Electrical Union, FMC Corp. Weigh Suits Against Boesky
Undated (AP) _ An electrical workers union said Tuesday it might sue Ivan F. Boesky for selling stocks from an investment fund while he was negotiating settlement of government insider-trading charges.
Separately, FMC Corp., one of the companies about which Boesky allegedly learned inside information, said it was considering suing Boesky and possibly others for damages.
The International Brotherhood of Electrical Workers also said it might file suit against the Securities and Exchange Commission for permitting the sales to take place before the Nov. 14 announcement that the government had settled a landmark case against the Wall Street speculator.
John J. Barry, president of the 967,000-member group, said the union’s pension fund suffered in the stock market slump that occurred after the Boesky affair sparked worries of a possibly widespread stock trading scandal.
Barry said the Ivan F. Boesky & Co. limited partnership sold a reported $440 million worth of stocks ahead of the SEC announcement with the benefit of knowing that the announcement would jolt the financial market.
″Allowing insider information to be used, as Boesky has done, places our membership’s portfolio at an unfair disadvantage. On behalf of our members, it seems probable that we may need to file a class-action lawsuit to this regard,″ Barry said.
The SEC knew that the Boesky settlement would unsettle the markets, Barry said. ″For this reason, it is necessary to fully investigate this occurrence and decide whether the SEC should be held accountable ...″
Boesky has agreed to pay $100 million to settle SEC charges that he reaped illegal stock profits by trading on tips about corporate takeovers.
According to the SEC’s complaint one of the companies about which he received confidential information was FMC, a Chicago-based machinery and defense equipment manufacturer.
An FMC spokeswoman said the company had not decided on whether to sue and declined to discuss the size of the loss it may have sustained.
″Obviously we’re looking at it,″ said Pat Brozowski, FMC public relations director. ″But we’ve made no decision on whether to sue.″
Besides the financial payment, Boesky also agreed to cooperate in the government’s investigation of the scandal, to be barred for life from the U.S. securities business and to plead guilty to one criminal charge.
Legal experts have speculated Boesky faces years of litigation arising from his alleged wrongdoing. Companies named in the SEC’s charges, such as FMC, and individual investors might decide to sue him, securities lawyers have said.
Half of the financial payment Boesky agreed to make will go into a court- supervised fund to pay off expected claims.
As previously reported, New Jersey investor Angelo Oriolo has filed a class-action suit against Boesky and others implicated in the scandal.
Crain’s Chicago Business reported Monday that FMC may decide to seek hundreds of millions of dollars in damages.
The weekly business publication said, based on SEC charges, Boesky made $975,000 in February by selling 95,300 shares he had bought only a short time earlier on information leaked to him that FMC was preparing a massive financial restructuring.
Boesky’s decision to buy the stock apparently fueled rumors that FMC was the target of a takeover attempt and this triggered a $14-a-share jump in the company’s stock.
FMC was involved in an effort to fend off any takeover by initiating a buyback of its stock. With 26 million shares outstanding, FMC paid $360 million more than it would have if the stock had not increased in value by $14 a share, the publication concluded.