Chad Deal 9:17 p.m., May 25
How Issa Raped Small Investors
Floyd Norris has a column in today's (Aug. 19) New York Times showing how North County's Rep. Darrell Issa screwed small investors in a Vista-based company named DEI Holdings, maker of such things as vehicle security devices -- Issa's road to riches. Issa was the founder.
The company went public in 2005 under the name Direct Electronics. In the offering, Issa's family foundation -- er, uh fortuitously -- got $3.8 million and the rest of the proceeds went to pay off debt. None went for company operations. As those operations soured and the stock plunged, the company decided to "go dark," in Wall Street patois, or withdraw its registration with the Securities and Exchange Commission, an agency of which Issa has been quite critical.
To do that, the company had to get the number of shareholders down to fewer than 300. The company did it through a reverse 1-for-240 stock split, followed by a 240-1 regular split. More than 300 shareholders were forced out. The company was sold, and those who had bought 2000 shares lost 72%. But those who had only 200 shares lost 95%. Question: will the SEC take on its persistent critic? Second question: why hasn't the agency probed Issa earlier?