A federal jury yesterday convicted a Watertown man on insider-trader charges for buying up shares of Wainwright Bank before it was acquired by Eastern Bank - based on a tip a friend who worked at Eastern wrote him on a cocktail napkin.
Robert Bray, 78, will be sentenced on May 4, the US Attorney's office in Boston reports. He faces a maximum sentence of 20 years in prison and a $5-million fine.
Prosecutors proved that:
In June 2010, Bray was tipped by a friend who was an executive at Boston-based Eastern Bank Corp. that Wainwright would be acquired. The tip - more than two weeks before the acquisition was publicly announced –- was passed on a napkin slipped to Bray over drinks at a country club bar in Watertown where both men are members. On Monday, June 14, 2010, Bray called his broker to ask how he could buy 25,000 shares of Wainwright stock, which he acknowledged "kinda sounds crazy," given how thinly the stock traded. Bray ultimately purchased a total of 31,000 Wainwright shares over the next two weeks, at prices between $8.85 and $9.90 per share, single-handedly accounting for some 56 percent of the total trading volume in Wainwright shares during that period. On June 29, 2010, Eastern Bank announced its agreement to acquire Wainwright for $19 per share in cash, a premium of nearly 100% over the stock’s prior closing price. Bray ultimately sold his shares for a profit of approximately $300,000.