By Joseph Ax
NEW YORK (Reuters) - A U.S. judge on Tuesday accepted the guilty plea of a former stockbroker to participating in an insider trading scheme, one week after expressing concern about whether the defendant's explanation of the crime was legally sufficient.
Daryl Payton, who had been a trader at Connecticut-based Euro Pacific Capital Inc, pleaded guilty last week to one count of conspiracy to commit securities fraud in federal court in New York.
But U.S. District Judge Andrew Carter declined at that time to accept the plea, saying he was unsure whether Payton had adequately explained how he knew the inside tips were obtained as a result of a breach of confidentiality, a legal element of the crime.
Payton was several steps removed from the original source. In court papers filed in response to Carter's concerns, prosecutors told Carter they had altered their theory of the case to narrow the conspiracy in which Payton was involved.
At a brief hearing on Tuesday, Carter accepted the plea, after Payton said he had discussed the matter fully with his lawyer and still wished to plead guilty.
His co-defendant and fellow Euro Pacific trader, Benjamin Durant, is scheduled to face trial on Dec. 8.
Payton took part in an insider trading scheme centered on a technology company acquired by International Business Machines Corp in 2009.
Three other people have also admitted to sharing and trading on secret information about IBM's pending acquisition of software maker SPSS Inc that originated from a corporate lawyer.
The lawyer, who has not been charged, has been identified in a related U.S. Securities and Exchange Commission civil lawsuit as Michael Dallas, a former associate at the law firm Cravath, Swaine & Moore.
Authorities said Dallas shared information about the pending deal with a friend, Trent Martin, an analyst at Royal Bank of Scotland Group Plc.
Martin then told his roommate, Thomas Conradt, a broker at Euro Pacific, authorities said. Conradt in turn shared the tip with others at his firm, including Payton and Durant, whom prosecutors said purchased options and shares in SPSS based on the insider information.
Martin, Conradt and David Weishaus, another Euro Pacific trader, all pleaded guilty last year and agreed to cooperate with prosecutors.
The indictment also refers to another co-conspirator at Euro Pacific who has not been identified.
Payton is scheduled for sentencing in March.
(Reporting by Joseph Ax; Editing by Leslie Adler)