SEC Launches Inquiry Into Resorts Battle : Trump, Griffin Each Say the Other Is to Blame
The Securities and Exchange Commission has begun an inquiry into the competition between Hollywood producer Merv Griffin and New York financier Donald Trump for Resorts International, both sides said Thursday.
However, the competitors for the casino operator pointed to each other as the cause of the investigation by securities watchdogs.
A Trump attorney told a Delaware judge in a letter that statements by Griffin and his ally, Resorts shareholder F. V. Scutti, have had a “manipulative effect” on the market for Resorts Class A shares, adding: “This has caused very substantial gyrations in the marketplace, which we believe have now brought about an investigation by (the SEC).”
Later, Griffin Co. of Los Angeles, which is wholly owned by the television game show producer, gave a far different impression of the inquiry:
“As part of its information-gathering process, the SEC has expressed interest to the Griffin Co. in receiving documents which support claims of Mr. Trump’s violation of federal law as asserted by Griffin against Trump. We are cooperating in providing these documents to the SEC.”
88% Control
The SEC itself made no public statement about the matter.
Meanwhile, Tweedy, Browne Co., an institutional investor that is the largest holder of Resorts Class A stock with 8.2%, Thursday urged the Delaware judge to reject the proposed settlement of lawsuits against Trump. The settlement increased Trump’s earlier $15-a-share offer for Class A stock to $22 a share. Tweedy Browne also formally withdrew its previous support for the settlement, which was anticipated.
Trump last year had obtained 88% control of Resorts’ voting securities. He owns 95% of the Class B shares, for which he paid $135 a share and that have 100 times the voting power of Class A shares.
On the eve of the Delaware court’s hearing on the settlement that would allow Trump to take Resorts private, Griffin last week offered to buy all the Class A and B shares for $35 each, or $225 million. He sweetened that offer this week to a total of $295 million. Griffin left the division of the money to Resorts’ board, provided that Class A holders received more than his original $35-a-share offer.
Delaware Chancery Court Judge Maurice A. Hartnett III has not handed down his decision on the contested settlement.
Tweedy Browne’s attorney, William Klein II, said he told the judge Thursday in a letter that the firm thought the settlement “moot” in light of the heavy trading that has boosted the price of Resorts Class A stock far above Trump’s bid.
The letter added that “the market is making a statement that it believes the Griffin offer has bona fides and viability.”
Meanwhile, a Trump attorney asked the court in a letter to rule upon the proposed settlement as soon as possible to “bring to an end the extraordinary market speculation and apparent manipulation that have taken place within the last week.”
The letter called Griffin’s offer “disingenuous at best and a sham at worst” because “there is absolutely no way” that the shareholders can force Trump to sell his controlling shares.
