SEC Bars Former Prudential Broker

U.S. securities regulators Tuesday barred former Prudential Securities Inc. broker Joseph T. Falcone from the industry for at least five years for allegedly trading on information he obtained from advance copies of BusinessWeek.

The Securities and Exchange Commission and U.S. prosecutors accused Falcone and other brokers of paying a foreman at a magazine distribution facility $3,000 to fax them advance copies of BusinessWeek’s “Inside Wall Street” column in 1995 and 1996. The SEC claimed that the brokers made more than $190,000 by trading on the nonpublic information.

Falcone, who worked in Prudential’s Melville, N.Y., office, was convicted of 13 counts of securities fraud in 1999; a federal appeals court upheld his conviction in 2001. Falcone neither admitted nor denied the SEC’s allegations as part of the settlement. A call to his lawyer wasn’t returned.

The SEC also permanently barred Larry F. Smath, a broker at now-defunct Renaissance Financial Securities Corp., from the industry for his alleged role in the scheme. The SEC said Smath bribed the magazine distribution foreman to fax the column to him and then sold it to other brokers, including Falcone. Smath pleaded guilty to one count each of conspiracy to commit securities fraud and mail fraud in 1999.

Michael Bachner, a lawyer representing Smath, called the settlement a “satisfactory resolution.” Smath neither admitted nor denied the SEC’s allegations as part of the settlement.