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Feds sue Azteca
chief for stock deals
SEC charges
Salinas Pliego with scamming $110M
In the case of Martha
Stewart, it was a matter of selling a few thousand shares of
stock in a company she didn't manage, ImClone. In the instance of
Ricardo B. Salinas Pliego, it's a case of pocketing $110 million he
pocketed in illegal trades in a media company the Mexican
billionaire controlled that has the U.S. Securities and Exchange
Commission in a bunch.
Yesterday the SEC filed a civil suit against Salinas
Pliego, chairman of TV Azteca, accusing him of profiting hugely at
the expense of stockholders through elaborate schemes in which he
netted $110 million. The SEC suit seeks to collect those ill-gotten
gains and to bar Salinas Pliego from any significant role in
companies whose stocks are traded on U.S. exchanges.
In a statement yesterday, Salinas Pliego said the
charges by the SEC were false and that he intended to contest them
in a civil trial. The SEC suit has been filed in federal court in
Washington, D.C. But unlike domestic diva Stewart, who is doing time
in a federal prison in West Virginia, Salinas Pliego is not facing
criminal charges. Unlike Stewart, he has not been charged with lying
to investigators.
Salinas Pliego controls Azteca Holdings, parent of TV
Azteca, which has a huge presence in Mexico as its second-largest
broadcaster and is one of the fastest-growing Hispanic TV networks
in the U.S. TV Azteca depository shares are traded on the New York
Stock Exchange. Salinas Pliego is also under investigation by
Mexican authorities for the same transactions.
Also charged in the SEC suit are TV Azteca, its parent
company, and two other TV Azteca executives, Pedro Padilla, former
chief executive of TV Azteca, and Luis Echarte, current chief
executive of Azteca Americas, based in New York. In a separate
statement yesterday, TV Azteca said it has cooperated in the SEC
investigation and has considered but rejected several settlement
offers.
In essence, the SEC charges Salinas Pliego with trading on
insider information and then hiding the transactions from investors,
in violation of U.S. and Mexican securities laws. In one deal in
2003, he and a partner secretly bought debt in an Azteca unit
at a deep discount and then months later sold it back at face value,
turning a profit of $218 million.
"Recognizing an opportunity to reap a tremendous
personal profit at the expense of investors located in the United
States and Mexico," the SEC suit contends, "Salinas
coordinated a scheme to conceal from TV Azteca's board of directors,
the commission and the investing public the related party nature of
several transactions."
What damage the suit will cause TV Azteca is very unclear.
The company and the executives will likely end up paying hefty fines
over the transactions, most likely in a settlement with government
attorneys. But those fines are not expected to approach the amounts
they were accused of pocketing illegally.
TV Azteca is available in 77 percent of Latino homes in
the United States.
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Jan. 5, 2005
©
2005
Media Life
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