|3 INDICTED ON INSIDER CHARGES
By JAMES STERNGOLD
Published: April 10, 1987
A Federal grand jury yesterday indicted three senior
Wall Street traders who had been arrested in February on charges of insider
The three, Robert M. Freeman, 44 years old, director of
arbitrage at Goldman, Sachs & Company; Richard B. Wigton, 52, head of arbitrage
& Company , and
Timothy L. Tabor, 33, a former arbitrage trader at Kidder, Peabody, were each
charged with four felony counts. The long-awaited charges included conspiracy to
commit securities, mail and wire fraud and three counts of having committed
Through their lawyers, each denied the charges in the indictment, obtained by the United States Attorney in
A number of lawyers involved in the case, criminal law
experts and Wall Street executives said they were struck
more by what was not in yesterday's indictment than by
what was included. The nine-page document repeats much
of the information in the original complaint filed at
the time of the traders' arrests, but it contains less
information, in several respects, than that complaint.
No Other Stocks Mentioned
No new stocks were identified as the subject of the
insider trading. As in the complaints, the only stocks
mentioned were of the Unocal Corporation and Storer
Communications Inc., and there was no reference to the
Continental Group Inc.
Martin A. Siegel, a former Kidder, Peabody investment
banker, previously pleaded guilty to a charge that he
had received an inside tip about Continental from Mr.
Freeman, and then had Kidder, Peabody profit from
trading in its stock.
In subpoenas issued to the firms after the arrests, the
Government sought information about more than 40
companies that had been involved in takeovers or were
clients of the firms, sources with knowledge of the
investigation have said. The sources said that subpoenas
were also issued to individuals at each of the firms.
In a search warrant obtained to collect records from Mr.
Freeman's office in February, the Government also
alleged that Mr. Freeman told Mr. Siegel he had created
''padded'' research files on stocks in which he traded
illegally, so it would appear that the trades were based
on legal information.
'From what I know there is substantial material that could be used to impeach
Mr. Siegel's testimony,'' said Andrew Lawler, Mr. Tabor's attorney. ''We intend
to enter a plea of not guilty and to aggressively litigate.''
According to the indictment, from June 1984 to January
1986 Mr. Siegel swapped tips with Mr. Freeman about
pending takeover transactions on which their firms were
working. Secret Details on Storer
Mr. Siegel reportedly
leaked secret details of a takeover involving Storer
Communications to Mr. Freeman. Mr. Freeman is said to
have then traded with that information, earning
unspecified profits for himself, his family and Goldman,
In turn, Mr. Freeman is said to have tipped off Mr.
Siegel about a takeover bid involving Unocal, a Goldman,
Sachs client. Mr. Siegel is said to have passed this
information to Mr. Wigton and Mr. Tabor, who used it to
earn unspecified profits for Kidder, Peabody.
''Mr. Freeman will plead not guilty, and we look forward
to going to trial,'' said Paul J. Curran, Mr. Freeman's
''Mr. Wigton will be found innocent,'' said Stanley
Arkin, his attorney. Kidder, Peabody suspended Mr.
Wigton without pay yesterday, pending a trial, the
Mr. Freeman remains a partner at Goldman, Sachs. Sources
close to the firm said that since his arrest he had been
spending most of his time helping to prepare his
Mr. Tabor is currently unemployed.
photo of Robert M. Freeman; photo of Richard B. Wigton;
photo of Timothy L. Tabor
Neither Kidder, Peabody nor Goldman, Sachs was charged
in yesterday's indictment, despite the Government's
allegation that they had profited from the trading.
An arraignment of the three
traders was set for next Thursday in Federal District
Court in Manhattan. Would Be First Insider Trials
The lawyers for the indicted traders said that they
planned to fight the charges in court and insisted that
their clients would be vindicated. Their responses
indicated that the Government might face its first
trials since the scandal blew up last May with the
arrest of Dennis B. Levine, a former investment banker
at Drexel Burnham Lambert Inc. Up to now, 10 investment
bankers or lawyers have pleaded guilty to felony charges
or agreed to do so, without one case having gone to
The indictment had been
expected since the three were dramatically arrested,
shocking Wall Street and heightening the nervousness
created by the spreading scandal.
Mr. Tabor was arrested at his Manhattan home late on
Feb. 11 and Mr. Freeman and Mr. Wigton were taken from
their offices on Feb. 12.
ll had been implicated by Mr. Siegel, a former senior
investment banker and takeover specialist at Kidder,
Peabody. He pleaded guilty on Feb. 13, the day after Mr.
Freeman and Mr. Wigton were arrested. He also settled
Securities and Exchange Commission charges that he had
sold inside tips for $700,000 to the arbitrager Ivan F.
Boesky. Siegel Only Known Source
In its original complaint,
the Government hinted that its charges had resulted from
information provided by sources in addition to Mr.
Siegel, although it did not identify the sources. Nor
did the indictment issued yesterday refer to any other
potential witnesses. The defense lawyers involved
indicated that they looked forward to cross-examining
Mr. Siegel, should he be a key Government witness.