DJN: =DJ Govt Says Elgindy Used Secret FBI Info To Manipulate Stks
(Dow Jones 05/22 12:47:06)
By Michael Rapoport and Carol S. Remond
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Anthony Elgindy, the controversial short-seller and
Internet stock commentator, has been charged with manipulating stocks by
using secret government information fed to him by collaborators within the
Federal Bureau of Investigation.
Elgindy was indicted by the U.S. Attorney's office in Brooklyn, N.Y., on
charges of racketeering, insider trading, market manipulation, extortion
conspiracy and obstruction of justice. Four other people, including a
current FBI agent and a former FBI agent, were also indicted.
The indictment alleges that Elgindy, through his FBI contacts, obtained
confidential information from FBI databases about criminal history and
investigations relating to companies that he was shorting or thinking of
shorting. A short-seller sells borrowed shares and profits when a stock
declines, so exclusive access to negative information about a company would
be valuable to a short.
Elgindy then used the secret information to decide how to invest,
prosecutors say, and distributed it to other short-sellers to encourage them
to short the stock also. Paid subscribers to Elgindy's e-mail newsletter and
investment Web site received the information also, prosecutors said.
In addition, according to the indictment, Elgindy extorted free or cheap
shares of stock from the insiders of companies he had targeted in exchange
for his agreement to lay off - to stop shorting the companies and stop
spreading negative information about them.
Elgindy was even able to spy on the government's grand jury investigation of
him through his FBI contacts, prosecutors allege. One of the FBI agents
indicted along with Elgindy gleaned information about the probe from an FBI
database and told Elgindy of the direction of the investigation and that he
was a target, according to the indictment.
A woman at Elgindy's home hung up the phone on a reporter who called seeking
comment. Elgindy's attorney couldn't immediately be reached. |
