FBI arrests magazine-trade broker

Magazines like Business Week can make or break a firm's share

A former stockbroker has been arrested by the FBI and accused of trading on information contained in stolen advance copies of Business Week magazine.

David Pajcin is alleged to have paid a printer to give him the magazine and then bought shares in 10 firms tipped by its "Inside Wall Street" column.

He has denied the claims and returned from a holiday to fight the charges.

Mr Pajcin was caught up in a separate insider trading case earlier this year regarding shares of sports firm Reebok.

Early bird

In August, the Securities and Exchange Commission (SEC) named Mr Pajcin as a defendant in a case centred around "highly suspicious" share trades in the lead up to Reebok's sale to rival Adidas-Salomon.

The SEC froze the assets of a retired Croatian woman accused of insider trading in Reebok options.

According to the FBI, Mr Pajcin is her nephew.

In this latest case, a witness said that Mr Pajcin had found someone who "was providing him with the publication prior to its release to newsstands".

The FBI claim that Mr Pajcin then bought shares in 10 companies, including TheStreet.com, BioLase, Alltel, Cornell Corrections and Imax, which were tipped by Business Week.

The magazine was due to be released after trading halted on the day that Mr Pajcin made the purchases.

Sneak peak

Mr Pajcin's lawyer said his client was not guilty and said that the amount of money in question was small.

This is not the first time that Business Week has been caught up in a trading scandal.

In 2002 and 2003, a number of cases came to light when people had gained access to advanced copies of the magazine and used that information to buy and sell shares.

Retail investors in the US often base their trading decisions on publications like Business Week.