Brokers Charged With Inside Trading
NEW YORK (AP) _ Three Long Island stockbrokers were charged with insider trading for allegedly using advance copies of Business Week’s ``Inside Wall Street″ column to make stock trades.
Peter Cohen, 33, and Seth Glaser, 29, who were brokers at Renaissance Financial Securities Corp. in Mineola and Joseph Falcone, 39, who was a broker at Prudential Securities in Melville, were charged with insider trading for using the information, said U.S. District Attorney Zachary W. Carter Wednesday.
Larry Smath, who also worked at Renaissance, pleaded guilty Tuesday to conspiracy to commit securities fraud for allegedly obtaining the column from an employee of a company that distributes the magazine and faxing it to the other brokers, Carter said.
According to a criminal complaint filed in U.S. District Court in Hauppauge, Smath was paid to obtain pre-published copies of the ``Inside Wall Street″ column _ in which positive information about publicly traded companies is often reported _ and send it to the three other brokers.
Smath allegedly received a copy through a friend working at Hudson News Co. in New Jersey. The company distributes Business Week and other publications.
The name of the Hudson News employee _ who allegedly also received a payoff _ was not released. A message left with Hudson News was not immediately returned.
On several Thursdays in 1995 and early 1996 Cohen, Glaser and Falcone allegedly received faxes of the column, or a list of companies mentioned in it, and would then buy stock in the companies before the stock markets closed for the day.
The column by Gene Marcial, which is printed in Business Week, is first available to the public over the Internet Thursday after the closing of the stock market.
The brokers and their clients would allegedly cash in by unloading the stock after the prices had gone up based on the column’s favorable coverage.
Cohen, Glaser, Falcone and their clients allegedly made profits of more than $140,000.
The scheme ended suddenly in January 1996, when Business Week published an article, ``Is Someone Sneaking a Peek at Business Week?″
The article mentioned that the Securities and Exchange Commission had been alerted that trading on Thursdays in stock mentioned in the column, an indication that someone might be getting an early look.
Three of the brokers had unlisted phone numbers and could not be reached for comment. A man who answered the phone at Smath’s home declined to give his name but said all calls were being referred to attorney Michael Bachner. Messages left with Bachner were not immediately returned.
There was no telephone listing for Renaissance Financial. No one answered the phone at Prudential in Melville late Wednesday.
Charges of securities fraud carry a maximum sentence of 10 years in prison, as well as fines and restitution, Carter said.