any other way, are held accountable for their actions,” U.S. Attorney Carmen Ortiz said in the statement.

The maximum sentence under the statute is 20 years in prison to be followed by three years of supervised release and a fine of up to $5 million, the Department of Justice said, noting that maximum penalties are rarely sentenced.