Buying at Forty-Five

A well-known arbitrageur had built up a large stake in a conglomerate and was negotiating to sell it back to the company. He called the chief trader of an investment firm and said he would not pay more than $45 a share and that it would be great if the stock traded at $45; the trader replied that he understood. Shortly afterwards the trader bought 75,000 shares, lifting the price from $44.75 to $45. Minutes later the arbitrageur and another investor sold 6.7 million shares to the company at $45. The trader's firm lost about $64,000 and the stock closed lower. Prosecutors said he bought solely to push up the price. The defence said he bought for legitimate investment reasons and never agreed to manipulate anything.