Judge Quashes 2 Subpoenas on Boesky

A federal court judge Tuesday quashed two subpoenas served on stock speculator Ivan F. Boesky by Diamond Shamrock after federal prosecutors protested that their criminal investigation into Boesky’s insider trading activities would be frustrated if he cooperates with the Dallas company.

Diamond Shamrock, in fighting a takeover bid by Texas businessman T. Boone Pickens and Alabama industrialist John Harbert III, subpoenaed Boesky and his Ivan F. Boesky Co. on Jan. 16 for “information concerning allegations of past insider trading activity” by Pickens.

The U.S. attorney’s office here objected last week, arguing that its investigation of Boesky and his conspirators in the biggest insider trading case ever prosecuted “involves many of the same facts and much of the same evidence” sought by Diamond Shamrock.

U.S. District Court Judge Robert J. Ward agreed. Citing Diamond Shamrock’s admission “in open court that (it) has no evidence of any improper relationship” between Pickens and Boesky, Ward ruled Tuesday that the subpoenas be quashed in “the interests of justice.” The company said it has not ruled out an appeal.

Boesky is the millionaire arbitrageur who has agreed to forfeit $50 million in illegal profit and pay a $50-million penalty, to plead guilty to one felony count and to cooperate with the government to settle illegal insider trading charges.

No conclusions can be drawn about the focus of the government’s investigation based on the prosecutors’ objections. The company’s requests for information are so varied that it is impossible to pinpoint whether prosecutors are interested in transactions concerning Pickens, Diamond Shamrock or any number of other oil companies.