Did famed poker pro Doyle Brunson try to manipulate the stock price of WPT Enterprises, the producer of the World Poker Tour, by making a fake tender offer? According to the Poker Prof:
Doyle Brunson is one of the best known professional poker players in the world and holds a record ten World Series of Poker gold bracelets including two WSOP main event championships. He continues to play in major poker tournaments and on Friday he made the final table of the Fourth Annual Five Diamond World Poker Classic's WPT Championship at the Bellagio Resort in Las Vegas where he finished third to collect $563,485 in winnings. He regularly host the world's highest limit poker players in his 'Doyle's Game' in the private 'Bobby's Room' at the Bellagio Resort.
Brunson's attorney, Alan Isaacman was quoted as saying, "We're confident that after the investigation it will be seen that the offer was a sincere offer and that there were no laws violated."
According to the SEC:
Doyle Brunson, prepared and delivered an unsolicited offer to buy WPT Enterprises, Inc., the publicly traded owner of the World Poker Tour, at a high premium over its then-market value. Shortly thereafter, the Commission contends, a public relations firm Brunson hired, and a website he endorses, announced the offer publicly. The Commission asserts that publication of this offer, widely covered in the media, triggered a steep rise in WPT's stock price on record trading volume.
As the Commission alleges, however, the Goodman firm and Brunson immediately stopped responding to WPT's requests for information about the offer. Instead, shortly after delivering the offer, the Goodman firm, at Chesnoff's instruction, abruptly withdrew from the engagement. When WPT publicly disclosed Brunson and his law firm's unresponsiveness, its stock price sharply declined, costing investors tens of millions of dollars in lost market value. Brunson's offer eventually expired by its terms.
The Commission is formally investigating whether Brunson's offer and its publication violated federal securities laws, including the antifraud provisions of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934.
Presumably the Commission is looking into, inter alia, whether Brunson ran a pump and dump on WPT stock. Any other theories as to what Brunson might have been up to?
For what it's worth, poker blogger John Caldwell thinks everything was above board:
After the WPTE's stock price had levelled off from its rumor-fuelled ride, cries of "pump and dump" were heard from several business insiders. Interestingly, potentially damaging accusations of stock-price manipulation fizzled quickly and everyone involved has escaped relatively unscathed.
My two cents on this deal was this was not any kind of "pump and dump" or manipulation scheme - all involved here are way too smart (and way too wealthy) to pull something like this for short-term gain. My guess is that this deal was about privatizing WPTE, so their new online gaming site WPTonline.com could take U.S. bets, and take advantage of the fact that the WPT is the sexiest brand in poker. Because WPTE is traded on a U.S. exchange, the company can't accept American players on their site. If that situation were to change, with the marketing monolith that the WPT has become, they would instantly become a major player in the incredibly competitive (and hugely profitable) online poker space. Again - this is just my own speculation - I have not talked directly to anyone involved.
Personally, I NEVER buy the "everybody was too smart" defense. Consider poor old Sam Waksal, who was smart enough to become the CEO of a major biotech company, but still was dumb enough to commit blatant insider trading when the FEC refused to approve his drug for sale. Besides which, you're talking about Doyle Brunson, who made a career out of bluffing and famously won two major poker tournaments playing a 10-2. Maybe he thought he could bluff the SEC?
FYI, Brunson has invoked his 5th Amendment rights and declined to cooperate with the investigation.
