Business Ethics of the Rich and Famous?

MOVE OVER, MICHAEL MILKEN AND IVAN BOESKY. Federal investigators have cracked open another huge insider-trading scandal, and this time they have implicated some of the most prominent names in America's social register. The Securities and Exchange Commission accuses seven corporate leaders of raking in at least $13 million in illegal profits from stock trading based on inside information.

Among the luminaries charged were Martin Revson, co-founder of the Revlon cosmetics empire, and Edward Downe Jr., a former director of the investment bank Bear Stearns and husband of auto heiress Charlotte Ford. The SEC claims Downe used his position at the Wall Street firm to cull confidential information on companies and then used it to earn profits of $3.3 million in stock trades. Revson allegedly netted $1.7 million from improper tips he received from Downe. Others charged by the SEC are Steven Greenberg, a former public relations executive, who allegedly pocketed $550,000 in illicit profits; Thomas Warde, a real estate developer ($1 million); David Salamone, a business partner of Downe's ($4 million); and Milton Weinger, a stockbroker at Oppenheimer & Co. ($2.3 million). Fred Sullivan was charged only with passing sensitive information to outsiders while on the board of Tyler, an industrial- products manufacturer.

The investors gathered at parties in Southampton, N.Y., and on Downe's yacht in the Caribbean, where they allegedly exchanged inside information. While most of the defendants have denied any wrongdoing, two have come forward to settle some of the charges. Sullivan has agreed to pay a penalty of $58,000 without denying or admitting his guilt. Downe has pleaded guilty to two criminal counts and could face 10 years in prison. "It's terrible," he said, "just awful to be in this situation." (See related story on page 47.)