The decision in a well-known securities fraud case is upheld - May 28, 1986 - HISTORY.com

The U.S. Court of Appeals upholds the conviction of writer R. Foster Winans for securities fraud. Winans, author of the “Heard on the Street” column for the Wall Street Journal, entered into a scheme with two brokers at Kidder Peabody to give them advance information about his column. The brokers, Kenneth Felis and Peter Brant, made $700,000 by trading stocks that Winans touted in the newspaper; Winans and his lover, David Carpenter, received only $31,000 in kickbacks.

Winans began writing “Heard on the Street” in 1982 and, though successful, was having difficulty leading the lavish New York City lifestyle that he desired. In October 1983, Felis and Brant persuaded him to leak the contents of upcoming columns so that they could take advantage of the price changes that typically occurred after a stock had been written about in the nation’s leading financial publication.

It wasn’t long before executives at Kidder Peabody noticed a strange coincidence between the Felis account and the stocks discussed in “Heard on the Street.” With the SEC already investigating, Winans admitted the scheme in March 1984 and was immediately fired by the Wall Street Journal. Winans, Carpenter, and Felis were indicted and convicted of securities fraud. Winans received an 18-month prison sentence.

Although the amounts of money involved were relatively small, the Winans case became a public symbol of the widespread greed, corruption, and win-at-all-costs mentality of Wall Street that prevailed in the 1980s.

Winans revealed all in his 1986 book Trading Secrets, which sold well.The New York Crime Victims Board initially disputed hisright to the profits under a law that prevents criminals from profiting from their crimes, but the law was eventually overturned. Later, Winans told people, “I like what [the conviction] has done to my life, if you can believe it.”