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Two Charged With Insider Trading

June 3, 1999

NEW YORK (AP) _ A former junior investment banker for Salomon Smith Barney and a Tokyo bank’s vice president were charged with insider trading Thursday for making $750,000 by using their knowledge of pending mergers and acquisitions, authorities said.

Criminal charges were filed by prosecutors against Kevin Kirkbride, 30, of Manhattan and Richard Ference, 51, of Greenwich, Conn. If convicted, each could face prison terms exceeding 10 years, prosecutors said.

Documents filed in U.S. District Court in Manhattan by federal prosecutors and the Securities and Exchange Commission portrayed Kirkbride and Ference as a team of insider traders who violated strict rules against profiting from secret knowledge of companies involved in mergers or acquisitions.

During a two-year period ending in March, Kirkbride allegedly stole confidential information about 13 potential and actual mergers involving Salomon clients, including Tyco International Ltd. and Hughes Electronics Corp. At the time, he was an associate in Salomon’s Large Cap Investment Banking Division.

Prosecutors said he gained information through work assignments, the firm’s computer system, by peeking through documents left on desks, copiers and printers at Salomon and by eavesdropping on conversations of fellow employees.

He then disclosed it to Ference, a vice president of the New York office of the Bank of Tokyo-Mitsubishi Trust Co. who was his friend and former supervisor when both men worked at the bank, prosecutors said. Ference then bought securities of the companies that were targets of potential mergers and acquisitions by Salomon clients, prosecutors charged.

The pair allegedly agreed to each share a third of the profits with another third being set aside to pay taxes.

To cover up the scheme, the pair agreed that payments from Ference to Kirkbride would be made only in cash and in person and that envelopes in which Ference enclosed the cash payments would be thrown away, prosecutors said.

Ference also allegedly gave Kirkbride two prepaid calling cards, telling him to call from pay telephones and not to call him from Salomon’s offices or from his residence.

Prosecutors said the pair received about $750,000 in illegal profits and that Ference holds more than $1.2 million in stock illegally bought based on inside information. The SEC, in civil claims outlined in its own court papers, sought the forfeiture of all illegally bought securities.

In a release, prosecutors said Salomon Smith Barney fully cooperated.

In a statement, Salomon Smith Barney said Kirkbride was no longer employed by the firm and authorities were notified as soon as the scheme was discovered.

``These are serious allegations and we fully support the U.S. attorney’s and SEC’s vigorous pursuit of the matter. We will continue to cooperate fully with the authorities,″ the company said.

A telephone message left with the Bank of Tokyo-Mitsubishi Trust Co. was not immediately returned.

Attempts to reach Kirkbride and Ference were not immediately successful. Phone messages were left at residences listed under their names.

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