Oct. 7, 2010
Alaska Air Group Chairman and CEO Bill Ayer says he did nothing iniquitous following a Bloomberg News report that the U.S. Securities and Exchange Commission is investigating him for possible insider-trading violations.
The SEC probe concerns whether he helped hedge fund Donald Smith & Co. profit from confidential information in its purchase of shares in Puget Energy just before regulators okayed a $3.89 billion takeover in 2008. Shares in Washington state’s largest utility jumped 21 percent following news of the buyout.
Mr. Ayer is included in the investigation because Donald Smith was Alaska Air’s No.1 investor while he was also serving on Puget Energy’s board. Mr. Ayer is now chairman of the board.
“I never provided any material non-public information about Puget Energy to Donald Smith & Co., or anyone else,” Mr. Ayer responded in an e-mail to Bloomberg.
It’s important to note that Mr. Ayer and the hedge fund have not been accused of misconduct.
“The Alaska Air Group board of directors has full confidence in Bill and his high ethical standards,” said Marc Langland, the board’s lead independent director.
In addition to his duties at Alaska, Mr. Ayer is chairman of the Seattle branch of the Federal Reserve Bank of San Francisco.
Alaska Air shares dropped 8 percent immediately following the Bloomberg report. At the end of the day, shares were down 4.61 percent.
In the 2008 deal, Donald Smith doubled its shares to 6 million in Puget Energy. They were valued at $160 million following the leveraged buyout. After Washington state regulators challenged the sale, other investors – Tradewinds Global Investors LLC and American Century Cos. Inc. – sold their holdings in Puget Energy.
My Biz Coach sense: It’s hard to believe that the SEC‘s investigation will be able to implicate Mr. Ayer. Let’s hope this gets settled quickly. Alaska is too great an airline and is worthy of maximum investor confidence.
From the Coach’s Corner, here’s the Bloomberg report.