Our old friend Anthony@Pacific was in the news today.
By MICHAEL RAPOPORT and CAROL S. REMOND
DOW JONES NEWSWIRES
NEW YORK -- Anthony Elgindy, the controversial short-seller and Internet stock commentator, was arrested on charges of manipulating stocks by using secret government information fed to him by collaborators within the Federal Bureau of Investigation.
Mr. Elgindy, who lives in the San Diego area, was arrested at his business on Tuesday, Jan Caldwell, a spokeswoman for the San Diego field office of the FBI, said Wednesday.
Mr. Elgindy was indicted by a federal grand jury in Brooklyn, N.Y., on charges of racketeering, insider trading, market manipulation, extortion conspiracy and obstruction of justice. Four other people, including a current FBI agent and a former agent, also were indicted.
The indictment alleges that Mr. Elgindy, through his FBI contacts, obtained confidential information from FBI databases about criminal history and investigations relating to companies that he was shorting or thinking of shorting. A short-seller sells borrowed shares and profits when a stock declines, so exclusive access to negative information about a company would be valuable to a short.
He then used the secret information to decide how to invest, prosecutors say, and distributed it to other short-sellers to encourage them to short the stock also. Paid subscribers to Mr. Elgindy's e-mail newsletter and investment Web site received the information also, prosecutors said.
In addition, according to the indictment, Mr. Elgindy extorted free or cheap shares of stock from the insiders of companies he had targeted in exchange for his agreement to stop shorting the companies and stop spreading negative information about them.
Mr. Elgindy was even able to spy on the government's grand jury investigation of him through his FBI contacts, prosecutors allege. One of the FBI agents indicted along with Mr. Elgindy gleaned information about the probe from an FBI database and told Mr. Elgindy of the direction of the investigation and that he was a target, according to the indictment.
A woman at Mr. Elgindy's home hung up the phone on a reporter who called seeking comment. Mr. Elgindy's attorney couldn't immediately be reached.
Write to Michael Rapoport at michael.rapoport@dowjones.com and Carol Remond at carol.remond@dowjones.com
Updated May 22, 2002 1:25 p.m. EDT
