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U.S. Supreme Court

Carpenter v. United States, 484 U.S. 19 (1987)

Carpenter v. United States

No. 86-422

Argued October 7, 1987

Decided November 16, 1987

484 U.S. 19


Petitioner Winans was coauthor of a Wall Street Journal investment advice column which, because of its perceived quality and integrity, had an impact on the market prices of the stocks it discussed. Although he was familiar with the Journal's rule that the column's contents were the Journal's confidential information prior to publication, Winans entered into a scheme with petitioner Felis and another stockbroker who, in exchange for advance information from Winans as to the timing and contents of the column, bought and sold stocks based on the column's probable impact on the market, and shared their profits with Winans. On the basis of this scheme, Winans and Felis were convicted of violations of the federal securities laws and of the federal mail and wire fraud statutes, 18 U.S.C. §§ 1341, 1343, which prohibit the use of the mails or of electronic transmissions to execute "any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises"; petitioner Carpenter was convicted of aiding and abetting. The Court of Appeals affirmed.


1. Insofar as it affirmed petitioners' convictions under the securities laws, the judgment below is affirmed by an equally divided Court. P. 484 U. S. 24.

2. Petitioners' conspiracy to trade on the Journal's confidential information is within the reach of the mail and wire fraud statutes. Pp. 484 U. S. 25-28.

(a) The Journal had a "property" right in keeping confidential and making exclusive use, prior to publication, of the schedule and contents of Winans' columns, which right is protected by the statutes. The intangible nature of the Journal's right cannot affect this determination, since McNally v. United States, 483 U. S. 350, did not limit the scope of § 1341 to the protection of tangible, as opposed to intangible, property rights, but merely distinguished protected property rights from unprotected intangible rights to honest and impartial government. Pp. 484 U. S. 25-27.

(b) Petitioners' activities constituted a scheme to defraud the Journal within the meaning of the statutes. It is irrelevant that petitioners might not have interfered with the Journal's use of its confidential information, publicized the information, deprived the Journal of the first public use of the information, or caused the Journal monetary loss, it chanrobles.com-red

Page 484 U. S. 20

being sufficient that the Journal has been deprived of its important right to exclusive use of the information prior to disclosing it to the public. The argument that Winans' conduct merely violated workplace rules, and did not amount to proscribed fraudulent activity, is untenable, since §§ 1341 and 1343 reach any scheme to deprive .mother of property by means of fraud, including the fraudulent appropriation to one's own use of property entrusted to one's care by another. Here, Winans violated his fiduciary obligation to protect his employer's confidential information by exploiting that information for his personal benefit, all the while pretending to perform his duty of safeguarding it. Furthermore, the evidence strongly supports the conclusion that each of the petitioners acted with the required specific intent to defraud. Pp. 484 U. S. 27-28.

(c) Petitioners' contention that the use of the wires and the mail to print and send the Journal to its customers is insufficient to satisfy the statutory requirement that the mails be used to execute the scheme at issue is rejected. Circulation of the column to Journal customers was not only anticipated, but was an essential part of the scheme, since there would have been no effect on stock prices and no likelihood of profiting from the leaked information without such circulation. P. 484 U. S. 28.

791 F.2d 1024, affirmed.

WHITE, J., delivered the opinion for a unanimous Court as to holding number 2, above.


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