Stock-hoarding fueled Shopping.com spike
COURTS: Depositions detail how an Irvine broker manipulated its share price.
May 14, 1999
By CHRIS KNAP
The Orange County Register
... The 30-page court finding, based primarily on depositions of others in the case, says Perle planned as early as August 1997 to control Shopping.com prices.
Perle told company founder Robert McNulty that he would "keep the company's publicly traded float 'tight' so that Waldron can properly manage the supply of stock in the after-market."
The Securities and Exchange Commission hasn't accused anyone at Shopping.com of participating in the scheme.
When the company went public at $9 a share in November 1997, Waldron took steps to control the market price, amassing 253,295 shares in its own accounts and 972,320 in customer accounts - 94.3 percent of the 1.3 million shares outstanding, documents show.
Depositions show that Perle personally monitored stock depository reports, ordering his brokers to "find a home" for stock or "bury" it in unsuspecting customers' accounts - sometimes over their express objections and orders to sell.
Perle denied that happened in the interview, saying "How can I control an individual?"
The court findings say Waldron created artificial demand by raising the bid price in the open market, even though it held a huge inventory that it theoretically needed to sell.
That helped boost the shares from the $9 offering price to the mid-20s, though Shopping.com was performing poorly, posting millions in quarterly losses.
Then Perle squeezed the "short sellers," market speculators who had bet that the stock would fall, the findings show.
The short sellers were forced to buy stock from Waldron - typically at 50 percent above the day's closing price - to close out their losing positions. ...
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