State Controller Steve Westly, candidate for governor, while answering questions following his speech at Bakersfield College, said a story published about his stock trading history in the San Francisco Chronicle is “inaccurate.”
The story, ‘Westly’s History of questionable IPO stock trades,’ was published on Feb. 19 and was written by Lance Williams.
It was indicated in the story that Westly made a substantial profit in the stock market when dot.coms were thriving, through a way which experts Williams interviewed said was “consistent with participation in a banned stock market manipulation scheme” called laddering.
In response to the article, Westly said, “First I have done no laddering. I have no questionable stock trades. The Chronicle article is inaccurate. Second, my investment manager has done everything right. Third they even did a review of my investment manager’s firm and found no problems whatsoever,”
Williams, in a telephone interview with The Rip, responding to Westly’s comment said, “He hasn’t pointed to an inaccuracy. He didn’t like that we wrote the story we did.”
“The story reflected his perspective. It also reflected the perspective of all those experts who looked at his trading history and said it was consistent with this banned practice of laddering,” he said.
However Westly’s press secretary Nick Velasquez, in a telephone interview the next day said the Chronicle article was “quite misleading.”
“There were allegations made that something illegal was done in terms of a practice called laddering,” said Velasquez.
“However the paper did not provide evidence of any agreement between the controller and his money manager, which is a necessity for there to be proof or evidence of laddering,” he said.
Williams said their perspective on this issue was reflected in the story.
“(Velasquez) is reciting facts that are already in the story. We are just going over stuff now that was in the article. If you go back to the story you’ll see those very points were made, in fact quoting the campaign manager on that point. I am not sure what his complaint is. It was reflected in the story,” he said.
Velasquez said Williams never asked to speak to Westly, as it says in his article.
“Additionally in the article, the reporter makes reference to contacting the Westly campaign and asking to talk to the controller but being told that he’d have a spokesperson speak on his behalf. That is not accurate. That did not happen,” said Velasquez.
Williams called those allegations “ridiculous” and said “Who did they think I wanted to talk to?”
“If that didn’t happen I am willing to interview Mr. Westly on this topic at anytime he chooses as I told them that when they said this before, said Williams.
Also in regards to the Chronicle story, Velasquez said there was an SEC investigation which found no evidence of laddering.
“The SEC reference was made in the article but it was buried. Something that compelling should not be at the bottom of page six (on an internet printout).
“The story did not say that. The story said (the SEC) didn’t file allegations against Robertson Stephens. They didn’t allege laddering. They alleged other things, but that’s different than if there’s an exoneration,” said Williams.
He said there is litigation involving Robertson Stevens, the firm Westly used to purchase stocks.
“There is a big combined class action lawsuit in New York federal court accusing this particular firm among others of laddering and other banned market manipulation practices. Stock issuers that worked with this particular firm have settled their part of the lawsuit by agreeing to pay more that 1 billion dollars compensation or damages in response to accusations that they were involved in banned practices,” said Williams.
“I don’t know where he gets the idea that they’ve been exonerated by the SEC and in fact there are active allegations being pursued in civil court against Robertson Stephens,” he added.