Chemical Company, Top Executive Plead Innocent to Stock Manipulation
NEW YORK (AP) _ GAF Corp. and its vice chairman pleaded innocent Thursday to charges they manipulated Union Carbide Corp.’s stock price after a takeover attempt of the much larger company fizzled in 1986.
During a brief proceeding in federal court, lawyers for GAF and James Sherwin entered the pleas to the 10-count indictment returned last week.
Sherwin, who could face a 50-year prison term and $15 million in fines if convicted, was released without bail. No trial date was set.
The indictment marked the first criminal charges against an American industrial enterprise stemming indirectly from revelations of Ivan Boesky, the Wall Street felon at the center of the widespread insider trading scandal. Boesky is serving a three-year prison term and cooperating with government investigators.
According to the indictment, GAF and Sherwin tried to create an artificial demand for Carbide stock after GAF’s takeover attempt on Carbide failed.
Their alleged motive was to induce other investors to buy Carbide shares and thereby inflate the price, so GAF could sell its 10 percent stake at a better profit or with minimal loss.
If convicted on all counts, GAF could face $15 million in fines.
Based in Wayne, N.J., GAF produces chemicals and building materials.