Got More Than Your Share of an IPO? Hold the High-Fives
It’s not uncommon for investors to complain about the meager initial public offering allocations they receive.
But that wasn’t the case for three people who recently won a combined $4.27 million arbitration judgment from a brokerage that gave them more shares of Shopping.com’s 1997 IPO than they could stomach.
The trio--a married couple, Raymond and Jennifer Fisk, and retired airline pilot Jay T. Pierce--were victims of an alleged stock-manipulation scam by now-defunct Waldron & Co. and Cery B. Perle, former president of the Irvine brokerage.
Perle was barred from the industry and Waldron’s registration was canceled in 1999 by the Securities and Exchange Commission. The agency claimed Perle created artificial demand for Corona del Mar-based Shopping.com’s stock through his firm, which underwrote the Internet retailer’s IPO.
Perle agreed to be barred without admitting or denying the SEC’s charges.
The case filed by the Fisks and Pierce shows how investors were used as pawns in the alleged manipulation, which drove the stock from its $9 initial offering price in November 1997 to $32 a share in early 1998.
Although they wanted to participate in the IPO, all three received shares well in excess of what they requested, said their attorney, Steven L. Miller of Woodland Hills.
When they tried to contact Perle to sell the shares, he didn’t accept their calls, Miller said. Keeping a majority of an offering’s shares off the market makes its price easier to manipulate.
Waldron has since gone out of business. Neither he nor Perle was available for comment.
After the initial run-up, Shopping.com’s stock dropped and the Fisks eventually sold at a loss.
Pierce, however, continued to hold his shares. In 1999, Compaq Computer Corp. bought Shopping.com for $18 a share, and Pierce ended up regaining some of his loss, Miller said.
Miller said the Fisks and Pierce didn’t know one another prior to the case, but they decided to join the same complaint to save costs.
An arbitration panel determined in December that Waldron and Perle were liable for the Fisks’ loss of $93,000, and for Pierce’s loss of $174,000. In addition, the panel awarded punitive damages of $2 million to Pierce and $2 million to the Fisks.
Whether they collect remains to be seen. Miller said it’s difficult to extract awards from defunct brokerages, and he’s not certain where to locate Perle, or whether he has any assets. The SEC didn’t fine Waldron when it canceled its registration due to lack of funds.
