A photograph of Virginia banking executive Robert M. Freeman was inadvertently used in some editions of yesterday's Business section accompanying an article about an investigation of insider trading. Freeman, president and chief operations officer of Signet Banking Corp., is not involved in the investigation. (Published 2/13/88)

NEW YORK, FEB. 11 -- It was one year ago Friday, at the offices of the prestigious investment firm Kidder, Peabody & Co., that two U.S. postal inspectors solemnly locked a pair of handcuffs around the wrists of executive Richard Wigton -- altering in one symbolic moment Wall Street's perception of its insider stock trading scandal.

The image of the respected Wall Street veteran Wigton being led from Kidder's boisterous stock trading room in handcuffs sent shock waves through the financial community, registering the depth and reach of the insider scandal with a force even the startling downfall of stock speculator Ivan F. Boesky in November 1986 had failed to achieve.

The sudden arrests of Wigton and two other well-known Wall Street executives, Robert M. Freeman of Goldman, Sachs & Co. and Timothy Tabor, a former Kidder stock trader, signaled that the financial corruption investigations spearheaded by Manhattan U.S. Attorney Rudolph W. Giuliani and the Securities and Exchange Commission were moving rapidly from the fringes to the heart of Wall Street.

But one year later, while the government's investigations have proceeded visibly on other fronts, the case against Wigton, Freeman, and Tabor appears far from resolution -- federal investigators continue to seek fresh evidence and new witnesses sources said. Rather than a symbol of deepening scandal, the case has become for many on Wall Street a rallying point for resentment directed against Giuliani and his securities fraud probes.

"The arrest was shown to be unjust and unwise," Stanley Arkin, Wigton's attorney, said today. "The unnecessary pain and anguish visited on the persons involved has been enhanced by the year's uncertainty and limbo."

None of the three men currently faces charges, but each has been told previously that he is the target of a continuing grand jury investigation.

Freeman, still employed by Goldman, commutes to his Wall Street office, sometimes working on merchant banking deals but mainly attending to the preparation of his defense. Wigton manages his defense and his personal investments from his home in suburban New Jersey. He receives a paycheck from Kidder, but the firm has denied him regular access to his office and placed him on paid leave of absence, following orders from its parent, General Electric Co. Tabor and his attorney could not be reached for comment.

After an indictment last April, the U.S. attorney's office withdrew its insider trading case against the trio after a judge insisted that a trial begin promptly. The men were accused of reaping millions of dollars in illegal profits by swapping inside information about upcoming corporate takeover events. Prosecutors said in court they needed about two months to complete their investigation and prepare for trial.

Nine months have passed since then and there have been no new indictments. "I guess they {prosecutors} took the position that they didn't have any deadline," said Paul Curran, Freeman's attorney. "I don't know what the timing is. I don't know when or if" there will be new indictments.

Through a spokesman, Giuliani declined to comment on any aspect of the case, as did Bruce Baird, chief of the Manhattan U.S. attorney's securities fraud unit. At the time prosecutors withdrew charges against the three men, they said in court papers that the original indictment represented only "the tip of the iceberg" and that more sweeping charges would be pursued.

Controversy has continued to surround the case, fueled by criticism from defense lawyers that Giuliani used the original arrests to score public relations points before conducting a thorough investigation. The withdrawal of charges last May and the time that has elapsed without new indictments only emboldened Giuliani's critics.

Defenders of the U.S. attorney argue that the arrests and subsequent investigation merely reflect an application of methods long used in other law enforcement areas to white collar crime.

"There remains a feeling among certain groups in the community that people who engage in criminal offenses like insider trading are not real criminals," said James B. Jacobs, director of the Center for Research in Crime and Justice at New York University. "I think the U.S. attorney's office has done a real service in bringing some high-visibility prosecutions in the securities industry."

Meanwhile, the investigation continues, sources said. As earlier reported, prosecutors recently have been probing the relationship between Freeman and a New Jersey investment firm raided by federal agents late last year, according to sources familiar with the investigation. The government apparently is using evidence gathered in the raid to increase pressure on Goldman and obtain new witnesses against Freeman, sources said, suggesting that prosecutors are not poised to seek indictments.

Freeman, Wigton, and Tabor were arrested primarily on the strength of testimony provided by Martin A. Siegel, a prominent merger specialist implicated in the insider trading scandal by Boesky. While agreeing to plead guilty to two felony counts, Siegel told prosecutors that he had participated with the three executives in an illegal conspiracy to swap inside information.

Like the former colleagues he informed on, Siegel now finds himself in limbo. Comfortably housed in a beachfront mansion near Jacksonville, Fla., the onetime star deal maker is waiting for new indictments to be brought in the case so he can complete his cooperation by testifying at trial. At that point, Siegel's sentencing, which has been indefinitely suspended, will be scheduled -- he faces a maximum 10 years in prison.

"He's doing nothing," said Jed Raykoff, Siegel's attorney. "We're waiting for the other shoe to drop, and until it does, we're on hold." Raykoff said that neither he nor his client has any indication of why the investigation has taken so long.