Follow up to Doyles bid for the wpt

[Snarf]

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...just ask Martha Stewart.

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You're ignorant.

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...just ask Martha Stewart.

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You're ignorant.

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Indeed. A poster inquiring about the legality of insider trading could not be aided by a comparison to the most well known insider trading case ever? I do agree, though, and I thank you for your feedback.

[sternroolz]

Please tell me you are like 22 years old and that your youthfulness is why you are so naive.

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Is it illegal to do such a thing ? I mean how would they prove this ... Seems like it would be just 100% circumstancial evidence without any witnesses.

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[Leonardo]

He can make a bid, that is fine. It is only illegal if he has no intention to actually buy the company, or if he tells his friends that he is going to make a bid before he does it, then they act on that information. If he had every intention of buying it if the shareholders accepted, I think he will be ok. To prove that he knew that someone else would act on information he provided may be tough.

Doyle is clearly the target of the investigation. Read the SEC release here. The SEC is trying to use the crime-fraud exception to pierce the attorney client privilege, which means that they are arguing to the judge that the law firm was in a criminal and/or fraudulent conspiracy with Doyle to violate the securities laws. Bottom line: SEC has already subpoenaed all trading records in equity and options for WPTE for probably 6 months prior to the tender offer, and they will track down every single sizeable purchase or sale in the ticker. Each of the individuals involved with these trades will be subpoenaed to testify as to whether they had any connection to Doyle. Some may be offered immunity deals to tesify against Doyle. If there was any improper trading in WPTE, it will be discovered. If Doyle was involved, he is going to prison.

[mosta]

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He can make a bid, that is fine. It is only illegal if he has no intention to actually buy the company, or if he tells his friends that he is going to make a bid before he does it, then they act on that information. If he had every intention of buying it if the shareholders accepted, I think he will be ok. To prove that he knew that someone else would act on information he provided may be tough.

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My hunch that I'd wager on is he traded no stock and tipped no one and will walk away clear and clean. He's not that dumb and it's not worth it. (you could say the same was true of martha and look at her, but I doubt martha really got it and she wasn't an archtect as doyle would have to be.)

What's the legal basis for charging someone with an insincere takeover bid? I'm curious because I just finished a securities reg class (like 2 days ago) and, because I haven't had M&A, I wasn't able to get beyond the 10b-5 insider trading issue (or section 14 tender violations if it had been that). In general contract terms if you make an offer you can withdraw it before it is accepted. and an acquisition couldn't be accepted until the share holders vote on it. (I imagine a bid would normally be kept open as an optoin for a period to allow you to go through the process without risk of it being pointless?) but I understand you don't necessarily want people to be able to monkey around with fake bids. Is this federal statuory law--which?--or Delaware? ... ? tx.

[MichaelOar]

I just finished the same class and am wondering the same thing. We definitely didn't cover insincere offers like this.

Michael

First Matusow in jail. Next Doyle. Then who? DanDruff!

[DesertCat]

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To prove that he knew that someone else would act on information he provided may be tough.

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Not when they roll over on Doyle to lower their own sentences.

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My hunch that I'd wager on is he traded no stock and tipped no one and will walk away clear and clean. He's not that dumb and it's not worth it. (you could say the same was true of martha and look at her, but I doubt martha really got it and she wasn't an archtect as doyle would have to be.)


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you doubt Martha "got it"? She was a licensed stockbroker who passed many more securities exams than you have. She should have been smart enough to know her actions weren't insider trading, or smart enough to consult with her lawyer to confirm that, but instead she lied to investigators so she could go to prison.

People panic when they make stupid mistakes.In Doyles case, you contend he's smart enough not to trade the stock or tip anyone, but dumb enough to make a bogus offer for a public company using a second rate law & PR firms without preparing to answer questions about it the very next day? Yea, right. If he was in the clear, he would be carefully explaining to investigators he didn't trade the stock or tip off his friends, not hiding behind the fifth amendment.

[Spiph]

I'm an M&A/Securities lawyer. Here's the relevant law on the issue:

Rule 10b-5 -- Employment of Manipulative and Deceptive Devices
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It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,

(a) To employ any device, scheme, or artifice to defraud,
(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or
(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person,

in connection with the purchase or sale of any security.

Section 14 -- Proxies
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(e) Untrue statement of material fact or omission of fact with respect to tender offer

It shall be unlawful for any person to make any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, or to engage in any fraudulent, deceptive, or manipulative acts or practices, in connection with any tender offer or request or invitation for tenders, or any solicitation of security holders in opposition to or in favor of any such offer, request, or invitation. The Commission shall, for the purposes of this subsection, by rules and regulations define, and prescribe means reasonably designed to prevent, such acts and practices as are fraudulent, deceptive, or manipulative.

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Bottom line is that the SEC will investigate. It will be hard to prove any wrongdoing under either of these rules. Unless they find a smoking gun (proof that he or someone he knows benefitted from shift in price; or that his intentions were to actually manipulate) he will likely get off without being charged ... so long as he doesn't lie during the investigation.

Looks shady and probably was shady, but without "real" evidence, nothing will happen.

Tortman