Reporter’s Co-Defendant Gets 6 Months
NEW YORK (AP) _ An ex-stockbroker convicted of trading on information leaked by former Wall Street Journal reporter R. Foster Winans was sentenced Wednesday to six months in prison, to be served on weekends.
U.S. District Judge Charles E. Stewart Jr. also fined Kenneth P. Felis $25,000, gave him five years’ probation and ordered him to perform 500 hours of community service during the probationary period.
Felis, a former broker at Kidder, Peabody & Co., was convicted with Winans of conspiracy, securities fraud and wire and mail fraud in June. Earlier this week he signed a consent agreement with the Securities and Exchange Commission in which he agreed to forfeit $160,000 in illegal trading profits while not admitting or denying any wrongdoing.
Assistant U.S. Attorney Peter J. Romatowski said it should take slightly more than a year for Felis to serve his sentence, in which he will be allowed to report to prison on Friday evenings and depart on Monday morning. Stewart allowed Felis to remain free, however, pending appeal.
Stewart, who decided the case in a non-jury trial, on Tuesday sentenced Winans to 18 months in prison and gave three years’ probation to the reporter’s roommate, David Carpenter, who was convicted of playing a smaller role in the scheme. Winans also is free pending appeal.
Winans was one of two writers of the Journal’s ″Heard on the Street″ column, a daily feature that offers stock tips to investors. Many Wall Street professionals believe the column can cause sharp, though temporary, swings in the price of stocks it reports on.
Prosecutors charged that in October 1983 Winans tried to take advantage of those price swings by agreeing to leak advance information about the columns to Kidder, Peabody broker Peter N. Brant. Brant was to make investments and split the profits with Winans.
Brant pleaded guilty last summer and became a government witness, testifying that he brought his close associate Felis into the scheme while Winans involved Carpenter. The government said the scheme netted $675,000 before the SEC uncovered it in March 1984, with $31,000 going to Winans and Carpenter while Felis and Brant split the remainder.