SEC Nixes Alleged Vote-Buying Scheme

On July 21, the Securities and Exchange Commission (SEC) charged Perry Corp., a New York investment adviser, with securities law violations for failing to report substantial stock purchases in order to vote the shares in favor of a merger. Without admitting or denying the SEC's findings, Perry consented to an entry of an administrative cease-and-desist order and agreed to pay a fine of $150,000. This action by the SEC underscores its determination to clamp down on vote-buying schemes in which investors enter into a series of hedging transactions through the use of derivative instruments to avoid any financial exposure from their ownership of a merging company's shares.

According to the SEC's cease-and-desist order, Perry failed to file required disclosure under Section 13(d) of the Securities Exchange Act of 1934 (Exchange Act) within 10 days of acquiring beneficial ownership of more than 5% of the shares of Mylan Laboratories Inc. At the time of the purchases, Mylan