NEW YORK — In a sign of its resolve to crack down on inadequate disclosure of stock purchases, the Securities and Exchange Commission on Thursday charged Asher B. Edelman with violating federal securities laws in fighting off an attempt to oust him from Datapoint Corp. in 1989.
Edelman, chairman of Datapoint and a leading corporate takeover figure in the 1980s, simultaneously agreed to settle the civil charges without admitting or denying guilt. He also agreed to pay $436,858 in penalties.
The SEC said the penalty was based on an estimate of what Edelman saved while buying up the company's stock over several days in September, 1989, without publicly announcing his intentions. The agency contends that if investors had known of Edelman's plans, Datapoint's stock price would have risen and he would have had to pay more.
In a written statement, David M. Brodsky, a lawyer for Edelman, said his client cooperated with the SEC in the inquiry. "He agreed to the settlement in order to resolve the matter promptly and avoid protracted and costly litigation," Brodsky said.
According to the charges, Edelman decided to acquire a large block of the company's shares to thwart a challenge to his control of Datapoint--a San Antonio-based computer products firm--by Martin Ackerman, a New York investor who also had amassed a stake in the company.
After Ackerman announced plans to seek a shareholders' vote to oust Datapoint's chairman and directors, Edelman began buying up the company's shares, boosting his holdings to 40% in two days. But he didn't disclose the purchases of the additional shares and his intentions until several days later.
Under SEC regulations, individuals who obtain control of 5% or more of a publicly traded company's stock must disclose their holdings by filing public documents. They must also disclose their intentions, such as plans to acquire more, and the reason for their purchases.
SEC officials and private securities lawyers have said there were widespread violations of the disclosure laws during the corporate takeover frenzy of the 1980s. Bruce A. Hiler, a lawyer in the SEC's enforcement division, said the SEC brought the action against Edelman because "there's a sense that it's time for people to understand how serious we are about this type of disclosure obligation."
He said the case is only the second time that the SEC has obtained "disgorgement" of allegedly improper financial gain in a disclosure case that didn't also involve fraud allegations. The other case involved First City Financial Corp. and the Belzberg family.