in the legal sense they didn't file bankruptcy..but both were on the edge before they were sold while financial info was concealed...
From The Mercury News, 11/1/02:
bayarea.com
Bush sold stock after lawyers' warning not to sell
By Peter Behr
WASHINGTON -
A week before George W. Bush's 1990 sale of stock in Harken Energy
Co., the firm's outside lawyers cautioned Bush and other directors
against selling shares if they had significant negative information
about the company's prospects.
The sale came a few months before Harken reported significant losses,
leading to an investigation by the Securities and Exchange Commission.
The June 15, 1990, letter from the Haynes and Boone law firm wasn't
sent to the SEC by Bush's attorney Robert W. Jordan until Aug. 22,
1991, according to a letter by Jordan.
That was one day after SEC staff members investigating the stock sale
concluded there was insufficient evidence to recommend an enforcement
action against Bush for insider trading.
The president's sale of his oil company shares has become tied to a
broader political debate about business ethics in the wake of the
Enron Corp. scandal and other cases of corporate wrongdoing.
The delay in delivering the law firm's report to the SEC -- Harken
executives had previously withheld it citing attorney-client privilege
-- indicates that regulators did not have a full picture of the Bush
transaction when they finished their investigation, said Michael
Aguirre, a securities lawyer in San Diego, who obtained the documents
in the case last summer after filing a Freedom of Information request.
"There was a failure to deal with the most important piece of
evidence," he said.
Dan Bartlett, White House communications director, said the timing of
the letter's delivery should not have had an impact on the
investigation.
"It has been made very clear that the SEC had the right to reopen the
case" after August 1991, he said.
"Whether it was a day after, or a week after, if career prosecutors
received information that was material and relevant, it's safe to say
they would follow up on it."
The Boston Globe, which reported Wednesday on the late delivery of the
law firm memo, said four former SEC officials who worked on the case
did not recall receiving it.
Several of those former officials did not return telephone calls
Thursday about the 1991 inquiry.
Bush sold 212,140 shares of Harken on June 22, 1990, for $848,560,
using the funds to pay off a bank loan that financed his investment in
the Texas Rangers baseball team.
The SEC memo closing the case in August 1991 reported that Bush had
been given approval to sell the shares by Harken's general counsel,
Larry E. Cummings, and Harken's chairman, Mikel D. Faulkner.
Cummings told the investigators that he had also checked with Haynes
and Boone attorneys, who said they saw no reason why Bush should not
sell.
In light of the approvals Bush received, it would be difficult to
establish that he acted with fraudulent intent, the SEC memo
concluded.
The SEC memo does not mention the Haynes and Boone letter.
Bartlett said the attorneys' letter was not specifically addressed to
the stock sale that Bush was considering at the time.
"It was a very general, broad set of guidelines to board members," he
said. Bartlett said President Bush does not recall receiving the
lawyers' warning, but does specifically recall seeking and receiving
approval to sell.
In their letter, the Haynes and Boone attorneys noted they had been
asked for advice on whether Harken directors and executives who sold
company stock could be accused of securities law violations.
At the time, Harken, a small, Dallas-based energy company, was in dire
need of funds to avoid bankruptcy and had decided to sell shares in
two subsidiaries that would be split off from the parent company in
what is called a "rights offering."
The offering had been announced publicly, but the price of shares
Harken would sell had not been set.
Thus the potential value of the deal could not be immediately
assessed.
The lawyers' memo said that if directors had any unfavorable
information about the company's outlook, their sale of Harken shares
would be viewed critically if the stock price dropped following the
rights offering.
"Unless the favorable facts clearly are more important than the
unfavorable, the insider should be advised not to sell."
Bush and two other directors attended a June 11, 1990, meeting of
Harken's audit committee, where Harken's outside auditor, Arthur
Andersen, reviewed the proposed rights offering.
An Andersen partner told the Harken directors that the offering might
lead to a potentially significant reduction in the market value of the
subsidiaries, although the amount could not be determined right away.
The attorneys' letter did not conclude whether directors' information
about the rights offering was favorable or not.
Bush has said that his decision to sell his shares was based on good
news -- the January 1990 announcement of Harken's deal to drill for
oil in Bahrain, in the Persian Gulf.
Bush received $4 a share for his stock in June 1990.
The price dropped sharply following the October 1990 disclosure of the
rights offering price, to a low of $1.25 a share in December 1990, but
then recovered.
Harken Energy shares now trade at 20 cents a share -- equivalent to
two cents a share in 1990, prior to a reverse stock-split in 2000 in
which investors received one new share of Harken for each 10 held
previously.
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>From: Harry Hope (rivrvu@ix.netcom.com)
>Subject: Bush sold Harken stock after lawyers' warning
>not to sell.
>This is the only article in this thread
>View: Original Format
>Newsgroups: alt.politics.clinton,
>alt.politics.economics, alt.politics.republicans,
>alt.rush-limbaugh, alt.impeach.bush
>Date: 2002-11-01 18:41:04 PST
>
>
>From The Mercury News, 11/1/02:
>http://www.bayarea.com/mld/bayarea/news/nation/4420819.
>htm
>
>Bush sold stock after lawyers' warning not to sell
>
>By Peter Behr
>
>WASHINGTON -
>
>A week before George W. Bush's 1990 sale of stock in
>Harken Energy
>Co., the firm's outside lawyers cautioned Bush and
>other directors
>against selling shares if they had significant
>negative information
>about the company's prospects.
>
>The sale came a few months before Harken reported
>significant losses,
>leading to an investigation by the Securities and
>Exchange Commission.
>
>The June 15, 1990, letter from the Haynes and Boone
>law firm wasn't
>sent to the SEC by Bush's attorney Robert W. Jordan
>until Aug. 22,
>1991, according to a letter by Jordan.
>
>That was one day after SEC staff members investigating
>the stock sale
>concluded there was insufficient evidence to recommend
>an enforcement
>action against Bush for insider trading.
>
>The president's sale of his oil company shares has
>become tied to a
>broader political debate about business ethics in the
>wake of the
>Enron Corp. scandal and other cases of corporate
>wrongdoing.
>
>The delay in delivering the law firm's report to the
>SEC -- Harken
>executives had previously withheld it citing
>attorney-client privilege
>-- indicates that regulators did not have a full
>picture of the Bush
>transaction when they finished their investigation,
>said Michael
>Aguirre, a securities lawyer in San Diego, who
>obtained the documents
>in the case last summer after filing a Freedom of
>Information request.
>
>"There was a failure to deal with the most important
>piece of
>evidence," he said.
>
>Dan Bartlett, White House communications director,
>said the timing of
>the letter's delivery should not have had an impact on
>the
>investigation.
>
>"It has been made very clear that the SEC had the
>right to reopen the
>case" after August 1991, he said.
>
>"Whether it was a day after, or a week after, if
>career prosecutors
>received information that was material and relevant,
>it's safe to say
>they would follow up on it."
>
>The Boston Globe, which reported Wednesday on the late
>delivery of the
>law firm memo, said four former SEC officials who
>worked on the case
>did not recall receiving it.
>
>Several of those former officials did not return
>telephone calls
>Thursday about the 1991 inquiry.
>
>Bush sold 212,140 shares of Harken on June 22, 1990,
>for $848,560,
>using the funds to pay off a bank loan that financed
>his investment in
>the Texas Rangers baseball team.
>
>The SEC memo closing the case in August 1991 reported
>that Bush had
>been given approval to sell the shares by Harken's
>general counsel,
>Larry E. Cummings, and Harken's chairman, Mikel D.
>Faulkner.
>
>Cummings told the investigators that he had also
>checked with Haynes
>and Boone attorneys, who said they saw no reason why
>Bush should not
>sell.
>
>In light of the approvals Bush received, it would be
>difficult to
>establish that he acted with fraudulent intent, the
>SEC memo
>concluded.
>
>The SEC memo does not mention the Haynes and Boone
>letter.
>
>Bartlett said the attorneys' letter was not
>specifically addressed to
>the stock sale that Bush was considering at the time.
>
>"It was a very general, broad set of guidelines to
>board members," he
>said. Bartlett said President Bush does not recall
>receiving the
>lawyers' warning, but does specifically recall seeking
>and receiving
>approval to sell.
>
>In their letter, the Haynes and Boone attorneys noted
>they had been
>asked for advice on whether Harken directors and
>executives who sold
>company stock could be accused of securities law
>violations.
>
>At the time, Harken, a small, Dallas-based energy
>company, was in dire
>need of funds to avoid bankruptcy and had decided to
>sell shares in
>two subsidiaries that would be split off from the
>parent company in
>what is called a "rights offering."
>
>The offering had been announced publicly, but the
>price of shares
>Harken would sell had not been set.
>
>Thus the potential value of the deal could not be
>immediately
>assessed.
>
>The lawyers' memo said that if directors had any
>unfavorable
>information about the company's outlook, their sale of
>Harken shares
>would be viewed critically if the stock price dropped
>following the
>rights offering.
>
>"Unless the favorable facts clearly are more important
>than the
>unfavorable, the insider should be advised not to
>sell."
>
>Bush and two other directors attended a June 11, 1990,
>meeting of
>Harken's audit committee, where Harken's outside
>auditor, Arthur
>Andersen, reviewed the proposed rights offering.
>
>An Andersen partner told the Harken directors that the
>offering might
>lead to a potentially significant reduction in the
>market value of the
>subsidiaries, although the amount could not be
>determined right away.
>
>The attorneys' letter did not conclude whether
>directors' information
>about the rights offering was favorable or not.
>
>Bush has said that his decision to sell his shares was
>based on good
>news -- the January 1990 announcement of Harken's deal
>to drill for
>oil in Bahrain, in the Persian Gulf.
>
>Bush received $4 a share for his stock in June 1990.
>
>The price dropped sharply following the October 1990
>disclosure of the
>rights offering price, to a low of $1.25 a share in
>December 1990, but
>then recovered.
>
>Harken Energy shares now trade at 20 cents a share --
>equivalent to
>two cents a share in 1990, prior to a reverse
>stock-split in 2000 in
>which investors received one new share of Harken for
>each 10 held
>previously. |
