Three Top Wall Street Figures Indicted in Insider Trading
NEW YORK (AP) _ Three top Wall Street executives were indicted Thursday by a federal grand jury for their alleged parts in an insider trading scheme.
The four-count indictment charged Robert M. Freeman, head of Goldman, Sachs & Co.’s risk arbitrage department; Richard B. Wigton, vice president at Kidder, Peabody & Co.; and Timothy L. Tabor, a former Kidder, Peabody arbitrageur, with conspiracy to violate federal securities, mail fraud and wire fraud laws.
The indictment also charged the trio with three counts each of securities fraud.
The indictment did not name either Goldman Sachs or Kidder Peabody as defendants.
Tabor, 33, of Manhattan, was arrested Feb. 11; Freeman, 44, of Rye, and Wigton, 52, of Summit, N.J., were arrested the next day. All three are free on bond.
″Mr. Tabor intends to plead not guilty to these charges and I expect that at the conclusion of the trial he will be exonerated,″ said Tabor’s attorney, Andrew Lawlor.
Freeman’s lawyer, Paul J. Curran, said his client: ″looks forward to pleading not guilty at his arraignment and we look forward to going to trial and to Mr. Freeman’s acquittal.″
Wigton’s lawyer, Stanley Arkin, was out of his office and could not be reached for comment.
Goldman Sachs said in a statement it supported Freeman: ″Based on all that we now know, we continue to believe in him and to believe that he did not act illegally.″
There was no answer at Kidder Peabody’s main phone number when a reporter called for comment Thursday evening.
According to the indictment, Freeman allegedly swapped confidential corporate information between 1984 and early 1986 with Martin A. Siegel, then a Kidder Peabody vice president. Both men had access to material, non-public information regarding clients of their respective firms.
Siegel pleaded guilty Feb. 13 to tax and securities law violations for his part in the conspiracy.
The Securities and Exchange Commission charged in a civil action against Siegel that he was paid $700,000 for stock tips by speculator Ivan F. Boesky. Siegel settled the SEC civil case without admitting guilt or innocence.
Boesky, who reached a $100 million settlement of an SEC civil action, has agreed to plead guilty to an unspecified felony count.
Thursday’s indictment charged that Siegel communicated the material, non- public information he allegedly received from Freeman to Tabor and Wigton and that Siegel, Tabor and Wigton made trading decisions for Kidder Peabody’s risk arbitrage department with the information.
Federal law forbids corporate executives, investment bankers and others with access to confidential corporate information from using it to trade in securities.
According to Neil S. Cartusciello and John M. McEnany, the federal prosecutors handling the case, the alleged conspiracy occurred between June 1984 and January 1986 and involved transactions in the securities of several corporations engaged in takeovers and tender offers, including Unocal Corp. and Storer Communications Inc.
The trio were charged with three counts of securities fraud on specific purchases of Unocal options in Kidder Peabody’s risk arbitrage account.
The indictment alleged that Kidder Peabody, Goldman Sachs, Freeman and members of Freeman’s family earned substantial amounts of money from the conspiracy.
All three are scheduled to be arraigned on the indictment at federal court in Manhattan April 16.
U.S. Attorney Rudolph Giuliani said each faces a maximum penalty, if convicted on all counts, of 20 years and fines of either $250,000 or twice the gross profits obtained by the alleged conspiracy.
The trio’s arrests in February at Wall Street area offices signaled a new get-tough policy by federal authorities and sent shock waves through the financial community, already rocked by the widening insider trading scandal.
Last May the SEC charged Dennis B. Levine, former managing director of Drexel Burnham Lambert Inc. with making $12.6 million in illegal profits by trading on inside information since 1980.
Levine pleaded guilty in June and agreed to cooperate with investigators. He was sentenced to two years in prison in February and agreed to pay $11.6 million as settlement of the SEC action.
Further insider trading charges in connection with the Levine scheme were leveled against investment bankers Ira B. Sokolow, Robert M. Wilkis, David S. Brown and takeover lawyer Ilan K. Reich. All pleaded guilty to various charges.
Michael Davidoff, Boesky’s former head trader, pleaded guilty to securities fraud last January and also agreed to cooperate.
Last month, Boyd Jefferies, former chairman of the Los Angeles-based Jefferies & Co., brokerage firm, agreed to plead guilty to two felony counts for securities violations stemming from his dealings with Boesky.