Carpenter v. United States

Background

A Wall Street Journal reporter who wrote the daily “Heard on the Street” column secretly gave brokers advance, unpublished information about the timing and contents of his columns. The brokers used that information to trade stocks and share profits, netting about $690,000. After an SEC inquiry and a guilty plea by one conspirator, the reporter and others were tried and convicted on securities charges, mail and wire fraud, and conspiracy; a roommate was convicted for aiding and abetting.

Reasoning

The central question was whether stealing a newspaper’s prepublication column information could count as taking “property” and thus support mail and wire fraud charges. The Court agreed with the lower courts that the paper’s confidential schedule and column contents were business property. The reporter’s deliberate breach of his duty and concealment of the scheme amounted to fraud against his employer. The Court affirmed the mail and wire fraud and conspiracy convictions. The securities-law convictions were also held affirmed because the Court was evenly divided, leaving the lower-court result in place.

Real world impact

The decision treats confidential newsroom prepublication information as property protected from theft and confirms criminal liability when that information is misused for trading profits. It signals risk of prosecution for employees who secretly provide business information to traders, and it affects journalists, news organizations, brokers, and anyone who trades on leaked business information. The securities counts remain affirmed by an evenly divided Court, while the mail and wire fraud ruling rests on the property finding.