GAF Stock Fraud Case May Result in Second Mistrial; Jury Deadlocked

A jury in the GAF Corp. stock market manipulation trial said Saturday that it was deadlocked 11 to 1 on eight pending criminal charges, raising the possibility that the widely followed Wall Street case may end for a second time in a mistrial.

The jury agreed at the urging of U.S. District Judge Mary Johnson Lowe to try again today. The jurors gave no indication of which way the majority voted but said in a note: “We need help.” The jurors said one holdout “says that under no circumstances can he/she agree with the other jurors’ decision.”

The first trial in the case ended in a mistrial Jan. 10 while testimony was under way. The mistrial was declared after Lowe ruled that prosecutors had improperly withheld from defense lawyers a report from an expert witness.

GAF Corp. and its vice chairman, James T. Sherwin, 55, are accused of hiring the Los Angeles-based stock brokerage Jefferies & Co. to illegally boost the price of Union Carbide stock in October, 1986, to help GAF get a better price for a block of 9.6 million Carbide shares it was preparing to sell.

The case has been widely followed in the securities industry and by defense lawyers and prosecutors because, among the chain of Wall Street stock fraud cases that began with former stock speculator Ivan F. Boesky, it is the first to go to trial. The others resulted in guilty pleas or are still pending.