484 U. S. 19
November 16, 1987
R. Foster Winans wrote a column for the Wall Street Journal where he offered stock trading news and advice. The Journal had a strict rule against him leaking the contents ahead of time, but for years he did so anyway with some friends. Large piles of cash were made on the resulting insider trading. All parties involved were charged with fraud against the Journal under the Securities Exchange Act, and the mail fraud statute. Winans argued that the Journal itself had been defrauded of nothing, and so neither law applied.
The Court’s consideration of the Securities Exchange Act resulted in a tie vote. With regard to the mail fraud question, the Court unanimously affirmed its application. Justice White wrote that confidential news information was a type of defraud-able property within the law’s meaning; a long series of precedents made that clear. That the information was still relatively unknown prior to publication did not matter, for the Journal had the right to completely pristine columns. Finally, White said that sending the newspapers in the mail satisfied the law, since publication in the newspaper was essential to the insider trading scheme succeeding.
White’s attempt to distinguish the case from last term’s McNally ruling wasn’t entirely convincing. I don’t understand why disclosing secret information is fraud, but government graft isn’t. In fact, the more I think about it, McNally was one of the most baffling decisions of the entire term. It has to be one of the strangest incidents ever of White and Rehnquist voting in favor of criminal defendants.