Leaked Doc Shows How Barry Diller Protected Himself Against IAC's Tumble
Wikileaks obtained a JP Morgan presentation put together for media mogul Barry Diller, showing Diller how to protect his personal wealth against any, erm, hypothetical future declines in the value of his internet conglomerate IAC. The techniques outlined in the 31-page document (PDF) neatly circumvent restrictions on insider trading but are really only useful for insiders who anticipate their company shares will decline, since stock price increases are limited along with declines. For example, here was the plan presented to Diller in February 2007:
In the first scenario presented to Diller above, "Structure A," his shares would be guaranteed at their then value of $40.58, but Diller could never realize a price increase to beyond $44.64 per share.
Sure enough, in the year after entering in to the "complex series of transactions," IAC shares declined 50 percent, while Diller was protected, at least according to the leaker who provided the document.
Government or company regulations may have prevented Diller from outright selling his shares at the time, but even if they hadn't, announcing a "pre-arranged stock trading plan" in a press release sounds so much better than disclosing in an SEC filing that you are dumping a bunch of shares, as illustrated by the sample press release included in JP Morgan's presentation to Diller. Here's the top of one:
Not that Diller's tactics are surprising; these sorts of crafty tactics are exactly how the ruthless mogul retains control of his company against the wishes of his dominant shareholder and apparent teacher, John "Darth Vader" Malone.