Telling Aussie mate about a big deal cost lawyer his job with top New York firm

They were the best of mates. An Australian and a New Zealander living the New York dream.

But loose lips and betrayal will spell up to five years in a US jail and a US$250,000 ($295,000) fine for Australian former RBS equities analyst Trent Martin, 34, when he is sentenced in New York this week for insider trading after a high-profile investigation by the US Securities and Exchange Commission (SEC).

For his part, New Zealand lawyer Mike Dallas no longer works at New York law firm Cravath Swaine and Moore, and has been castigated in publications such as American Lawyer, Above The Law and Law360 for breaching the confidences expected of him as a corporate lawyer when he told Martin about a US$1.2 billion deal he was working on.

Dallas left the firm in New York in December 2010, returning briefly to Auckland to work as a labourer for a builder.


He then went to London to work in the legal team at Spire Healthcare before joining Rail UK, part of global infrastructure company Balfour Beatty, as its division legal director.

When asked this week about Trent Martin's sentencing, he only said, "I don't have a comment I am afraid".

In 2008 and 2009, after being introduced by friends, the two expat professionals often shared confidences about their work, although they knew confidentiality in their jobs was paramount.

But their friendship fell apart after Dallas confided in Martin at a Manhattan restaurant on May 31 2009 that he was stressing over his inexperience and the demands made of him by his team leader in the mergers and acquisitions department of his law firm.

In the course of the conversation he let drop that he was working on IBM's US$1.2b takeover of Nasdaq-listed predictive analytics software firm SPSS, for a "significant premium over its market price".

After sitting on the information for three days, Martin bought 1500 SPSS shares and took 29 stop options on SPSS, an amount he thought would be so small no one would notice.

His folly was to tell his flatmate, Thomas Conradt, a stockbroker at Euro Pacific Capital who told his colleague David Weishaus, who then told others at the firm.

They bought up SPSS stock that would net them more than US$1 million in profits.

Shortly before the July 27, 2009, takeover Martin, anxious about what he had done, confessed to Dallas. According to court documents, Dallas was furious and demanded he sell his stock before the takeover. Martin did so, except for 500 shares that netted him a US$7900 profit - and proved his undoing.

When Dallas' law firm learned late in 2010 that the SEC was investigating SPSS trades, Dallas told Martin, who packed up and went home to Australia. Dallas became a witness for the SEC against his former friend.

Dallas, the eldest son of Paparoa travel agents Jan and Garry Dallas, grew up in the Northland town and graduated with a law degree from Victoria University in 2004, before starting work at one of New Zealand's biggest law firms, Chapman Tripp, in 2005.

A managing partner at Chapman Tripp, Mark Reese, said Dallas was highly thought of and did a great job when he worked at the firm.

Working in the US might not be an option for Dallas in the near future, but last year he married his American fiancee Kate Kehoe in Italy.