In early 2014, an unknown investor announced he had made an offer to buy 51% of Barnes & Noble (BKS) for $22 a share, a nice premium to the stock’s level at the time. Not surprisingly, the bookstore chain’s stock spiked.
But as Wall Street quickly realized that few had ever heard of the purported buyer, G Asset Management, or had a sense of whether it even had the finances to make such an acquisition, the stock’s pop fizzled.
Turns out, the market’s suspicions that day, Feb. 21, were spot on: the bid was bogus and part of an effort to manipulate the stock and its underlying derivatives, according to the U.S. Securities and Exchange Commission. The stock only rose as high as $19.12 after the release, suggesting doubts about the legitimacy of the offer, but long enough for G Asset Management founder Michael Glickstein to allegedly make a quick profit of $168,000.
The SEC on Tuesday charged Glickstein and his firm with fraud, based on a press release G Asset issued that day that the regulator called “misleading.”
For one thing, Glickstein and his firm didn’t make clear one basic fact: he didn’t have the financial ability to buy 51% of Barnes & Noble, which at $22 a share was worth $1.32 billion. For another, it did not say that G Asset Management had recently bought thousands of Barnes & Noble shares and short-term call options, and that it planned to sell the shares and options after issuing the press release.
In conjunction with the charges, the SEC announced a settlement with Gickstein and G Asset Management. Glickstein was not required to admit wrongdoing, but he will repay $175,000 — his fraudulent profits plus interest — plus incur a civil penalty of $100,000. Moreover, Glickstein will be barred from the securities industry for at least five years.
Fortune was unable to reach Glickstein. Both the phone number he had listed in earlier filings and G Asset’s website, where he had been the only person listed, have been taken down.
Glickstein won’t have to admit to the findings in the SEC’s order, but he and his firm agreed to settle, and give back $175,000– his profit plus interest, the SEC said. Glickstein agreed to pay a civil penalty of $100,000 and be barred from the securities industry for at least five years.
Glickstein’s gambit was just one of several fake bids in recent years for struggling companies. Earlier this year, a Bulgarian huckster made a bogus takeover offer for Avon (AVP).
