Psychiatrist Charged With Insider Trading
A Manhattan psychiatrist was indicted on criminal insider trading charges for allegedly having bought stock in BankAmerica Corp. after a patient, during the course of treatment, revealed confidential information involving the company.
The psychiatrist, Robert H. Willis, 50, was named in a 46-count indictment on mail fraud and securities fraud charges stemming from the alleged insider trading. The indictment was returned late Wednesday by a federal grand jury in Manhattan. Willis’ lawyer denied that his client had violated securities laws and said he plans to fight the charges.
In 1986, Willis allegedly had a patient, identified in the indictment only as “Jane Doe,” whose husband had a business relationship with Sanford I. Weill, the former chief executive of Shearson Loeb Rhodes.
The indictment charges that in January, 1986, she disclosed to Willis that Weill was considering making a bid to become chief executive of BankAmerica and that Weill had secured a commitment from Shearson to invest $1 billion in the company if he succeeded. San Francisco-based BankAmerica is the parent company of Bank of America.
Not First Psychiatrist Charged
The indictment states that Jane Doe discussed this with Willis because “there would have been substantial upheavals in the personal lives of Jane Doe and her spouse” if Weill succeeded, due to his business relationship with her husband.
Willis allegedly bought $171,130 of BankAmerica common stock based on the information, through accounts at Bear, Stearns & Co., and later reaped a profit of $27,475 after Weill’s attempt to become chief executive was publicly announced. Weill’s effort to gain control of the company eventually failed. He currently is chairman of Primerica Corp., the parent company of the brokerage firm Smith Barney, Harris Upham & Co.
Willis isn’t the first psychiatrist to be accused of insider trading. In 1986, a Connecticut psychiatrist, Morgan F. Moore, was accused in civil charges filed by the Securities and Exchange Commission of trading on inside information obtained from a patient and her husband in 1984.
The information related to the then-pending acquisition of Posi-Seal International, a Connecticut company, by a unit of Monsanto Co. Moore settled the SEC lawsuit without admitting or denying the charges and paid back to the government $26,933 in allegedly illegal profits, plus an equal amount in penalties. Moore wasn’t prosecuted criminally.
Willis is due to be arraigned Aug. 10. If convicted, he faces a maximum sentence on each count of five years in prison and a $250,000 fine. Edward Brodsky, Willis’ lawyer, said: “He never traded on any insider information, he never violated the securities laws and he’s going to plead not guilty.” The lawyer predicted that Willis will be acquitted if the case goes before a jury.
