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Non-Tech : Auric Goldfinger's Short List
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To: Art M who wrote (10986)1/23/2003 9:32:09 AM
From: StockDung  Read Replies (1) of 19428
 
SPITZER, SEC EYE PRE-PAID LEGAL'S BUSINESS DEALINGS

By JOHN CRUDELE

January 23, 2003 -- The New York Attorney General's Office and the SEC are looking into the business practices and the stock market activity of Pre-Paid Legal Services, The Post has learned.
The Post has reported that Attorney General Eliot Spitzer's people were looking into a hedge fund, Gotham Partners, which had issued a flattering report on Pre-Paid and posted it online.

It was a prelude to a larger investigation of hedge funds. Well, the larger probe has started.

And authorities are not only widening their interest in these funds, but also narrowing their probes into individual stocks like Pre-Paid.

Gotham also had reports - all negative - on companies like MBIA Corp. and Farmer Mac, which is officially known as the Federal Agricultural Mortgage Corp. I'm guessing those stocks are also likely to also be investigated.

But investigators are hearing allegations that Pre-Paid may have been in cahoots with Gotham to inflate the price of its stock.

The Attorney General's Office, the SEC, and Pre-Paid declined comment. But a source close to the investigation confirmed that authorities are looking into how Pre-Paid's stock managed to get up to $30 a share on Gotham's report.

It's selling at around 30 percent less now that Gotham has sold shares.

What's got investigators' attention was that Gotham reportedly sold a large number of Pre-Paid shares as the stock was climbing, even though its research report indicated a hope that the company's shares would more than double from the $30 level.

Someone familiar with the investigation says subpoenas have gone out and there's a "let's see where it goes" attitude with regard to the results.

For more information and headlines on this company
CLICK HERE
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