Beginning in March 1981, R. Foster Winans was a Wall Street Journal reporter and one of the writers of the "Heard on the Street" column (the "Heard" column), a widely read and influential column in the Journal. David Carpenter worked as a news clerk at the Journal from December 1981 through May 1983. Kenneth Felis, who was a stockbroker at the brokerage house of Kidder Peabody, had been brought to that firm by an- other Kidder Peabody stockbroker, Peter Brant, Mr. Felis's longtime friend who later became the govern- ment's key witness in this case.

Mr. Winans participated in a scheme with Mr. Brant and later Mr. Felis and Mr. Carpenter in which he agreed to provide the two stockbrokers (Mr. Brant and Mr. Felis) with securities-related information that was scheduled to appear in "Heard" columns; based on this advance information, the two brokers would buy or sell the subject securities. Mr. Carpenter, who was involved in a private, personal, nonbusiness relationship with Mr. Winans, served primarily as a messenger for the conspirators. During 1983 and early 1984, these defen-dants made prepublication trades on the basis of their advance knowledge of approximately 27 Wall Street Journal "Heard" columns, although not all of those columns were written by Mr. Winans. Generally, he would inform Mr. Brant of an article's subject the day before its scheduled publication, usually by calls from a pay phone and often using a fictitious name. The net profits from the scheme approached $690,000. Was this scheme a 10(b) violation? [United States v. Carpenter, 791 F.2d 1024 (2d Cir. 1986); affirmed, Carpenter v United States, 484 U.S. 19 (1987)]