Friday, December 16, 2005
I'll be up wth an uber post soon. Hopefully.
But here's some bad news for one of my poker heroes.
He's currently sitting at the final table in the WPT Bellagio Five Diamond poker tournament.
Say it ain't so, Dolly.
WASHINGTON, Dec 16 (Reuters) - U.S. securities regulators said on Friday they are formally investigating U.S. poker champion Doyle Brunson's unsolicited $700 million offer in July to buy gaming entertainment group WPT Enterprises Inc. (WPTE.O: Quote, Profile, Research)
News of the unsolicited bid, which was nearly double the company's market value, sent WPT's stock price soaring more than 50 percent in one day to an intraday high of $29.50 per share.
The price then rapidly fell after the company said it was not able to reach Brunson or his attorneys for further information on the bid, according to the U.S. Securities and Exchange Commission. The offer later expired.
WPT, which owns the popular World Poker Tour television show, was trading at $6.14 per share during morning trading on the Nasdaq on Friday.
The SEC also said on Friday that it filed an action in Fort Worth federal district court to enforce subpoenas issued to attorneys David Chesnoff and Chaka Henry, whose Las Vegas firm Goodman & Chesnoff PC represented Brunson in his unsolicited offer.
Soon after delivering Brunson's offer, the firm withdrew from the matter.
Chesnoff said he did not have a comment, and a call to Henry was not immediately returned. Brunson and a spokeswoman for WPT could not immediately be reached for comment.
The SEC said it is investigating whether Brunson's offer and its publication violated anti-fraud laws.
Brunson, who is one of the best-known professional poker players in the United States, has invoked his Fifth Amendment right against self-incrimination and declined to testify in the investigation, the SEC said.
The agency said Brunson directed the two attorneys to withhold certain documents and not to testify on critical aspects of the offer, under the attorney-client privilege and work product doctrine.
The SEC's subpoena enforcement action seeks to compel Chesnoff and Henry to testify and provide the requested documents.
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.Litigation Release No. 19495 / December 16, 2005
Securities And Exchange Commission v. David Chesnoff and Chaka Henry, Misc. Action No. 4:05-MC-043-Y/Northern District of Texas (Fort Worth Division)
On December 14, 2005, the Securities and Exchange Commission filed an action in Fort Worth federal district court to enforce subpoenas issued to attorneys David Chesnoff and Chaka Henry of the Las Vegas firm Goodman & Chesnoff, P.C.
The Commission alleges that Henry, on behalf of Goodman firm client Doyle Brunson, prepared and delivered an unsolicited offer to buy WPT Enterprises, Inc., the publicly traded owner of the World Poker Tour, at a high premium over its then-market value. Shortly thereafter, the Commission contends, a public relations firm Brunson hired, and a website he endorses, announced the offer publicly. The Commission asserts that publication of this offer, widely covered in the media, triggered a steep rise in WPT's stock price on record trading volume.
As the Commission alleges, however, the Goodman firm and Brunson immediately stopped responding to WPT's requests for information about the offer. Instead, shortly after delivering the offer, the Goodman firm, at Chesnoff's instruction, abruptly withdrew from the engagement. When WPT publicly disclosed Brunson and his law firm's unresponsiveness, its stock price sharply declined, costing investors tens of millions of dollars in lost market value. Brunson's offer eventually expired by its terms.
The Commission is formally investigating whether Brunson's offer and its publication violated federal securities laws, including the antifraud provisions of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934. As part of its investigation, the Commission's staff subpoenaed documents and testimony from Chesnoff and Henry. However, Brunson, who has invoked his Fifth Amendment right against self-incrimination and declined to testify in the investigation, directed the Goodman attorneys to withhold certain documents and not to testify on critical aspects of the offer, under the attorney-client privilege and work product doctrine. The Commission's subpoena enforcement action seeks to set aside these privileges on various legal grounds, including the crime-fraud exception, and to compel Chesnoff and Henry to provide the requested documents and testimony. The court has not yet set the Commission's action for hearing.
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