High Court Lets Insider Trading Suit Continue

The Supreme Court on Monday refused to block a $1.6-billion lawsuit against brokerage Kidder, Peabody & Co. over insider information allegedly given to convicted Wall Street figure Ivan F. Boesky.

In other actions, the court:

* Agreed to consider killing an antitrust lawsuit against Eastman Kodak Co. by companies that repair Kodak equipment.

* Refused to squelch a Florida city’s plan to operate a cable TV system in competition with a cable company.

In the Kidder case, the justices let stand without comment a ruling that forces the brokerage to defend itself against allegations that it violated the Texas Business and Commerce Code.

Dallas-based Maxus Energy Corp. contends in the $1.6-billion suit that it paid $300 million more than it should have in its 1983 takeover of Natomas Co. because Martin A. Siegel, a former Kidder vice president who advised Maxus on the merger, gave Boesky confidential information.

A U.S. District Court judge ruled that Maxus could not assert violations of federal securities law against Kidder and blocked the Texas state court litigation. Kidder is owned by General Electric Co.

But the U.S. 2nd Circuit Court of Appeals ruled that the judge lacked the authority to squelch the Texas lawsuit.

In 1987, the Securities and Exchange Commission charged Siegel with illegally disclosing confidential material about the planned merger to Boesky. The SEC said Boesky used the information to purchase Natomas stock, reaping at least $4.8 million in profits.

Boesky was the central figure in Wall Street’s largest insider trading scandal. He pleaded guilty to one felony count, paid $100 million in penalties and served two years in prison.