2nd Torrance Worker Linked to Insider Case

The scope of the Business Week insider trading scandal continued to expand Wednesday amid the disclosure that a second printing-plant employee in Torrance traded on pre-release information about stock tips in the magazine.

The employee, whose identity was not disclosed, resigned before he could be fired, said a spokesman for R. R. Donnelley & Sons, which prints Business Week in Torrance and in Old Saybrook, Conn. Donnelley also said Wednesday that it fired another Torrance employee whom it earlier had suspended and fired a second employee at its Connecticut plant, where leaks also have occurred.

Meanwhile, the U.S. attorney’s office in Hartford, Conn., disclosed that the FBI has begun a criminal investigation into the matter, the first confirmation of such a probe. And Advest Inc. said a Connecticut broker, previously suspended, has resigned.

Accounts at Brokerages

The disclosure that at least two employees at Donnelley’s Torrance plant traded on pre-release knowledge of Business Week’s “Inside Wall Street” column provides further evidence that several brokerages in Southern California handled trades based on inside information.

Sources close to the investigation said the two Torrance employees appear to have had accounts at several brokerages. However, the two employees are believed to have had no connection with the two in Connecticut.

Donnelley spokesman Arthur C. Prine Jr. said the second employee in Torrance came forward to admit guilt and resigned.

As previously reported, California offices of at least two brokerages--Prudential-Bache Securities and Smith Barney, Harris Upham & Co.--are investigating suspicious trading based on stock tips in Business Week.