Stock fraud verdict upheld in Wall Street Journal case. Reporter Winans, two others lose in high court
The Reagan administration won at least a partial victory on Monday when the Supreme Court unanimously upheld insider-trading convictions against former Wall Street Journal reporter R. Foster Winans and two others. An 8-to-0 vote - with one seat vacant pending the confirmation of a justice to replace retired Justice Lewis Powell Jr. - left intact mail- and wire-fraud convictions handed down by the United States Court of Appeals for the Second Circuit. The appellate court had sentenced the defendants to prison, imposed a fine, and then required them to perform community service.
The Supreme Court split 4 to 4, however, in ruling whether federal securities law applies in this type of case. This tie vote leaves this issue unresolved, with no national precedent established.
Government lawyers had argued that if Winans and his co-defendants were found to be exempt from securities violations, it could open a loophole for other insider trading violators.
The justices also sidestepped the issue of First Amendment free-press rights originally raised by the defense. Mr. Winans wrote a business column for the Journal which contained stock market investment tips for the general public. He agreed to leak certain information in advance to a stockbroker who, in turn, benefited financially from the data. Winans shared in the profits.
The reporter had argued that, while he had violated his newspaper's work rules, no law was broken. Associate Justice Byron White, writing for the court, said that there was a conspiracy to trade on the Journal's confidential information. He added: ``The Journal has been deprived of its right to exclusive use of the information.''