Wall St hit by scandal

Press, 29 June 1988, Page 35

Wall St hit by scandal

NZPA-Reuter Washington Wall Street has again been hit by a major insider trading scandal when a trainee stock analyst was charged with selling tips in a case investigators described as the biggest since the Boesky affair.

The Securities and Exchange Commission (S.E.C.) charged Mr Steven Wang, aged 24, who worked in Morgan Stanley’s mergers and acquisitions department, on Monday (yesterday morning, N.Z. time) with passing insider information to a Hong Kong man that produced illegal profits of SUSI 9 million (SNZ27 million).

Also charged was Mr Fred Lee, a Hong Kong businessman. Lee, aged 38, claimed Canadian citizenship and had dealings in Taiwan, Hong Kong, and the United States, the S.E.C. said. The S.E.C. will seek the return of the SUSI 9 million in alleged illegal profits plus three times that amount in fines, according to Mr Gary Lynch, the S.E.C.’s chief enforcement officer.

Morgan Stanley is one of the oldest and most respected names on Wall Street. It has played a

leading role in the wave of mergers and acquisitions of recent years and is the investment community’s top arranger of leveraged buy-outs. The firm said in a statement it had co-operated with the S.E.C. and was “considering its legal alternatives with respect to Mr Wang and the third party.” Court papers did not in any way link the Wang case to Mr Ivan Boesky’s activities. Mr Boesky agreed to settle insidertrading charges in November, 1986, by paying SUSIOO million (SNZI44 million) — half a repayment of illegal profits and half a penalty. The charges against Mr Wang and Mr Lee of insider trading, illegal trading on confidential corporate information, were the first big actions brought by the S.E.C. in Wall Street’s recurring insider-trading scandal in about a year. The U.S. Attorney’s Office in New York said no criminal charges had been brought against Mr Wang and Mr Lee at this stage. Mr Wang was said to have recieved SUS2OO,OOO ($NZ288,000) in the transactions.