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BRIEFLY

September 03, 1987

Most large firms that handle corporate takeovers "routinely speculate" in the targets before a merger is announced, creating a huge potential conflict of interest, a new Senate study says. Senate Banking Committee Chairman William Proxmire (D-Wis.) released the results of a survey conducted at his request by the Securities and Exchange Commission that showed of the 31 largest investment banking firms, 25 acknowledged that they invested in takeover targets before any public announcement of the acquisition. "What troubles me is that the very companies engineering the current tidal wave of takeovers are investing in the deals, sometimes before the public finds out about them," Proxmire said. "Something's amiss when the jockey bets on the race."

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