Opinion ID: 1384382
Heading Depth: 2
Heading Rank: 4

Heading: Investigations

Text: In December 1999, the National Association of Securities Dealers (NASD) launched an investigation into the purchases of WF stock, based on increased activity during the months directly preceding the buyout. NASD sent out a questionnaire requesting information on the relationships among purchasers of stock during the relevant period and those persons who knew about the buyout. Instead of providing the information requested in the questionnaire, Blackwell responded by stating: I supplied no information about the transaction to any of the people on the list or any one [sic] else. When asked by anyone about [ ] Worthington Foods during this period, I replied that I was not able to comment about the company's stock, as is my standard practice. Blackwell eventually did disclose to NASD his relationships to his father, his son, Jack, Black Jack Enterprises, Hughes and Stacy, but continued to deny providing information to them about the buyout. It is important to note that in a three-day time frame, during the same month the NASD investigation began, Blackwell's telephone calling card was used from New York to call most of the people he was connected to who had purchased WF stock during the period under investigation, including Dale Blackwell, the Stephanses, Hughes and Stacy, Jack, and Voss. In 2000, the Securities and Exchange Commission (SEC) subpoenaed Blackwell to testify and to provide various documents regarding the matter. On January 9, 2001, Blackwell testified before the SEC that he did not disclose the information about the Kellogg buyout to anyone. He also responded to a later SEC inquiry, restating his position of non-disclosure. In February of 2002, Stephans-Blackwell, along with her parents, testified before the SEC, stating that they had not received insider information from Blackwell about the buyout. According to Stephans-Blackwell, she and her husband has previously agreed that no one would disclose that Blackwell had provided them with insider information about the buyout. In November 2000, Hughes and Stacy both provided sworn testimony before the SEC. Both testified that they did not receive inside information about the purchase of WF and did not base their purchases of WF stock on any such information. On May 15, 2002, Hughes again testified before the SEC. She stated that she never received money from Blackwell to help pay for WF stock and that the $30,000 check she received from RBA, discussed below, was not used to purchase WF stock.