NEW YORK (Reuters) - A little-known New York City investment firm and its owner were charged with fraud on Thursday by the U.S. Securities and Exchange Commission for issuing a misleading press release announcing their offer to buy 51 percent of Barnes & Noble Inc.
The SEC said the Feb. 21, 2014 statement from G Asset Management LLC and Michael Glickstein misled investors because it did not disclose that G Asset had no ability to raise the $670 million needed to finance the offer.
It also said the release did not say that G Asset intended to profit once the offer became public by selling thousands of Barnes & Noble shares and call options it had recently bought.
Without admitting wrongdoing, G Asset settled with the SEC by giving up $175,000 of ill-gotten gains and interest, while Glickstein, 34, agreed to pay a $100,000 civil fine and accept a five-year securities industry ban.
Neither G Asset nor Glickstein could be reached for comment. A phone number and website for G Asset were no longer active. It was unclear whether the defendants have a lawyer.
G Asset had offered to take control of Barnes & Noble in a transaction valuing its shares at $22 each, roughly a 30 percent premium, making the largest U.S. bookseller worth $1.32 billion.
Alternatively, G Asset offered to buy 51 percent of Barnes & Noble’s Nook e-reader business, valuing it at $5 per share.
Barnes & Noble shares surged more than 11 percent seconds after the statement was issued, and the stock closed up 5.4 percent that day.
In a Feb. 2012 regulatory filing, Glickstein reported holding a 5 percent stake in Barnes & Noble.
He previously worked at Goldman Sachs Group Inc and the hedge funds Mercer Partners and Pequot Capital Management, according to industry records and his LinkedIn entry.
Regulators occasionally sue alleged perpetrators of hoax or misleading offers designed to boost stock prices.
In June, the SEC accused a Bulgarian man, Nedko Nedev, and others of making thousands of dollars trading in Avon Products Inc and two other companies after making bogus tender offers and press releases public.
Editing by Bernadette Baum