Ex-Business Week Broadcaster Pleads Guilty to Mail Fraud
NEW YORK (AP) _ Business Week’s former broadcast editor, Seymour G. ″Rudy″ Ruderman, has pleaded guilty to mail fraud in an insider trading scheme, admitting he illegally used advance material from the magazine to buy and sell securities.
Ruderman admitted on Thursday making $15,000 between January 1986 and last July in securities trades, using not-yet-published information from upcoming issues of the nation’s biggest business weekly.
The 62-year-old editor waived indictment and pleaded guilty to two counts of mail fraud before U.S. District Judge Robert Ward, who released him on $100,000 bond.
Ward scheduled sentencing for March 8, 1989. Ruderman faces a maximum penalty of five years in prison and $250,000 in fines on each count.
Ruderman, who had broadcast market and business news for Business Week since 1981, was fired Aug. 12 for failing to disclose all his stock trades and the full extent of his holdings, in violation of the magazine’s ethics code.
The first criminal charges were filed in the widening scandal last August. William Dillon, a stock broker who had been fired by Merrill Lynch & Co., for suspcious trades was charged with mail fraud.
Seven employees of Business Week’s printer also lost their jobs, a result of an in-house investigation that allegedly found workers sold advance copies of Business Week. Two brokers at two other investment firms also were fired.
Ruderman did not report, write or edit stories for Business Week. But he broadcast a business news report several times a day from the magazine’s office in midtown Manhattan to radio stations in New York, Boston, Philadelphia and Fort Wayne, Ind.
According to the charges, Ruderman used information obtained largely from Business Week’s market-sensitive ″Inside Wall Street″ column to buy and sell securities on 50 occasions.
″A security that received a favorable mention in that column generally increased in price in the period immediately following public dissemination of Business Week,″ court papers said.
In entering his plea, Ruderman said he probably lost more money than he made in his securities trading.
According to the charges, Ruderman regularly received a page proof of the ″Inside Wall Street″ column on Thursdays - hours before its official release to the public - to make sure companies mentioned in the column were not referred to in radio broadcasts. Ruderman also was free to use the information in his weekend reports, which were taped on Fridays.
Instead, Ruderman bought shares or options to buy shares, and caused unidentified ″other persons″ to purchase securities in companies receiving favorable mention in the upcoming column.
U.S. Attorney Rudolph Giuliani refused to characterize who the ″other persons″ were but said the investigation was continuing.
He also commended Business Week and its publisher, McGraw-Hill Inc., for their cooperation.
Ruderman conducted transactions in the securities of such companies as Champion Spark Plug, Chrysler Corp., MCA Inc., Getty Petroleum and Jefferies Group Inc.
Giuliani noted that Ruderman was charged with mail fraud for victimizing the magazine, which is delivered by mail.
Ruderman was not charged with securities fraud for insider trading, the prosecutor said, because the U.S. Supreme Court split 4-4 on that issue last year in the case of former Wall Street Journal reporter R. Foster Winans.
The Supreme Court unanimously upheld the mail and wire fraud convictions of Winans for using advance knowledge of upcoming Journal columns to make illegal trading profits. But the court split over a broad interpretation of ″misappropriation″ of confidential information that would have included revealing yet-to-be published newspaper and magazine stories.
Noting that the penalty for mail fraud and securities fraud were the same, Giuliani said ″from a criminal (law) point of view, this is a safer way to achieve the same results.″