ONCE CONSIDERED a conservative second-tier investment firm, Kidder, Peabody survived two insider trading scandals in the 1980s before collapsing after bond trader Joseph Jett's schemes went awry. The first insider trading scandal broke in 1984, when Wall Street Journal columnist R. Foster Winans confessed to the Securities and Exchange Commission (SEC) that he had passed tips to broker Peter Brant. In 1985, Brant pled guilty and became the key witness against Winans, Winans' roommate David Carpenter, and Brant's long-time friend and fellow broker Kenneth Felis. All eventually served brief prison sentences.

Two years later, former Kidder, Peabody investment banker Martin Siegel, who had since moved to rival Drexel Burnham Lambert, pled guilty to selling insider secrets to arbitrageur Ivan Boesky. Siegel's testimony implicated two bankers ...

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