GAF Corp., Top Officer Indicted in Stock Scam

A federal grand jury has indicted GAF Corp. and a top company officer for manipulating the stock price of Union Carbide Corp., which GAF tried to take over in 1985, federal officials said today.

The grand jury indicted the Wayne, N.J., chemicals company, two of its subsidiaries and its vice chairman and chief administrative officer, James T. Sherwin, in an alleged scheme to artificially hike Union Carbide’s stock price during the takeover battle.

The alleged manipulation was done through the Los Angeles brokerage firm Jefferies & Co. in October, 1986. Its former chairman, Boyd Jefferies, has pleaded guilty to other stock manipulation charges in a scheme with Ivan Boesky, the now-imprisoned stock speculator.

Rudolph W. Giuliani, U.S. district attorney for Manhattan, said the 10-count indictment charges GAF, two of its subsidiaries and Sherwin each with one count of conspiracy, one count of stock manipulation, three counts of securities fraud and three counts of wire fraud.

To Maximize Gain

According to Giuliani’s office, the indictment alleges that Sherwin, acting for GAF, asked two co-conspirators employed by Jefferies to ensure that the price of Union Carbide stock closed at or above a specified price for a number of days in late October, 1986.

The purpose was to create the impression among potential buyers of Union Carbide stock that the stock was increasing in value and to maximize the gain to GAF in the event of a sale of its block of Union Carbide stock.