Reply #42: K&R!!! Don't forget the "timely" stock sales of W and Harken...

[KansDem]

Published on Wednesday, October 30, 2002 by the Boston Globe
Board Was Told of Risks Before Bush Stock Sale
Harken memo went to SEC after probe

by Michael Kranish and Beth Healy

WASHINGTON - One week before George W. Bush's now-famous sale of stock in Harken Energy Corp. in 1990, Harken was warned by its lawyers that Bush and other members of the troubled oil company's board faced possible insider trading risks if they unloaded their shares.

The warning from Harken's lawyers came in a legal memorandum whose existence has been little noted until now, despite the many years of scrutiny of the Bush transaction. The memo was not received by the Securities and Exchange Commission until the day after the agency decided not to bring insider-trading charges against Bush, documents show.

It appears that Mr. Bush had insider information, that he was told that such insider information could be considered material, was given express warnings about what the consequences could be.

The memo, a copy of which was obtained by the Globe, does not say directly whether Bush would face legal problems if he sold his stock. But it does lay out the potential for insider-trading violations by Bush and other members of the Harken board, and its existence raises questions about how thoroughly the SEC investigated Bush's unloading of $848,000 of his Harken stake to a buyer whose name has not been made public.

The SEC cleared Bush after looking into whether he had insider knowledge of an upcoming quarterly loss at Harken. But the SEC investigation apparently never examined a key issue raised in the memo: whether Bush's insider knowledge of a plan to rescue the company from financial collapse by spinning off two troubled units was a factor in his decision to sell.

The plan engineered by one of the company's largest shareholders, the endowment fund of Harvard University, raised uncertainty about the value of Harken after the breakup. The question is, did Bush sell believing that the stock might soon dip?

''It would certainly have raised a question in the mind of a reasonable investigator,'' said Theresa Gabaldon, a professor at George Washington University and author of the textbook ''Securities Regulation.''

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Common Dreams

Yeah, it's nice to have low friends in high places...:grr: