Pair Face Insider Trading Charges in Lucky Deal

The Securities and Exchange Commission Wednesday charged that a father-son insider trading scheme gained $328,844 in stock profits after the owner of Alpha Beta stores announced its plans to take over Lucky Stores last year.

SEC attorneys charged that David Hellberg, 31, a financial specialist with Alpha Beta, tipped off his father, Gerald Hellberg, last March to the plans to buy Lucky.

The senior Hellberg, a Salt Lake City retiree, allegedly used the information to buy Lucky stock options, according to the civil suit filed in U.S. District Court. Then, when Alpha Beta’s parent announced the planned takeover (secretly dubbed “Cloverleaf” inside the firm), Hellberg sold the securities at a huge profit.

“I believe the charges are without merit, and I intend to defend them vigorously,” said David Hellberg, reached in Salt Lake City. Hellberg, who lived in El Toro last year, said he could not answer other questions on his residence or his employment status with Alpha Beta.

In a separate interview, his father, 59, also denied the accusations. “I just feel the SEC case is without merit,” said Gerald Hellberg.

SEC attorneys in Washington who prepared the case could not be reached Wednesday night.

According to the official complaint, the younger Hellberg was employed last year in Irvine as Alpha Beta’s manager of special projects, such as writing financial reports. Early in the year, officials of American Stores, Alpha Beta’s parent, asked him to prepare a computer program that would forecast the financial effects of taking over the rival Lucky chain.

American executives had decided by early March to make the move and already had discussed it with outside attorneys and the investment banker, Shearson Lehman Hutton, the SEC attorneys said Wednesday.

They claim that David Hellberg knew of the plan by March 13 and that he tipped off his father by telephone that same day. Three days later, Gerald Hellberg began a series of three purchases of Lucky stock options that cost him $15,049, according to the SEC.

After the announcement, these securities soared as much as 25-fold, and Gerald Hellberg unloaded them in three separate deals that yielded $328,844 in profits, the SEC charges.

The SEC seeks court orders forcing Gerald Hellberg to surrender his profits from the sales, barring the two men from future securities violations and also unspecified penalties.

Although American, based in Salt Lake City, purchased Lucky last year for $2.5 billion, a federal judge so far has blocked it from combining the Alpha Beta and Lucky operations.