Ex-Employee of Business Week Pleads Guilty : Advance Information Used in Stock Trades
A radio commentator formerly employed by Business Week magazine pleaded guilty Thursday to two federal criminal charges, admitting that over 2 1/2 years he had regularly made investments based on advance knowledge of which stocks the magazine would recommend.
Seymour G. “Rudy” Ruderman, 62, had worked for about seven years at Business Week, providing several radio stations with daily business commentary. He was dismissed in August, after the magazine said it had obtained information that he may have traded in stocks that were to be recommended in the magazine’s “Inside Wall Street” column.
50 Trades Alleged
In a settlement with the U.S. attorney’s office in Manhattan, Ruderman agreed to forgo a grand jury indictment and pleaded guilty to two counts of mail fraud. He is due to be sentenced March 8 and could face a maximum penalty of 10 years in prison and a fine of $500,000. Alan R. Kaufman, Ruderman’s lawyer, said he “wouldn’t be surprised” if the Securities and Exchange Commission also files civil insider trading charges.
According to a criminal information filed Thursday by prosecutors, Ruderman made more than 50 illegal trades between January, 1986, and July, 1988. But the document states that he made a total profit of only about $15,000. Prosecutors charged that he routinely received page proofs of each week’s still-unpublished magazine, so that he knew in advance which stocks the “Inside Wall Street” column would recommend. Stock prices often went up based on recommendations in the widely followed column once the magazine was delivered to subscribers.
Reports Called Falsified
The court document suggests that Ruderman passed along the information to other individuals who traded on the advance tips. But the document didn’t identify them, and U.S. Atty. Rudolph W. Giuliani refused to comment. But he said the investigation was continuing.
Ruderman typically made small trades, buying a few hundred shares of stock or 10 or 20 stock options at a time. He generally ordered the illegal trades about twice a month, although in August, 1987, he traded on four successive weeks. The court documents also noted that Ruderman, like other Business Week editorial employees, was required to submit regular memoranda to the magazine’s editor-in-chief. But prosecutors said he falsified the reports to hide his illegal trading.
In a statement before pleading guilty to U.S. District Judge Robert J. Ward, Ruderman told the judge: “I truly regret the shadow cast on my colleagues at Business Week, for whom I have the most profound personal and professional respect. . . . They are people of integrity, and I am distressed at the embarrassment and anguish that my violations of journalistic ethics have caused them.”
Cooperation Noted
Ruderman’s dismissal from the magazine followed disclosure of widespread insider trading based on advance knowledge of what would appear in the column. Much of the illegal trading was subsequently traced to leaks from the magazine’s printing plants. Investigations of those leaks is also continuing, Giuliani said.
The prosecutor praised Business Week for cooperating fully in the investigation, including voluntarily turning over documents.
