It’s the kind of thing that the Securities and Exchange Commission might want to look into. First the company froze out investors with small holdings, cashing them out at a very low price. Within days, it began confidential talks seeking to find a buyer. It took a few months, but the net result was that the company was acquired for more than five times the price the small investors were forced to accept.
Had the small investors not been frozen out, the remaining shareholders, including the executives and directors who made the decision to eliminate the small investors, would have received only pennies per share less in the eventual merger, which was approved by the remaining shareholders in late June.
The S.E.C., in keeping with its normal policy, declined to comment on whether it had looked into the company, DEI Holdings, but there has been no indication that it is doing so.
Just starting an investigation could pose substantial political risks for the agency. The founder of the company, who remained a director and substantial shareholder even after he stepped down from management, is Representative Darrell E. Issa, a California Republican who is chairman of the House Committee on Oversight and Government Reform and has been a harsh critic of the S.E.C.
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