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Last week the SEC filed a 55-page civil complaint in New York federal court charging that Winans, Brant and three others had engaged in a scheme of "fraud and deceit" by trading on the basis of inside information not available to the public. If found guilty of the SEC charges, they will be forced to pay back the money they made, but they will not face jail sentences. A separate criminal investigation against them is being conducted, however, and that could lead to prison terms...
...SEC charges that Winans' tips on Journal stories led to 46 instances of insider trading in the stock of 27 companies. Also charged in the suit, which is backed up by more than 200 pages of documents, are Kenneth Felis, a college friend of Brant's and another former Kidder Peabody broker, who is said to have gained $302,000 from the trades, and David W.C. Clark, 34, a New York City lawyer and country club crony of Brant's. Clark is believed to have made...
...planting stories, he admitted to investigators that he twice wrote favorable columns at Brant's request on companies in which Brant and his clients held stock: Chicago Milwaukee, a railroad holding company, and Digital Switch, a telecommunications manufacturer. Said Winans, who was fired from the Journal after the SEC began its investigation in March: "There is much in my conduct during the last months at the Journal which was wrong ... I stand in judgment of myself as having violated fundamental tenets of my profession...
Most of the SEC's version of events was, in fact, supplied by Winans and Carpenter. Brant denied to the SEC that he ever knew in advance of any of Winans' articles, and both Brant and Felis refused to cooperate with the SEC investigation...
...paid for interior decorating work. On Jan. 29, Carpenter deposited a $10,000 check written on Felis' account at Morgan Guaranty Trust with "drapes" written on it. Despite their careful precautions, the scheme began unraveling in February. Tipped off by the American Stock Exchange about trading irregularities, the SEC began questioning Clark and Brant. At one point, Brant showed up at Clark's law office in a "state of high emotional excitement," according to Clark. He was brandishing a thick stack of $100 bills and said he wanted to "flee the jurisdiction" by going to Brazil. Although...