Shares of Avon Products jumped as much as 20 percent as a result of a seemingly bogus takeover offer which appeared on a US regulatory website.
The offer has raised security concerns about the site (www.sec.gov) which is maintained by the US Securities and Exchange Commission (SEC) and is a trusted source of news for investors.
A company calling itself PTG Capital Partners posted a mysterious filing claiming that it was willing to pay US$8bn for Avon Products. The company stated that it had submitted a bid of US$18.75 per share to the board at Avon, almost triple the stock’s closing price early yesterday.
The news seemed to signify an enormous premium for investors and sent shares soaring as high as US$8 per share. Avon’s stock closed up 40 cents, or 6 per cent on Thursday afternoon at US$7.07.
However, doubts about the legitimacy of the offer were raised when Avon stated that it had not received a takeover bid.
Furthermore, calls to the PTG Capital Partners, said to be based in London, went unanswered and arrived at generic voicemail messages of the type not normally used by professional businesses.
The dubious filing also contained errors such as the misspelling of PTG Capital Partners’ own name.
Despite PTG Capital Partners’ claiming to be based in London’s financial district, the filing lists information lifted from the website of Texas-based private equity investment firm, TPG Capital and at times even refers to the bidding firm as “TPG”.
A former lawyer at the SEC, Robert Heim, described the filing as a “blatant hoax” but noted that it was the first that he’d heard of to move the stock of such a big company.
When making filings, companies must first submit papers to the SEC with signatures of executives in order to secure a code that allows them to make the filings electronically, but vetting of each filing published on the site ends there, according to legal insiders.