Winans Agrees to Give Up His Insider Profits
Former Wall Street Journal reporter R. Foster Winans has agreed to give up $4,502.84 that he made illicitly by trading stocks on which he was reporting for the newspaper, the Securities and Exchange Commission said Tuesday.
Winans signed the agreement without admitting or denying the SEC’s assertions of fraud, although he has already been convicted on criminal fraud charges stemming from the same case. The agreement, completed Monday, was made public by the agency Tuesday.
Signing a similar agreement was David J. Carpenter, Winans’ longtime roommate and companion, who was also convicted in the scheme. Winans and Carpenter, who was not required to pay any penalty, were both permanently enjoined from future violations of federal anti-fraud laws under the court order.
The SEC had charged that Winans, one of two principal writers of the Journal’s “Heard on the Street” feature, tipped two stockbrokers at Kidder, Peabody & Co. to the feature’s contents and timing. The column, a melange of daily Wall Street rumor and intelligence, can often inspire short-term moves in stocks, and the trading ring made gross profits of more than $918,627 by using the information. Winans and Carpenter received $31,000 for their information.
Additionally, Winans and Carpenter had been charged with making a separate profit by trading on their own before joining with the Kidder brokers. It is that money that Winans agreed to give up in the latest action.
Three Were Convicted
Winans, Carpenter and Kenneth Felis, one of the brokers, were convicted last summer of felony fraud charges in connection with the case. Winans was sentenced Aug. 6 to 18 months in prison, a $5,000 fine and five years’ probation; Carpenter to three years’ probation and a $1,000 fine, and Felis to six months in prison and a $25,000 fine. All are free pending appeal.
Peter Brant, the second Kidder broker, pleaded guilty to several criminal counts last spring and served as the prosecution’s chief witness against the other three. He still awaits sentencing.
Brant, Felis and Winans lost their jobs after the trading was exposed. Carpenter was no longer employed at the Journal at the time.
Of the more than $900,000 in gross profits turned by the group, Brant has already paid to the government, or “disgorged,” $454,437, and Felis has disgorged $159,814. An SEC spokesman said the $31,000 payments to Winans and Carpenter are presumed to have been included in the money that Brant and Felis disgorged.
Winans’ and Carpenter’s judgments leave only one defendant in the SEC’s civil lawsuit over the scheme: David W. C. Clark, a New York lawyer and client of Brant’s who allegedly made more than $300,000 in the illegal trading. Clark was not charged in the criminal case.
