Michael Glickstein and his New York-based company, G Asset Management LLC, reaped $168,000 in improper profits from the higher share price prompted by a news release announcing the deal, the SEC said.
Without admitting or denying the regulator’s allegations, Glickstein and his company agreed to return $175,000 of alleged ill- gotten gains and interest. The firm also agreed to accept SEC censuring, and Glickstein agreed to pay a $100,000 civil penalty and minimum five-year ban from participating in the securities industry.
The enforcement action focused on the $22-a-share offer G Asset Management announced Feb. 21 as a purported effort to purchase 51% of Barnes & Noble‘s stock. The offer was approximately a 30% premium over value of the bookseller’s shares at the time, according to an SEC order.
As an alternative, the G Asset Management news release offered to acquire 51% of Barnes & Noble‘s Nook electronic reader business unit.
But the investment firm, with less than $3 million in assets under management, “had no ability to finance either of its purported purchase offers and no reasonable basis to believe it could finance the offers in the future even if Barnes & Noble accepted one of these offers,” the SEC said.
Glickstein and his company also failed to disclose their acquisition of approximately 14,000 shares of Barnes & Noble stock and roughly 30,050 call options that would gain value if the bookseller’s shares rose, the SEC said.
Seconds after the the G Asset Management release was issued, Barnes & Noble stock jumped from $17.05 to $18.99. The New York Stock Exchange automatically halted trading as a result of the more than 10% increase.
The stock ultimately closed at $17.69, up 5.4% for the day, following media reports that traders had questioned G Asset Management’s ability to fund a takeover.
Investors sold the bookseller’s shares earlier in September after the New York-based retailer announced its fiscal first-quarter loss had widened to $34.9 million amid falling sales of books and digital content. Barnes & Noble shares finished down about 1% at $12.97 Thursday.