SEC criticizes D'Amato for 1993 windfall stock deal GOP senator netted $37,125 profit in one day

June 07, 1996|By LOS ANGELES TIMES

WASHINGTON -- Sen. Alfonse M. D'Amato of New York, who has led Republican attacks on alleged ethical breaches by President and Hillary Rodham Clinton in the Whitewater case, has come under criticism himself in a government report that says he reaped one-day profits of $37,125 in a stock deal.

D'Amato, chairman of a special Senate committee investigating Whitewater for the past year, was criticized in a confidential report commissioned by the Securities & Exchange Commission that was made public by U.S. District Judge Joyce Hens Green. The judge said the SEC recommended its release, and D'Amato did not object.

The report said the brokerage house of Stratton Oakmont of Lake Success, N.Y., violated its own rules by allocating shares of a start-up issue, Computer Marketplace Inc., to D'Amato's account.

The deal is questionable, the report said, because it came at a time when SEC enforcement actions were pending against Stratton and while D'Amato was the ranking Republican on the Senate Banking Committee that has influence with SEC commissioners.

The report said the senator was allocated "a much larger number" of shares in the initial public offering than other customers with accounts of the same size. Although D'Amato was not accused of any wrongdoing, the report said the special treatment he received raises suspicions.

"Stratton's bending of its own rules to service a United States senator who, through his status as senior minority member of the Senate Banking Committee, wielded influence over the SEC raises suspicions about Stratton's motives," said the report by Charles Loewenson, an attorney and consultant to the SEC.

In the one-day transaction in December 1993 -- which the firm handled without D'Amato's involvement -- D'Amato's account purchased 4,500 units of Computer Marketplace shares and warrants at $4 a unit and "flipped" them hours later when the offering became publicly available and jumped in price to $12.25 a unit.

D'Amato said that when news reports first appeared three years ago about his profits, he decided to place his account in a blind trust and instructed the trustee "not to invest in initial public stock offerings" like that of Computer Marketplace.

"I took the proper actions so that we would avoid even the appearance of impropriety [and] remove any questions about my investments," D'Amato said.

Pub Date: 6/07/96

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