PPD short candidate....
NEW YORK (Dow Jones)--The New York Attorney General's Office and the SEC are looking into the business practices and the stock market activity of Pre-Paid Legal Services (PPD), The New York Post has learned.
The Post has reported that Attorney General Eliot Spitzer's people were looking into a hedge fund, Gotham Partners, which issued a flattering report on Pre-Paid and posted it online. Investigators are hearing allegations that Pre-Paid may have been in cahoots with Gotham to inflate the price of its stock, the report added.
The Attorney General's Office, the SEC, and Pre-Paid declined comment. But a source close to the investigation confirmed that authorities are looking into how Pre-Paid's stock managed to get up to $30 a share on Gotham's
report. It's selling at around 30% less now that Gotham has sold shares, the Post reported.
What's got investigators' attention was that Gotham reportedly sold a large number of Pre-Paid shares as the stock was climbing, even though its research report indicated a hope that the company's shares would more than double from the $30 level.
Someone familiar with the investigation says subpoenas have gone out and there's a "let's see where it goes" attitude with regard to the results, The New York Post reported in its Thursday editions.
(END) Dow Jones Newswires
01-23-03 0345ET
