SEC Investigation
On December 14, 2005, the Securities and Exchange Commission filed an action to enforce subpoenas issued to the attorneys of Doyle Brunson regarding his unsolicited offer in July 2005 to buy WPT Enterprises, Inc., the publicly traded owner of the World Poker Tour, at a high premium over its then-market value. Shortly thereafter, the Commission contends, a public relations firm Brunson hired, and a website he endorses, publicly announced the offer. The Commission asserts that publication of this offer, widely covered in the media, triggered a steep rise in WPT's stock price on record trading volume.
When pressed for details, Brunson and his lawyers immediately stopped responding to the WPT and the media. Instead, after delivering the offer, Brunson withdrew from the engagement. When the WPT publicly disclosed Brunson and his law firm's unresponsiveness, its stock price sharply declined, costing investors tens of millions of dollars in lost market value. The offer eventually expired by its terms.
The SEC is formally investigating whether Brunson's offer and its publication violated federal securities laws, including the anti-fraud provisions of the Securities Exchange Act of 1934. As part of its investigation, the SEC subpoenaed documents and testimony from Brunson's lawyers. However, Brunson, who has invoked his Fifth Amendment right against self-incrimination and declined to testify in the investigation, directed his lawyers to withhold certain documents and not to testify on critical aspects of the offer, under the attorney-client privilege and work product doctrine. The subpoena enforcement action seeks to set aside these privileges on various legal grounds, including the crime-fraud exception, and to compel Brunson's firm to provide the requested documents and testimony. The court has not yet set the Commission's action for hearing.
The case was reported to have been dropped by the SEC in 2007.
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