The U.S. Securities and Exchange Commission (SEC) has begun a formal investigation into the $700 million bid for World Poker Tour Enterprises, Inc. (WPTE) launched by poker star Doyle Brunson and unknown investors this past July. The SEC is focusing its efforts on whether Brunson's seemingly spontaneous offer and its publication violated anti-fraud laws.
According to a statement released by the SEC, "Publication of this offer, widely covered in the media, triggered a steep rise in WPT's stock price on record trading volume."
The bid offered a 100% premium over WPTE's market value at the time, and sent the firm's shares rocketing by 55.4%. However, when WPTE revealed Brunson and his attorneys at Las Vegas firm Goodman & Chesnoff had ended communication, shares plummeted. The bid subsequently expired.
The SEC has filed an action in a federal district court in Fort Worth, Texas to try to enforce subpoenas issued to Las Vegas lawyers David Chesnoff and Chaka Henry of Goodman and Chesnoff, demanding they release documents to the court.
Brunson has declined to testify in the investigation, invoking his Fifth Amendment right against self-incrimination. He has also asked Chesnoff and Henry to withhold documents relevant to the case according to the attorney-client privilege, which the SEC is looking to set aside on legal grounds.
Alan Issacman, Brunson's attorney, said: "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."
Todd Steele, chief financial officer of WPTE, stated the company had every intention to fully cooperate with any ongoing investigation.