On this day in 1986, the U.S. Court of Appeals upheld the decision to convict a writer on securities fraud charges. The author, R. Foster Winans, who wrote a popular Wall Street Journal investment column called "Heard on the Street," created a stock fraud scheme with two stockbrokers from the Kidder Peabody brokerage firm.
Stockbrokers Earned $700K in Profits
Winans' started writing "Heard on the Street" in 1982. In October 1983, he was convinced to leak information about his yet-to-be published columns to two stockbrokers, who wanted to benefit from the price changes that almost always happened after he reviewed a particular stock. In exchange for providing the information, Winans -- and his lover/coconspirator -- received $31,000. Meanwhile, the stockbrokers earned $700,000 in stock profits from the trades they made with Winans' information.
Winans Served 18 Months in Prison
Soon, a Kidder Peabody executive noticed how one of the stockbroker's trades appeared to mirror Winans' recommendations in advance of them actually being published. The coincidence was too out of the ordinary for him to overlook. The SEC began investing the trading activity and Winans later admitted to the entire scam.
Winans was immediately terminated from the Wall Street Journal. He and the two stockbrokers were all convicted on securities fraud charges. Winans was punished with 18 months in prison.
The stock fraud perpetrated by these three individuals became a well-known example of the cutthroat mindset on Wall Street during the 1980s. However, the scheme was quite small in comparison to the massive scams and fraud that have been discovered at other large banks and investment firms on Wall Street over the last 15 years.
Winans later released a book in 1986 that described his scheme in detail. The book was called Trading Secrets and it was successful. At first, the New York Crime Victims Board tried to prevent Winans from profiting from the publication based on a law that prohibits convicted criminals from receiving any kind of profit from their crimes. However, Winans ultimately prevailed and was able to keep his profits. Later, Winans said that he liked how the conviction has improved his life.
Bankruptcy – Business
Bankruptcy – Personal
Criminal Law – Appellate
Criminal Law – Federal
Criminal Law – State Felony & Misdemeanor
Drunk Driving Defense
Dumb or Weird Laws
GM Ignition Switch
Stryker Hip Replacement
Intellectual Property Law
Labor & Employment Law
Landlord Tenant Law
Personal Injury – Defendant
Personal Injury – Plaintiff
Social Security Disability
Weird Law Friday
Trending Searches#TBT #ThrowbackThursday constitutional law Criminal Law - State Felony & Misdemeanor dangerous or defective products divorce DUI dumb laws estate planning Events that Changed History Family Law FAQ first-amendment product-recall products liability random laws recall safety recall strange laws weird laws