Business Winners and Losers 2003

Richard S. Strong: This year we learned the mutual-fund market was open as late as Denny's, but only insiders and big spenders got a seat at the counter. The SEC found that a quarter of the country's largest brokerages knew about after-hours trading that allowed big-shot investors to profit from the spread between a fund's 4 p.m. closing price and its opening price the next day. Other firms allegedly engaged in "market timing," or the rapid trade of fund shares. Richard S. Strong, founder of Strong Financial Corp., was one of the first to resign due to the scandal. He wasn't the only candidate in this category: Runners-up include Lawrence J. Lasser, former chief executive of Putnam Investments, where the scandal started a multibillion-dollar drain by fleeing customers. Strong and Lasser haven't been charged with wrongdoing, but there were civil charges against Invesco Funds Group Inc. CEO Raymond Cunningham, as well as Gary L. Pilgrim and Harold J. Baxter, the founders of Pilgrim Baxter & Associates.

Sam Waksal: The founder of ImClone Systems probably wished he could clone himself when it came time to report to prison in July. Waksal was sentenced to seven years behind bars for insider trading after he admitted tipping off his daughter to dump ImClone shares in January 2002, just before the stock took a nosedive. Starting in January, prosecutors will try to prove that Waksal's friend Martha Stewart also traded on insider information when she sold her ImClone shares. Waksal's 82-year-old father has also been charged. To make matters worse for Waksal, his jail sentence came just as ImClone's shares were on the rebound.

Forty Seven People You've Never Heard Of: These are the foreign-currency traders who allegedly had more scams going than the back room of Tony Soprano's Bada-Bing Club. According to prosecutors, some ran old-fashioned "boiler room" fraud schemes, working the phones to dupe investors with bogus trades. Others allegedly collected kickbacks from clients for transactions that ripped off the traders' own employers. Ultimately, the feds nabbed 47 on various charges. But from the sounds of it, you could safely bet 10,000 Suriname Guilders (U.S. $4) that investigators could have rounded up more if they hadn't run out of room in the paddy wagon.

Winners

Frank Quattrone: No wonder he's always smiling: Quattrone made many, many millions touting tech stocks during the bubble and slipped quietly away when it burst. Prosecutors say when it came time to carve up some of the juiciest initial public offerings of tech companies, he helped guide the knife. At his obstruction of justice trial, memos put into evidence seemed to back that up. But the key memo — in which Quattrone told his minions to "clean up" their e-mail boxes — didn't convince enough jurors, some of whom believed Quattrone when he said he was just reminding workers of company policy on record keeping. The result: a hung jury. So Quattrone's in the winner's box, and still smiling, at least until a retrial.

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