Boesky Named in Class-Action Suit in L.A.

Former Carnation Co. shareholders filed a class-action suit Friday against Ivan Boesky and Martin Siegel, claiming they depressed the company’s stock price and traded on inside information before it was acquired.

Charles Taplin, a Carnation shareholder, filed suit in U.S. District Court on behalf of himself and all other Carnation stockholders who sold their stock on the open market between July 3, 1984, and Sept. 4, 1984.

During that period, Siegel was a vice-president of Kidder, Peabody & Co., which was acting as broker and financial adviser to Carnation for the takeover by Switzerland-based Nestle S.A., which was consummated in January 1985.

According to the Carnation suit, as a result of an agreement between Siegel and Boesky, Siegel divulged non-public information to Boesky about Carnation’s impending takeover, allowing Boesky to trade in Carnation stock with illegally obtained insider information.

Taplin said in the suit that a representative of Boesky met Siegel in a “conspicuous” public location, identified himself with a password and handed him a briefcase containing $700,000 cash as payment for channeling insider information to him.

Kidder, Peabody and Siegel were also handling Carnation’s press releases at that time and disseminated information that had the effect of keeping the prices of Carnation stock artificially depressed before the takeover, the suit said.

As a result, stockholders who sold Carnation stock during that period reaped far less than they might have if news of the takeover had not been manipulated, the suit said.

Boesky and Siegel could not be reached for comment.

Boesky, who was among Wall Street’s richest and best-known stock speculators, stunned the investment community when he admitted to insider trading charges last November.