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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Ploni who wrote (9968)	6/12/1998 10:44:00 AM
From: Roger A. Babb	Read Replies (5) \| Respond to of 18691

Charles, I am short CYPH through Datek. I am beginning to think that Mr. A is spying on my account!

To: Ploni who wrote (9968)	6/13/1998 3:05:00 PM
From: Lazlo Pierce	Respond to of 18691

Charles the following is from thestreet.com talking about Schonberg/Dreyfus/CCSI ***********************8 Looking Out for the Shareholder: Dreyfus Case Shows Why Personal Trading by Managers Is Bad News By Jamie Heller Executive Editor 6/12/98 6:04 PM ET For a couple of years now, shareholders in two of Dreyfus' aggressive growth funds lost lots of money. Now they have a new concern: that the funds' manager could have been using their money -- the fund's assets -- to help boost a holding in his personal account. According to news reports this week, most recently in Business Week, Michael Schonberg personally owned shares of Chromatics Color Sciences International (CCSI:Nasdaq) that he bought on the cheap through a private placement when he purchased the stock for both funds. For a while, the shares soared -- enriching both Schonberg and the fund investors. But as the shares plunged recently, in part on accusations of fraud by a noted short-seller, fund investors must certainly be asking what was motivating a manager at a white-shoe firm like Dreyfus to be in this shaky stock in the first place (an issue TSC raised back in April). TheStreet.com has long maintained that managers shouldn't be permitted to trade stocks for their personal account. It was a primary tenet of our pioneering Looking Out for the Shareholder survey. There we argued that even in a conflicts-free world, if you're running money for your shareholders and for yourself, you're more distracted than you should be. In our view, managers should be invested in their own fund and perhaps other funds, but they shouldn't be picking individual stocks for their own account. This case raises issues bigger than distraction. Presuming Schonberg had no reason to be in this stock other than that he considered it a great investment, his interests were arguably aligned with those of his shareholders. Indeed, Dreyfus says Schonberg disclosed his personal position to the firm when he joined the Dreyfus. It denies allegations that Schonberg traded for personal gain and says it is conducting its own review. (Schonberg was replaced as lead manager on the funds in early April.) But now, as the situation unravels, one has to wonder whether among the many thousands of stocks in the universe, Chromatics was really the one that on its merits deserved high billing in the Dreyfus portfolios. Or, was Schonberg using the Dreyfus Premier Aggressive Growth and Dreyfus Aggressive Growth funds to enrich himself? At December's end, his funds held more than 13% of the outstanding shares in the microcap company, now boasting a market cap of $110 million. That size position is certainly enough to make more than a dent in the stock price. It's precisely this kind of mess that we think shareholders should be spared worrying about. The reasons to ban personal trading seem obvious to us. Yet, the Securities and Exchange Commission permits it, and the fund industry blesses it, subject to suggested restrictions like bans on short-term trading and reporting requirements.