Word: raider
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Dates: during 1980-1989
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...intended takeover victim fights back, outside brokers who are unregistered with the major stock exchanges might enter the game, usually as stalking horses for the raider. The job of the so-called third-market brokers is to "sweep the Street" quickly and quietly for any available blocks of stock in the target company, usually after regular market hours or when normal trading in a stock has been suspended under exchange rules. Then they turn the shares over to the raider...
...those operations are completely legal. But the close proximity of a small core of professional takeover specialists, and their towering importance in the market of the '80s, makes the prospects for collusion virtually endless. Since brokers and junk-bond dealers often know about a raider's plans well in advance of the general public, those professionals have the opportunity to tip off other investors or to make their own profits by trading in the target stock...
Lawyer Daniel Bergstein, a senior partner in the New York firm of Finley Kumble Wagner, which has many Wall Street clients, notes that raiders and arbitragers can form what he calls an "unholy alliance." In a typical maneuver, they might have a mutual commitment to buy up stock in a company, limiting their blocks to less than 5% to avoid the SEC's required disclosure rule. Then one member of the ring can leak the rumor of an impending takeover. When legitimate arbitragers leap into the fray, the group can unload at an inflated stock price and make off with...
...reports of abuses in the takeover game proliferate, the political pressure to put new curbs on corporate raiders is sure to rise. At last week's hearing before the House Monopolies Subcommittee, A.A. Sommer, a Washington securities lawyer and former SEC commissioner, delivered a strong denunciation of takeover mania. Said he: "American enterprise, at a time when all its energies are needed for the worldwide economic struggle, is being driven by a . handful of opportunists into a massive restructuring, with consequences that may be disastrous." Sommer's argument struck a responsive chord among the legislators. Said Democratic Representative Mary Rose...
...issue is not that simple. In many cases a raider's acquisition bid may be one of the few defenses that shareholders have against inept, self- serving and complacent management. Many economists, along with key figures in the Reagan Administration, believe executives should be subjected to the full discipline of the marketplace, including the threat of takeover...