Wednesday, 22 February 2017
Last updated 2 hours ago
May 20 2014 | 2:27pm ET
Wynnefield Capital founder Nelson Obus’ lawyer insisted yesterday that his client is either innocent or “the lamest insider trader in history.” The Securities and Exchange Commission expressed a willingness to accept the latter.
The civil trial of Obus, Wynnefield and two others opened yesterday with opening statements. SEC lawyer Paul Kisslinger told the jury that Obus went so far as to brag about his inside dope, telling the jury that Obus and the other defendants “all knew what they did was wrong.”
“It’s as if he knew which horse was going to win the Belmont Stakes before the race began,” Kisslinger said.
In his own opening, Obus lawyer Joel Cohen ridiculed that theory, asking whether Obus would have openly spoken of his knowledge if he knew it was criminal. “The problem,” Cohen said, “is that confessing is the opposite of concealing. After 13 years, this is the best the SEC is going to offer you: two witnesses’ uncorroborated memories.”
The SEC alleges that Obus’ analyst, Peter Black, learned from a friend at GE Capital about Allied Capital Corp.’s planned acquisition of SunSource back in 2001. Black and his friend, Thomas Strickland, are also on trial.
According to the regulator, Obus boosted his stake in SunSource after learning of the deal, earning Wynnefield $1.3 million. Obus’ lawyers are expected to argue that their client’s actions look nothing like insider trading, with Obus waiting two weeks to act on the information about a stock he already owned, and pointing out that Wynnefield actually sold some of its SunSource shares before the deal was announced.