Guilty Plea in Business Week Insider Case : Ex-Salesman at Printer Gave Copies to His Broker
A former salesman for the company that prints Business Week magazine formally entered a guilty plea Thursday to conspiring to trade on advance information about stocks mentioned in the magazine’s influential “Inside Wall Street” column.
As reported, Shayne Walters, 32, of Laguna Hills, agreed in August to plead guilty to charges in the Business Week case. He also pleaded guilty to perjury for lying under oath to an investigator of the Securities and Exchange Commission.
The federal investigation has now resulted in guilty pleas on both the East and West coasts in the government’s probe of illegal trading using purloined copies of the business weekly between 1986 and 1988. The magazine was not charged with any wrongdoing.
Walters was a sales representative for R. R. Donnelley & Sons, a Chicago-based printer of Business Week, from January, 1983, until April. A Donnelly plant in Torrance printed copies of the magazine for distribution in California.
In entering the plea in U.S. District Court in Manhattan, Walters agreed to cooperate in the federal probe. Assistant U.S. Atty. Carl H. Loewenson Jr. said his office would recommend a lenient sentence for Walters based on the information he gives the government.
Walters faces up to five years in prison and a $250,000 fine on each of the two charges. He is to be sentenced April 24 by U.S. District Judge John Walker Jr.
Early Morning Trek
The conspiracy charge alleged that between September, 1986, and July, 1988, Walters obtained advance copies of Business Week from the Donnelley plant in Torrance and then supplied them to his stockbroker, who traded on companies reported favorably in the “Inside Wall Street” column.
Walters told the judge that he would leave his house at 3:45 a.m. on Thursdays, the day the magazine was distributed, and drive 45 miles to the plant to get a copy of the magazine.
He then would drive 45 miles back to his hometown and give the magazine to his stockbroker, Walters said. He also said the stockbroker, who was not identified, paid him for some of the advance copies.
Walters was the latest person to plead guilty to schemes involving trading on pre-publication copies of “Inside Wall Street.”
William Dillon, a former Merrill Lynch & Co. broker, and S. G. (Rudy) Ruderman, the former broadcast editor for Business Week, had previously pleaded guilty to similar charges, and both were sentenced to six months in prison.
In addition, at least seven other Donnelley employees have either resigned or been fired in wake of the Business Week scandal. The SEC also has sued Dillon and five others in the case.
In a settlement reached with the SEC in August, Walters agreed to pay $62,000 in restitution and civil penalties--an amount double his illegal profits.
Papers filed by the SEC said Walters purchased and sold stock from 13 companies based on information in the magazine and that the stockbroker traded on more than 40 companies.
