Elliman-Anywhere merger talks triggered insider trading probe
Soon after Anywhere reportedly pursued a deal with Douglas Elliman, newly obtained letters reveal a regulatory agency began asking who knew what — and when.
A regulatory agency that tracks investor trading is reportedly asking who knew about a possible Douglas Elliman-Anywhere Real Estate merger before news of the partnership — which ultimately did not come to pass — became public.
Bloomberg first reported the proposed deal on May 23, and Douglas Elliman's share price jumped shortly thereafter.
FINRA's request: Two letters obtained by Reuters reveal what was happening behind the scenes following the news of the potential merger, the media outlet reported this week. According to Reuters, the Financial Industry Regulatory Authority (FINRA) sent Douglas Elliman a letter on June 9 asking for "a detailed written chronology of the events which preceded" the media reports. That chronology was to include information like board minutes and names of individuals who knew about any merger discussions.
The inquiry, which Reuters suggests "is in the early stages," is part of "a routine review of trading" and "should not be construed as an indication that FINRA has determined that any violations...have occurred," the letter noted. FINRA, which the U.S. Securities and Exchange Commission oversees, is charged with monitoring financial markets to flag potential fraud, insider trading and other manipulations.
How Douglas Elliman responded: Douglas Elliman's June 25 response, also obtained by Reuters, identified one early May stock trade request from a member of its board of directors. The letter indicated that the brokerage approved the trade, which was valued at $250,000.
A different deal for Anywhere: Talks of an Elliman-Anywhere merger had ended around the time FINRA notified Douglas Elliman that it was reviewing trading activity, Reuters reported.
But for Anywhere, a much larger deal was coming. On Sept. 22, Compass announced that it is acquiring Anywhere, a move that will create the world's largest brokerage.
FINRA declined Real Estate News' request for comment on Sept. 26. Real Estate News has also reached out to Douglas Elliman for comment and will update this story if and when a response is received.