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...most controversial suggestions on how to limit takeovers comes up for SEC hearings next month. It involves a New York Stock Exchange proposal to remove its 60-year-old "one share, one vote" rule, which prohibits the trading of shares in companies that issue both voting and nonvoting common stock. The revision would allow corporate managers and other insiders to keep the voting stock for themselves and to raise money by selling the nonvoting shares to other investors. Critics of the proposal see it merely as a way for managements to make themselves impregnable...
Whether or not anything should be done to restrict takeovers, specific steps can be taken to slow down insider trading. One would be to cut back steeply on the time speculators have to maneuver before a takeover bid is publicly announced. Under current SEC rules, corporate raiders have ten days between the time they acquire 5% of a target stock and the date when a public announcement of their intentions is necessary. It is precisely at such times, when insiders know that something is happening and outsiders are in the dark, that the potential for abuse -- and for profit...
Says Samuel Winer, a former SEC enforcement lawyer now in private practice in Washington: "You can get away with all kinds of discussions and not tell anyone." Winer would require companies to announce publicly whenever preliminary takeover negotiations begin. He would also mandate companies to release much more quickly such important data as earnings projections and year-end financial results...
What is also astounding is the fact that the Securities and Exchange Commission (SEC) has given him nearly two years, until April 1, 1988, to withdraw from the U.S. market. Too much time and consequently too much unfair profit. And after that he is free to practice his profession in Europe, excluding London. Yet the most astounding fact is that Boesky, with tacit SEC permission, sold off $440 million of his holdings before the announcement of his censure. He traded with inside information again. This time he was his own source...
According to the SEC, Levine, whose job was to work on mergers and acquisitions, passed on insider information about the deals to Boesky. In return Boesky at one point allegedly agreed to pay Levine 5% of any profits made by his firms in trading on information from Levine that led Boesky to make an initial stock purchase. Boesky is alleged to have offered Levine a 1% commission when his information affected trade in stocks that the speculator already possessed. Around April of this year, the Government charged, Boesky offered Levine a lump-sum $2.4 million payment for his illegal tipster...