Each day, Benzinga takes a look back at a notable market-related moment that occurred on this date.
What Happened? On this day in 1987, Kidder, Peabody & Co. paid a $25.3-million fine for insider trading.
Where The Market Was: The Dow closed at 2,337.08. The S&P 500 traded at around 295.09.
What Else Was Going On In The World? In 1987, the popular sitcom “Full House” debuted on ABC. U.S. President Ronald Reagan famously urged Soviet Union leader Mikhail Gorbachev to “tear down this wall” during a speech in West Berlin. A dozen eggs cost 65 cents.
Insider Trading Crackdown: Kidder, Peabody & Co. was a securities firm that was founded in Massachusetts in 1865. General Electric Company GE acquired Kidder in 1986, and almost immediately the company was slammed by several insider trading scandals.
Former executive Martin Siegel admitted to making trades based on inside information and implicated chief arbitrageur Richard Wigton of doing the same.
United States Attorney for the Southern District of New York Rudy Giuliani threatened to indict GE, prompting the company to conduct its own internal investigation. As a result of the investigation, GE fired three senior Kidder executives.
In June 1987, Kidder settled with the SEC on charges relating to Siegel’s trading and the firm parking stock for Ivan Boesky to help conceal his ownership of Unocal to protect him from losses.
After enduring heavy losses from Kidder, GE sold the unit to PaineWebber in 1994.
Related Link: Why You Should Pay Attention To Insider Transactions
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