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Monday, Nov 9, 2009
The SEC later investigated whether or not Bush traded his stock in light of insider information that may have had an adverse impact on the company's stock price. An April 9, 1991, SEC memo found Bush had filed late insider-trading forms on four different occasions, and that SEC staff had opened an investigation "with respect to Bush's sale of 212,140 shares to [sic] Harken stock prior to Harken's announcement on August 20, 1990 of a loss of $23.2 million."
The SEC found that Bush had erred in filing late forms, but decided not to prosecute a case against him. In an October 1993 memo, the SEC declared "the investigation has been terminated as to the conduct of Mr. Bush, and that, at this time, no enforcement action is contemplated with respect to him." But the letter states that the investigation's termination "must in no way be construed as indicating that the party has been exonerated or that no action may ultimately result" from the investigation.
While the case against Bush did not go forward, many questions remain unanswered. Smith, the Los Angeles broker, insists he was approached by a client who, in spite of the company's problems, eagerly wanted a large chunk of Harken stock. Both Smith and the White House dismiss allegations that the purchase was made by an investor interested in bailing out the president's son.
Just who bought the stock remains a mystery. Records show that during the second quarter of 1990, only two institutional investors purchased large quantities of Harken stock. One was Harvard University, which owned 30 percent of Harken. The school purchased 918,450 shares during the spring of 1990. The other was a mutual fund management company called Quest Advisory, which purchased 357,900 shares. But the buyer of Bush's stock, meanwhile, remained anonymous.
White House spokesman Dan Bartlett told the New York Times that Bush never knew the identity of the buyer and said it was "very far fetched" to assume the buyer knowingly helped Bush in a moment of need.
Questions have also resurfaced about Bush's late filing of the insider-trading form when he sold his Harken stock. Though he made the sale in June 1990, the SEC did not receive his notice -- known as a Form 4 -- until March 4, 1991, eight months after the sale.
Bush's inconsistency in answering questions about the sale, and the late filing, have only raised more questions. Ten years ago, Bush blamed the SEC, saying the commission lost the Form 4. But when questions about the probe resurfaced last week, Bush spokesman Ari Fleischer said it was a "mix-up" by the Harken's lawyers. When asked again about the late filing at a press conference Monday, Bush said, "As to why the Form 4 was late, I still haven't figured it out completely. But nevertheless, the SEC fully looked into the matter. They looked at all aspects of it, and they did so in a very thorough way. And the people that looked into it said there is no case."
The White House has shrugged off the Form 4 fudging as no big deal, but memos from Harken attorneys to Bush indicate the lawyers thought otherwise. An Oct 5, 1989, memo from Harken counsel Larry Cummings to Bush states: "I could not find where Form 4 had been filed covering the 25,000 shares you purchased this year ... If you have no record of filing one, please sign the enclosed 5 copies of a Form 4 and return them to me."
A Form 4 is required by the SEC whenever corporate insiders sell or purchase stock. In his corporate accountability plan outlined in the wake of the Enron collapse, Bush himself noted the importance of filing such forms promptly, stating, "Corporate leaders should be required to tell he public promptly whenever they buy or sell company stock for personal gain."
