i really don't like stock brokers:
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Thursday January 28, 9:09 pm Eastern Time
REPEAT-Three arrested in BusinessWeek probe
By Elizabeth Smith
NEW YORK, Jan 27 (Reuters) - Three New York area stock brokers were arrested Wednesday on charges of illegal insider trading involving advance copies of BusinessWeek magazine's influential ''Inside Wall Street'' column, authorities said.
Federal prosecutors allege that the brokers secured advance copies of the column, which often influences stock prices of the companies it mentions, through an employee at Hudson News Co., a New Jersey distributor of the magazine, which is published by McGraw-Hill Cos. Inc. (NYSE:MHP - news).
This is not the first time inside-traders have sought out advance copies of ''Inside Wall Street,'' which is written by Gene Marcial. BusinessWeek in 1988 intensified security surrounding its magazine's distribution when 11 people, including three stockbrokers, faced similar charges.
That case came about when authorities learned people had received advance copies of the magazine from workers at Connecticut and California printing plants. In another instance, BusinessWeek's radio broadcaster S.G. Ruderman went to prison after pleading guilty to insider trading using advance copies of the column.
Charged in the latest case were Peter Cohen, 33, of Plainview, N.Y.; Seth Glaser, 29, of Levittown, N.Y.; and Joseph Falcone, 39, of Farmingdale, Conn.
Cohen and Glaser worked at Renaissance Financial Securities Corp. in Mineola, N.Y., while Falcone was a retail broker at one of the nation's largest brokerages, Prudential Securities.
Another broker, Larry Smath, who also worked at Renaissance Financial, arranged to get advance copies of BusinessWeek from a friend working at Hudson News, according to a complaint filed by the U.S. Attorney's office for the Eastern District of New York.
Smath on Tuesday pleaded guilty in federal court in Uniondale, N.Y., to one count of conspiracy to commit securities fraud.
Between June 1995 and January 1996, Smath faxed advance copies of the columns, or the names of favorably mentioned companies, to the three suspects, court documents allege. Cohen, Glaser and Falcone are alleged to have bought stock in the named companies and recommended them to customers, the U.S. attorney's office said in a statement.
The three brokers and their customers are alleged to have bought $6 million worth of stocks and sold them within days of purchase after the stocks rose in price. They allegedly reaped profits of more than $140,000, according to the statement.
The investigation began when BusinessWeek editors noticed in late 1995 unusual trading in stocks mentioned in ''Inside Wall Street,'' said McGraw-Hill spokeswoman Christine Summerson.
McGraw-Hill officials alerted the Securities and Exchange Commission (SEC) and published a column ''Is Someone Sneaking a Peak at BusinessWeek,'' which ran in the magazine's Feb. 5, 1996, edition. The column noted names of 11 stocks suspected of being influenced by the column, which put an end to the most recent scheme.
''We know the 'Inside Wall Street' column moves stock, and we take extraordinary measures to maintain the confidentiality and integrity of the column,'' said Summerson, reading from a prepared statement.
Prudential Securities spokesman Charles Perkins told Reuters that Falcone was fired in August 1996 because of the SEC investigation. Falcone was a retail equities broker who traded stocks on his account, he said.
''The allegation is against the individual, not the firm,'' Perkins said. Prudential has cooperated fully with the SEC and will continue to help the agency, he said.
Renaissance Financial could not be immediately reached for comment.
The charge of securities fraud carries a maximum sentence of 10 years in prison and also calls for fines and restitution. The U.S. attorney's office said the SEC on Wednesday filed a related civil action.
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