An Orange investor pleaded guilty Monday in U.S. District Court in New York to charges of insider trading, admitting that he used information culled from advance copies of Business Week magazine.
Stephen R. Rasinski, 35, was accused of having improperly earned at least $115,000 between September, 1986, and July, 1988, by buying stock in companies mentioned in the “Inside Wall Street” column before the magazine was available to the public. A mention in the column generally raised a company’s stock price.
Rasinski’s guilty plea is the latest development in the growing insider-trading scandal involving Business Week. Thirteen individuals in several unrelated cases involving the magazine have been charged with criminal or civil wrongdoing.
Rasinski could not be reached for comment Monday. He faces a minimum sentence of 10 years in prison and a $500,000 fine.
In entering his plea Monday, Rasinski told the court that he had received the inside information from his stockbroker, John L. Petit of Newport Beach. Petit has admitted that he paid hundreds of dollars a week for the information, which Petit received from Shayne Walters, a former salesman for one of Business Week’s printers, R.R. Donnelley & Sons Co. of Torrance.
Both Petit and Walters have pleaded guilty to insider-trading charges in the case and face sentences of 10 years in prison and fines of up to $500,000.
Assistant U.S. Atty. Alice Hill, who is heading the investigation, said the criminal inquiry is continuing. Petit is cooperating with authorities.
Rasinski was first named in the scandal last month when the Securities and Exchange Commission accused him of insider trading in a civil complaint filed in U.S. District Court in New York. The civil case is still pending; the SEC is seeking damages equal to three times Rasinski’s profits.
“We believed he willfully violated the securities law,” Hill said.
The SEC has also named Pacific Palisades stockbroker Lawrence M. Small, a former broker with Smith Barney, Harris Upham & Co., in connection with the Business Week case. The SEC alleges that Petit, also a former Smith Barney broker, paid Walters for advance copies of the magazines and that Petit then provided the information to Rasinski and Small, who in turn contributed to payments to Walters.