1 Federal prosecutors announced a sweeping securities fraud indictment against six people Thursday, charging them with illegal profits on insider tips about the corporate takeover plans of ATT Corp.
2 Several others including a former ATT labor relations executive also were implicated in the alleged scheme, which netted dlrs 2 million and marked one of the biggest cases of Wall Street corruption since the takeover heyday of the 1980s.
3 The six defendants were charged with conspiracy to commit securities fraud, fraud in connection with takeover offers, wire fraud and obstruction, U.S. Attorney Mary Jo White told a news conference in Manhattan.
4 The indictment says that for more than four years, the defendants were fed illicit tips about the takeover plans of the nation's biggest long-distance telephone company and used the information to buy and sell securities for profit.
5 Federal law prohibits this practice, known as insider trading, which proliferated during the 1980s era of takeovers that frequently drove up the stock prices of target companies.
6 'This indictment sends a clear message that insider trading will not be allowed to erode investor confidence in the stock market,' White said. 'The public demands a level playing field for all investors.'
7 Between December 1988 and last year, White said, the defendants bought and sold securities of companies that ATT planned to acquire, acting before other potential investors knew about the company's plans.
8 The companies targeted were Paradyne, NCR Corp., Digital Microwave Corp. and Teradata Corp.
9 The defendants were identified as Joseph Cusimano, William Mylett, Robert Flanagan, Thomas Flanagan, Albert Brody and Robert Allen. Allen is unrelated to ATT's chairman, Robert E. Allen.
10 Four of the six defendants were arrested this morning. If convicted of the criminal violations of securities laws, they face prison terms and fines.
11 The indictment also said two former ATT employees already have pleaded guilty to criminal charges in relation to the scheme. They were identified as Charles Brumfield, a former labor relations manager at ATT's Morristown, New Jersey office, and and Thomas Alger, his aide.
12 The Securities and Exchange Commission simultaneously announced civil law violations by 17 individuals, including the six criminally charged by the U.S. Attorney's Office and the two former ATT employees. The SEC complaint seeks a return of the illegal profits and penalties.
13 Federal officials emphasized that ATT itself was never implicated in the scheme.
14 ATT is the country's largest U.S. long-distance telephone company, with an estimated 60 percent of the nation's long-distance traffic. It has purchased a number of big companies in recent years and moved aggressively into the cellular telephone business with its dlrs 11.5 billion acquisition of McCaw Cellular Communications last September.
15 The company made a dlrs 4.71 billion profit in 1994 -- its best performance since the 1984 divestiture of the local phone companies. Its previous record profit was dlrs 3.67 billion in 1990. It had revenues of dlrs 75.09 billion in 1994, up from dlrs 69.35 billion.
16 The company has been facing stiff competition from other long-distance carriers, losing customers to MCI Communications Corp. and Sprint Corp. The company began an aggressive marketing promotion last spring to win back customers.
17 ATT said it had signed up 1 million new residential long distance customers by the end of the year and won back market share for the first time. In afternoon trading on the New York Stock Exchange, AT&AMP;T shares were up 50 cents at dlrs 51.625.

The indictment says that for more than four years , the defendants were fed illicit tips about the takeover plans of the nation ' s biggest long - distance telephone company and used the information to buy and sell securities for profit .
defendants were fed
Who fed them the tips?