SEC Wants Financiers Barred From Top Positions at Firms : Securities: Upcoming fraud trial of Victor Posner and son Steven is last chapter in Milken insider trading case.
Financier Victor Posner and his son Steven should be barred from ever again serving as officers or directors of a public company because of their pattern of self-enrichment, the Securities and Exchange Commission has urged in a court filing.
The SEC’s brief lays the groundwork for a civil trial of the Posners, scheduled to begin June 17. It is the final part of the agency’s 5-year-old insider trading case against Michael Milken and his employer, Drexel Burnham Lambert Inc.
Milken went to prison and, together with Drexel, paid the government $1.25 billion in fines and disgorgement of profit.
Victor Posner until recently controlled Miami Beach-based DWG Corp., which owns Arby’s Inc. and Royal Crown Cola Co. Steven Posner was vice chairman of DWG.
The SEC also recommended that the Posners be forced to repay Fischbach Corp. investors $2.5 million plus interest for fraud committed against them.
“One would be hard-pressed to find more worthy candidates to be barred from serving as officers and directors than the Posners,” the SEC said in a brief filed late Friday in U.S. District Court in New York.
The SEC alleges that the Posners fraudulently wrested control of Fischbach, an electrical and mechanical contractor, during the 1980s and provided no services as officers and directors of the New York-based company.
The brief also accuses the Posners of fraud while colluding with Milken and investor Ivan F. Boesky in attempts to gain control of Fischbach and Burnup & Sims Inc., a telecommunications company in Plantation, Fla.
Management at both Fischbach and Burnup & Sims opposed the takeovers. The Posners gained control of Fischbach but failed with Burnup & Sims.
The Posners would not comment on the SEC brief.
“We can’t respond,” said Martin Rosen, a spokesman for the Posners. “We’re in the middle of litigation.”
According to the brief, “the Posners have repeatedly abused their positions in public companies, engaged in self-dealing, enriched themselves at the expense of public shareholders and generally conducted themselves in ways that are the antithesis of what one expects of a corporate fiduciary.”
The agency described Victor Posner’s alleged attempts to enrich himself and his family while controlling DWG and Sharon Steel Corp., saying he siphoned off millions of dollars for personal use while the companies’ financial condition deteriorated.
The SEC urged that the Posners be made to return their compensation as Fischbach officers and directors, estimated at $2.5 million. The money, plus interest, would be given to the court, which in turn would disburse it to investors.
The brief says the Posners violated an agreement with Fischbach, now controlled by American International Group Inc., and induced Boesky to identify himself falsely as a substantial holder of its stock.
With Burnup & Sims, the SEC said, the Posners tried to frustrate a court order, evade reporting requirements and conceal the size of their financial stake.
Victor Posner sold his 46% stake in DWG for $143.6 million in April. Half of the stake was purchased by DWG and the other half by Trian Group, headed by New York investor Nelson Peltz.
As part of the agreement, Posner, 74, stepped down as DWG chairman and chief executive and son his Steven, 50, resigned as vice chairman.
