Lawyer gave papers to magazine

Published Sept. 29, 1995|Updated Oct. 4, 2005

For three weeks, Bankers Trust Co. _ with the help of the court system _ has been able to block Business Week from publishing a story about the company based on documents that had been sealed by court order.

Where did the magazine get the documents? From the law firm that represents Bankers Trust.

A partner with that firm, Stephen Holley, testified Wednesday that he was the source of the documents. Holley, who was not personally representing Bankers Trust but got the papers from another lawyer in the firm, acknowledged that he violated the firm's rules on confidential documents and dealing with the media.

That left Business Week fighting to protect Holley's identity in court proceedings "even though it would have been to our advantage not to," said Steve Weiss, a spokesman for McGraw-Hill Cos., which publishes Business Week.

In a rare instance of prior restraint, Judge John Feikens on Sept. 13 barred Business Week from publishing a story about a dispute between Bankers Trust and Procter & Gamble Co., which lost $102-million on derivatives securities it bought from Bankers Trust.

Cincinnati-based P&G sued Bankers Trust last year to try to recover the losses, accusing the New York-based company of fraud and misrepresentation. Bankers Trust has denied the allegations.

The magazine went to press Wednesday night on its third issue without the story.

"The hearing vindicated everything we've said," said Stephen B. Shepard, Business Week's editor-in-chief. "The reporter, Linda Himelstein, got the documents lawfully without knowing they were under court seal. . . . The law has been on our side since day one. We just have to get a judge on our side."

McGraw-Hill appealed Feikens's ruling, but Supreme Court Justice John Paul Stevens refused to overturn it on procedural grounds. Feikens plans to decide by Tuesday whether to make his restraining order permanent.

Prior restraint orders are quite rare _ the most famous case involved the 1971 publication of the Pentagon Papers by the New York Times and the Washington Post _ and legal experts believe Business Week will eventually be allowed to publish. The Supreme Court has never permanently upheld an order banning publication.

Bankers Trust says that it should not be penalized for its law firm's mistake and that it would be damaged by publication of the documents, which involve allegations by Procter & Gamble of wrongdoing related to the derivatives trading.

_ Information from the Associated Press was used in this report.