The U.S. Securities and Exchange Commission has confirmed that it is carrying out an investigation of poker legend Doyle Brunson's US$700 million bid on July 8, 2005 to purchase WPT Enterprises.
The bid reportedly placed a 100 percent premium over the previous day's closing price of $17.75, which valued the company at about $357 million. Brunson and a group of unnamed investors delivered a term sheet proposing the purchase for WPT Enterprises to the company through Las Vegas-based law firm Goodman and Chesnoff, but the offer failed to provide sufficient information for WPT Enterprises to determine its credibility. The offer was then publicized through a press release that was distributed without consultation with WPT Enterprises and was consequently reported by hundreds of international media channels. The news reports caused WPT Enterprises' share price to skyrocket 59 percent to an all-time high of $28.20 the day the offer was announced.
The term sheet indicated that the offer would expire on July 12, although the company could ask for a one-week extension. After seeking more information from Goodman and Chesnoff on July 8, WPT Enterprises was informed that the firm was no longer involved in the matter. The company was never able to obtain any further information, and the offer expired without an extension on July 13, by which time WPT Enterprises share price had fallen to $20.23. Shares closed last Friday at $6.32.
The SEC is trying to determine whether Brunson's offer and decision to publicize it violated federal security laws. SEC regulators are working in court to enforce subpoenas issued to Goodman and Chesnoff attorneys David Chesnoff and Chaka Henry, but in addition to refusing to testify, Brunson has demanded that his attorneys assert attorney-client privilege by withholding documents and limiting their testimony.