(March 15) – “In the first criminal case involving the swapping of inside stock information over the Internet, the federal authorities accused 19 people yesterday of making $8.4 million on illegal tips from a part-time graphics clerk on Wall Street who passed some of the information through private chat rooms and America Online’s instant messaging system,” writes Christopher Drew in today’s New York Times.

“The clerk, John J. Freeman, who had temporary jobs at Goldman, Sachs & Company and Credit Suisse First Boston, pleaded guilty yesterday in federal court in New York to sharing confidential information on corporate mergers in exchange for $70,000 to $110,000 in kickbacks from the trading profits.

“Mr. Freeman devised the plan in 1997 with two disgruntled investors who frequented an Internet chat room involving stocks, and the authorities say it expanded over nearly three years to include illegal trading in four states by stockbrokers, insurance sales representatives, restaurant waiters, a dentist and a schoolteacher.

“Mary Jo White, the United States attorney for the Southern District of New York, said the case was a good example of “insider trading, millennium-style.” She said it showed how the nature of insider trading had changed as the public’s captivation with the stock markets, and the explosion of financial information on the Internet, had led to a culture in which more people are searching desperately for the latest edge or hot tip.

“In contrast to the era of insider-trading involving top securities executives that was popularized in the 1987 movie ‘Wall Street,’ Ms. White said, ‘This is a case of Wall Street meeting Main Street and coming back again — over the Internet.’ Federal officials said the charges represented the largest criminal insider-trading case ever in terms of the number of people who made illegal trades and the number of business deals for which inside information was stolen.

“They said Mr. Freeman rummaged through garbage pails and other workers’ desks at Goldman, Sachs and Credit Suisse First Boston, a unit of the Credit Suisse Group, to gather sensitive information about 23 mergers, acquisitions and buyouts, and then often did his own research to decipher coded references meant to shield the identities of the companies from workers at the investment houses.