Business Week Fires Its Radio Broadcaster as Scandal Spreads

The Business Week insider trading scandal touched the magazine’s own staff for the first time as the publication fired its radio broadcaster Friday for violating the magazine’s code of ethics.

Business Week spokeswoman Mary McGeachy identified the employee as S. G. (Rudy) Ruderman, 62, who broadcast daily business reports on four radio stations. She said Ruderman was dismissed for failing to disclose that he had traded in several stocks shortly before they were recommended in the magazine’s “Inside Wall Street” column.

McGeachy said Business Week officials hadn’t yet established whether Ruderman’s trades were based on advance knowledge of what would be published in the column. But she said he was dismissed because he violated magazine conflict-of-interest rules requiring editorial employees to disclose all personal stock trades to the magazine’s editor-in-chief.

The dismissal marks the first time that a Business Week employee has been implicated in the affair. So far, suspicions have focused on employees of R. R. Donnelley & Sons, which prints the magazine under contract, and on a variety of stockbrokers who apparently received information from the printers. To date, seven Donnelley employees have been dismissed or resigned because of the investigation.

First Criminal Charge

Business Week first confirmed July 21 that it had launched an internal investigation because of a pattern of unusual trading activity on Thursdays of stocks recommended in the widely read column. The weekly magazine is printed on Wednesday nights and Thursday mornings, and the first copies aren’t released to the public until after the stock markets close on Thursday.

Ruderman’s firing comes one day after Rudolph W. Giuliani, the U.S. attorney in Manhattan, brought the first criminal charge in the case, against a Merrill Lynch & Co. stockbroker who was fired for making suspicious trades. The broker, William Dillon, is expected to cooperate with the government’s investigation.

Ruderman provided daily reports on business news and stock market conditions to three all-news radio stations owned by Westinghouse Broadcasting in New York, Boston and Philadelphia, as well as another station in Ft. Wayne, Ind. Ruderman had done the broadcasts since 1981. The spokeswoman said Ruderman didn’t report, write or edit articles for the magazine.

McGeachy said Ruderman was dismissed after a New York Stock Exchange official called the magazine late Thursday to say that the exchange investigators had obtained records showing that Ruderman had traded in stocks recommended in the column shortly before the magazine was published. In a statement, the magazine said: “Ruderman may have made four or five trades in 1988 involving stocks mentioned” in the column.

McGeachy said she didn’t know which specific stocks had been traded or the amounts of money involved. She said the trades all took place on Thursdays. The New York and American stock exchanges, the Securities and Exchange Commission as well as the U.S. attorney’s office in New York are conducting investigations of trading based on leaks from the magazine.

Suspending Reports

Ruderman couldn’t be reached for comment on Friday. Calls to an answering machine at what is believed to be his home telephone in Scarsdale, N.Y., weren’t returned.

Warren Mauer, the general manager of WINS, the Westinghouse station in New York that carries the Business Week broadcasts, said: “We won’t carry the Business Week reports on WINS until we have a chance to sit back and take stock and make sure that everything is OK.” He said the station had planned to drop the Business Week reports in October anyway because it intended to begin broadcasting reports prepared by Financial News Network.

Mauer said Ruderman’s reports never involved recommendations of individual stocks. He said the brief broadcasts were limited to explanations of why the stock market was going up or down and reports of other business news such as changing interest rates.