SEC probing Sirius stock trading
Did somebody have advance knowledge that Howard Stern was going to sign with Sirius Satellite Radio? Frequent Stern guest Chaunce Hayden has been subpoenaed to appear before an SEC investigator this Wednesday to answer questions about what he may have heard prior to the October 6th announcement (10/7/04 RBR #196) that the self-professed "King of All Media" would jump to Sirius in 2006 when his current contract with Viacom's Infinity ends.
Hayden told RBR/TVBR he doesn't know why the SEC wants to talk to him, except that he had predicted in an appearance on a celebrity gossip show for ABC News On Demand (the network's broadband Internet subscription service) that Stern would soon announce that he was moving to Sirius. Hayden, who is Editor In Chief of Steppin' Out magazine, a regional entertainment magazine in New York and New Jersey, said he'd heard lots of speculation that Stern would move to satellite radio.
"He had made the comment that he had big news coming. On the air, he had said 'I have big news coming. I'm going to make the announcement in a few days.' So that's why I made my announcement, saying this is what his news is going to be - - that he's going to satellite radio," Hayden said. Since XM had already signed Opie & Anthony, he said it was pretty easy to surmise that Stern's deal would be with Sirius. "It didn't take a rocket scientist to figure that out or to be bold enough to make such a prediction," he said. "And if I'm wrong, so what? It's gossip." Hayden said he can't even recall when he made the prediction on the "Tattle Tales" show for ABC News On Demand, but that it was probably a week or two before Stern's announcement.
As it happened, Hayden was a guest on Stern's show on October 6th when he actually announced the Sirius deal. As a journalist, Hayden took advantage of his good luck and asked Stern several questions on the air. "Maybe those two things combined was enough to [raise] suspicion by the SEC," he said. Although he got little information from the SEC in a phone call, Hayden said they did ask him whether anything out of the ordinary happened in the studio on the day Stern made the announcement. He'd hung up on the SEC investigator several times at first, thinking it was one of Stern's cronies goofing on him - - but realized it was for real when the subpoena showed up.
For his part, Hayden said he's never owned any stock except through a 401(k) retirement plan which is invested in mutual funds. "You don't know how happy I am that I didn't buy Sirius stock. I was kicking myself two days ago, saying I was so stupid. Now I'm jumping for joy," Hayden told RBR/TVBR.
RBR observation:
Although Sirius' stock was in a general climb that took it up about 40% in the two weeks prior to Stern's announcement, it looks like the SEC is likely to focus on trades made on September 29 and 30. The price jumped 15% to 3.02 on the 29th and trading volume nearly tripled to over 105 million shares. Volume was nearly 95 million on the 30th and the price moved up modestly to 3.20, before both the price and volume fell back (although still above ordinary levels) the next day. When Stern made the actual announcement on October 6th, the stock price shot up 15% for the day to 3.87 and volume skyrocketed to nearly 344 million shares.
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