A Wall Street watchdog is zooming in on Douglas Elliman.
The Financial Industry Regulatory Authority is in the early stages of a probe into trading activity ahead of a failed takeover bid for the New York-based brokerage, according to letters reported by Reuters and people familiar with the matter. The inquiry is centered on who at Elliman knew about Anywhere Real Estate’s offer before Bloomberg broke the news May 23, sending Elliman’s stock up more than 30 percent by the end of that day.
Anywhere, the parent company of Corcoran, Sotheby’s International Realty, Coldwell Banker and Century 21, pitched a $5-a-share deal in March, pulled back in April, and lobbed a revised offer in late May. Talks collapsed by early June.
According to letters dated in June and August from the agency’s market abuse division — which noted that the inquiry isn’t a sign of wrongdoing — the regulator is seeking a “detailed written chronology” of events from Elliman, plus board minutes, trading policies and a list of anyone aware of the offer.
While the agency told Elliman the review was “routine,” it requested records on stock trades leading up to the news leak. Elliman disclosed that board member Patrick Bartels sought clearance on May 7 to buy $250,000 worth of shares — the same day Anywhere’s advisors signaled they were working on a new proposal. The company signed off on the purchase, which was later reported in an SEC filing.
Bartels has not commented publicly. Elliman and FINRA declined to comment to the outlet, while Anywhere did not respond to requests for comment.
For Elliman, the probe adds to a pile of headaches surfaced in the last year: multiple quarters of losses, an activist shareholder campaign and a series of abrupt executive shakeups.
Despite the talks with Elliman, Anywhere landed a seismic acquisition deal with Compass. Announced this week, the all-stock merger agreement values Anywhere at $1.6 billion, and Compass shareholders will own 78 percent of the combined entity in exchange for taking on the conglomerate’s $2.6 billion in debt.
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