Company Drops Suit Charging Stock Manipulation : Boesky Agrees to Limit CBS Stake

Financier Ivan F. Boesky, whose large stake in CBS played a role in the speculative run-up of the company’s stock last month, agreed Friday to limit his CBS holdings to 4.3% or less and to stay out of any takeover raid on the company for two years.

In return, CBS agreed to withdraw its lawsuit charging Boesky with manipulating its stock and violating federal margin regulations in buying his shares.

In a statement issued by his public relations firm, Boesky said he is “pleased” by the withdrawal.

“This action simply confirms that there was no basis for the allegations in the first place,” he said.

Boesky is known on Wall Street chiefly as its biggest risk-arbitrageur, a trader who aims to turn short-term profits in stocks involved in takeover situations.

He announced April 1 that he owned 8.7% of CBS, a holding that made him the network’s largest single stockholder.

That disclosure provoked a flurry of litigation. CBS sued Boesky on April 9, charging that he had illegally borrowed 100% of the value of the stock when the legal limit is 50%.

The lawsuit also alleged that Boesky had talked with Ted Turner, the Atlanta cable-television entrepreneur currently attempting a takeover of CBS, in an effort to coerce CBS into buying him out.

Boesky denied the allegations.

Boesky began selling his shares the day that Turner announced his thinly capitalized bid for CBS. His sale of about half of his stake apparently produced a profit of $16.5 million before commissions and financing charges. He held 4.3% of the company’s stock as of April 19.

In addition to preventing his ownership from exceeding that level, the financier’s agreement with CBS prohibits him from taking part in any proxy contest or takeover attempt involving CBS stock for two years.

The CBS lawsuit is withdrawn without prejudice, meaning it may be reinstated if Boesky violates the agreement.

Boesky has consistently maintained in documents filed with federal securities regulators in Washington that his CBS purchases were made for investment purposes and not to promote a CBS takeover--a claim that the network challenged in its lawsuit.

Boesky stuck to that assertion in his statement Friday.