The case began with an associate at the New York law firm that represented IBM in the upcoming deal. The law firm appears to be Cravath Swaine & Moore, since that's who represented IBM in the particular deal. The associate told his good friend, the Australian, who told his roommate, the stockbroker who is now a lawyer in Denver. The lawyer in Denver then told his buddy, the former stockbroker-turned-lawyer in Baltimore.

Here is DOJ's press release. Here is the Indictment. Here is the SEC Complaint filed against them.

Samples of the instant messages:

In Instant Message exchanges in July 2009, CONRADT and WEISHAUS discussed their insider trading scheme and the source of their Inside Information. For example, on July 1, 2009, WEISHAUS wrote to CONRADT, “somebody is buying spss . . . we should get [CC-1] to buy a f***load [of SPSS shares] . . . .” CONRADT responded, “jesus don’t tell anyone else . . . we gotta keep this in the family.” WEISHAUS answered, “dude, no way. i dont want to go to jail f*** that . . . martha stewart spent 5 months in the slammer . . . and they tried to f*** the mavericks owner.” Later that same day, WEISHAUS wrote to CONRADT, “jesus, we need spss to run up i need that lexus.”

Moral of the story: Don't discuss illegal activity on your blackberrys or iphones. Our federal prisons may be operating at more than 34% over-capacity, inmates may be double and triple bunked, but they are still likely to go after you.