1984 – Reporter R. Foster Winans uses the Heard on the Street column in The Wall Street Journal to promote stocks for friends. He is later convicted.

Perhaps the most famous illegal act involving using the media to profit financially occurred at the publication – The Wall Street Journal – that has the best reputation among the financial community and among those who rely on financial information. In the 1980s, Journal reporter R. Foster Winans was writing the “Heard on the Street” column in the newspaper. He met some stockbrokers and agreed to provide them information about what was going to appear in the column before it was published. The brokers then used that information and made nearly $700,000. They also paid Winans some of their profits. In one case, Winans promoted the stock of American Surgery Centers in the column while Abelson was criticizing the company.

Winans and the two brokers were convicted of mail and wire fraud charges and for violating securities laws by using confidential information for personal use. In addition, Winans had violated the newspaper’s conflict of interest code. He argued that he broke no laws during his trial, but still served time in prison. Merrill Brown, the financial correspondent for the Washington Post at the time, wrote, “If there is a seemingly sure thing in the stock market it is that the Journal’s ‘Heard on the Street’ moves company stocks and bonds quicker and probably more decisively than any information source in the nation.” Despite the transgressions of Winans, the “Heard on the Street” column and the Journal remain well respected today among financial journalists and readers. And yes, it can still move the prices of stocks and bonds, showing its influence.

Such transgressions of journalists using information in articles before they were published happened elsewhere as well. In 1989, Seymour Ruderman, an editor at BusinessWeek, was sentenced to six months in prison for trading on information in the magazine before it was published. He had earned $39,000 in profits on Wall Street with the information. The Securities and Exchange Commission also brought charges against the editor. The information came from the “Inside Wall Street” column written by Gene Marcial, whose reporting of tips in the piece has been criticized in the past because they often come from Wall Street analysts and investors who could potentially profit from what he writes.

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