Posted on 04/23/2003 2:12:01 PM PDT by Timesink
Edited on 04/22/2004 12:36:09 AM PDT by Jim Robinson. [history]
NEW YORK
(Excerpt) Read more at foxnews.com ...
April 23 - There's new information on the Security and Exchange Commission's investigation into Lehman Brothers Internet stock analyst Holly Becker and her husband SAC Capital trader Michael Zimmerman. Sources tell CNBC's Maria Bartiromo that the enforcement division of the SEC has decided to recommend the commission file civil action against the couple for trading and profiting from inside information.
THE ACTION is expected to focus on trading in three stocks — eBay, Drugstore.com and Avon Products. Becker allegedly gave information to her husband on Salomon Brothers rating actions while she was an analyst at Solomon in 1999. Zimmerman, an analyst at Omega Partners at the time, then allegedly recommended his firm trade those stocks.
Becker herself initiated coverage of two of the stocks — eBay and Drugstore.com. Her neutral rating on eBay would have been viewed as a negative in the stock when it was issued on Dec 1, 1999. Her husband’s firm, Omega, bought puts and shorted eBay two days before that report was published.
Becker also initiated coverage with a positive rating on Drugstore.com on Dec 6, 1999. In the week preceding, Omega allegedly bought shares of the stock.
The third stock, Avon Products, was downgraded by another analyst at Salomon in April, 1999. Omega shorted that stock one week before the downgrade. Interestingly, Becker’s mother also shorted the stock, which made her a few thousand dollars in April, 1999.
Omega made little more than $2 million in total on the trades. While Zimmerman did not trade for his own account, the SEC believes the firm’s profits were factored into his bonus, which was close to $1 million in 1999.
The SEC is expected to seek penalties and disgorgement of profits. It is also seeking to have both parties barred from the securities industry. Sources also say the SEC could announce this as early as next week, although there is always the chance that the commission will decide not to bring this case or there is a chance that the parties could settle the matter, which of course would also mean significant penalties on the couple.
For their part, Holly Becker and Michael Zimmerman continue to say they are innocent.
The idea is that if the public comes to believe it cannot compete with "insiders", then it will stop investing and the whole capital market will suffer.
Objectivists and free market purists have valid counter-arguments, but none of them carry the weight of law and regulation.
Can't imagine why you'd think that..........LOL.
(And thanks for the ping.)
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