Printer Fires Two More Workers, Third Resigns; Advest Broker Quits
NEW YORK (AP) _ Business Week’s printer fired two more workers today and a third printing employee resigned in a widening scandal into possibly illegal trading based on leaked stock tips from the magazine.
The disciplinary moves by printing giant R.R. Donnelley & Sons Co. of Chicago came the same day the Connecticut brokerage Advest Inc. announced a broker it had suspended because of the scandal resigned.
In addition, the U.S. attorney for Connecticut confirmed he had initiated an inquiry into a network of brokers and printing employees who used ″Inside Wall Street″ columns purloined from Business Week to trade.
Donnelley, one of the nation’s largest printers, said it had fired a suspended employee at its Torrance, Calif., plant and fired another employee at its facility in Old Saybrook, Conn., where a production worker had been dismissed earlier this week.
The company also said a Torrance worker had resigned in connection with its investigation into the leaks.
″This is not the way we do business,″ John R. Walter, president of the company, said in a statement. ″We have a long, proud tradition of protecting our customers’ materials. Though a few employees violated the rules, we continue to have confidence in our more than 23,000 other employees.″
He said the investigation was continuing and any others found to have violated the company’s confidentiality rules would be dealt with severely.
The company declined to identify any of the affected employees.
Earlier today in Hartford, Conn., Advest spokeswoman Martha Payne announced the resignation of suspended broker Thomas Griffin, who worked at Advest’s office in New London, Conn.
That resignation brought to three the number of investment professionals been forced out as a result of queries into suspicious Business Week-related trading.
Ms. Payne said Griffin, who had been with the firm for five months, ″tendered his immediate resignation as of late yesterday.″
She would not disclose whether Griffin admitted involvement in the scandal.
Griffin was not in the New London office today and he did not return messages left at his home. Griffin’s attorney, S.W. Bromson, was out of the office, his secretary said.
Ms. Payne said no other Advest brokers were under scrutiny but she said the firm was continuing to investigate the suspicious trading.
Hartford U.S. Attorney Stanley Twardy Jr., meanwhile, confirmed he had asked the FBI to investigate ″any possible wrongdoing in Connecticut in connection with this matter.″ He declined to elaborate.
The developments today came two days after Donnelley fired a production worker at the Old Saybrook plant for selling copies of Business Week to William Dillon, a Merrill Lynch broker who was fired last week.
People familiar with the investigation have said Dillon bought them for as little as $20 each and used the information to make profits of $2,000 a week or more.
Prudential-Bache Securities Inc. also has dismissed a broker in connection with the scandal, Brian Callahan, from its office in Anaheim, Calif., not far from Donnelley’s Torrance plant.
At least nine securities firms have become enmeshed in the scandal, which surfaced July 21 when Business Week, the nation’s leading business weekly with a circulation of nearly 1 million, disclosed it was investigating suspicious trading of stocks mentioned in ″Inside Wall Street″ before the magazine was publicly available.
The Securities and Exchange Commission and the nation’s major stock exchanges also are probing trades of stocks mentioned in the column. Such activity is regarded as fraud under federal securities laws.