D'Amato defends profit from trade

June 17, 1994|By New York Times News Service

WASHINGTON -- Almost every day for weeks, New York Sen. Alfonse M. D'Amato has risen on the Senate floor to deride Hillary Rodham Clinton's profits in commodity trades and to exhort his colleagues to approve hearings to examine the investments.

Now it turns out that Mr. D'Amato has also made a remarkable profit in a speculative foray.

Mr. D'Amato, the leading Senate critic of the Clintons' finances, made $37,125 in a single day last June in an initial public sale of stock in asmall California company called Computer Marketplace.

The senator is the ranking Republican on the Banking Committee, which regulates Wall Street and oversees the Securities and Exchange Commission. His highly profitable trading was made possible by a Long Island brokerage firm that at the time had serious SEC fraud charges pending against it and that has since been fined and sanctioned severely.

The senator said yesterday that his broker at the firm had bought 4,500 shares of Computer Marketplace at $4 a share and sold them later that same day at $12.25 a share. The stock has since fallen to as low as $1 a share, and yesterday it closed at $3.

As the computer company's underwriter, the brokerage firm, Stratton Oakmont of Lake Success, N.Y., could decide who could buy the stock. The Computer Marketplace shares were specifically allotted to the senator's account by his broker, and they were unavailable to ordinary investors.

Initial public offerings involve a limited number of shares that aresold to a few select buyers, often favorite customers. New offerings commonly show immediate profits, sometimes quite substantial. Investors who buy and later sell in the first day's trading often have a risk-free investment.

Still, there is no evidence that the senator's trading violated any laws. Other members of Congress, including House Speaker Thomas S. Foley, have made significant profits from initial offerings.

Mr. D'Amato tried yesterday to distinguish his investment record from Mrs. Clinton's, who parlayed a $1,000 investment in commodities futures into nearly $100,000 more than a decade ago. "I wish the Clintons had been as forthcoming as I have been," he said.

The senator found himself offering the same two explanations used by the first lady: Not all of his investments were winners, and the trades were executed by somebody else.

The founder of Stratton Oakmont, Jordan Belfort, had donated $2,000 to Mr. D'Amato's 1992 campaign and $100,000 to the Republican Party after the filing of the SEC suit. Federal election records filed by Mr. D'Amato show that he returned Mr. Belfort's donation as well as $6,000 from two other company executives after he learned of the federal investigation.

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