Spain Probing Drexel Unit’s Role in Deal

Spanish securities regulators are investigating a unit of the U.S. brokerage firm Drexel Burnham Lambert Inc. over allegations that it misrepresented itself in the stock sale of the petroleum giant Repsol SA, a report published Wednesday said.

The newspaper El Pais quoted unnamed sources from the National Securities Commission as alleging that last spring Drexel sold Repsol shares intended for small investors to a few large private institutions.

The newspaper’s sources said Drexel requested an estimated $59.8 million in shares of the state-controlled Repsol to be sold to 400 investors. But they claimed that on May 11, the first day of public trading, Drexel improperly sold the shares to a small number of large private investors, the newspaper said.

There was no comment on the report at Drexel’s Spanish office.

However, Repsol issued a statement late Wednesday denying that Drexel formed part of the syndicate of 48 brokerages or investment firms that took part in the stock sale.

“Drexel Burnham Lambert did not form part of the offering, thus, there has been no relation at all between that firm and Repsol,” it said. “Repsol has cooperated since the start of the (commission’s) investigation (in early June) and based on its outcome will then take the appropriate legal action.”

Between April 20 and May 6, Repsol, Europe’s eighth-largest petroleum company, sold 79.75 million shares at $14.70 each to 400,000 shareholders worldwide.

The company sold 44 million of the total shares offered to individual Spanish shareholders under a prorated system.

El Pais said the sources confirmed that the commission had contacted at least 10 of the 400 investors Drexel had identified as original buyers. They said they knew nothing about ordering the purchase of Repsol shares.

El Pais said if Drexel used the names of investors without their consent, the brokerage could face criminal fraud charges.