SEC Reportedly Probing Costa Mesa Firm
The Securities and Exchange Commission is reportedly conducting an investigation into possible illegal trading of Costa Mesa-based ICN Pharmaceuticals stock.
Lawrence Panitz, ICN’s chief administrative officer, was quoted by the Wall Street Journal on Friday as saying that an SEC investigation focuses on Paine Webber Inc., which last summer helped underwrite $137 million in ICN stock and debentures offerings. E. F. Hutton & Co. also participated in the offerings.
The inquiry into possible manipulation and insider trading at ICN reportedly began about six months ago, but citing agency policy, SEC officials refused to confirm that any investigation was going on. Panitz could not be reached Friday; an ICN spokesman would neither confirm nor deny the statements attributed to Panitz in the story.
Following the report, ICN shares fell $1.375 in active trading on the New York Stock Exchange to close at $22.625 a share. More than 1 million shares changed hands. ICN’s Viratek Inc. subsidiary fell $4 in over-the-counter trading to close at $60.50 a share.
Report Propelled Stock
Less than one month after the July, 1986, offerings took place, Paine Webber analyst Ronald Nordmann issued a bullish research report on ICN that triggered a buying frenzy in which ICN’s share price soared more than 60% on the New York Stock Exchange over a one-week period.
Panitz was quoted by the Journal on Friday as saying that the investigation concerns an Aug. 12 “buy” recommendation in which Nordmann claimed that ICN’s drug Virazole could be one of the “largest selling” drugs in the world.
After topping out at $34 a share last summer, ICN stock plunged to the low $20-a-share range, touching off a class-action lawsuit in which a disgruntled ICN shareholder accused Paine Webber of artificially inflating ICN’s share price.
When reached Friday, Nordmann refused to comment concerning the reports of an SEC investigation or the lawsuit against his firm. A Paine Webber spokeswoman also declined to comment.
