Mysterious firm PTG Capital Partners supposedly offered to buy Avon Products Inc for three times its worth, making its shares temporarily soar as much as 20 percent. What prevented the merge from happening? The firm doesn’t actually seem to exist.
Yesterday morning (at around 11:30 am New York time), PTG issued a SEC (Securities and Exchange Commission) filing, announcing their intent to acquire the well known cosmetics company for at $18.75 per share, adding up to a total of $8 billion.
Avon Inc would have had a nice surprise, except they gave a statement informing that they received no takeover offer whatsoever. The company can’t even confirm PTG Capital Partners even exists as all of their calls to the company went unanswered.
When Fortune investigated PTG and their offer to Avon, they didn’t find much evidence supporting the existence of PTG, or the existence of its law firm, Trose & Cox LLC. They both have a phone number and a street address, however neither of them have any web presence, and when Fortune themselves gave these companies a call, they didn’t have much more success than Avon did.
About $91 million worth of Avon shares were traded yesterday as a result of the hoax and an ongoing investigation is trying to determine whether or not this was an attempt to manipulate the market.
The event raised serious concerns about the security of the S.E.C.’s Edgar database. Edgar is used by publicly traded companies and money managers alike in order to make official regulatory filings.
In their defense, S.E.C. send an email statement saying that under federal securities laws, filers are responsible for the truthfulness of their own filings, and that they’re subject to enforcement actions when they are false or misleading.
The fake firm claimed to be a London-based investment firm, and their “About PTG Partners” pages boldly states: “PTG Partners is a global private equity investment firm, focused on leveraged buyout, growth capital and leverage capitalization, investment in distress companies and turnaround situations”.
They call themselves problem solvers, partners and pioneers, and claim that their approach to investing helps them recognize value, or potential for value, where others can’t see it. They believe their contrarian philosophy has delivered consistent and outstanding performance because they dedicate the right mix of capital, time, and management and operational expertise, to make successful investments out of challenging situation.
Their arrogant descriptions end with PTG Partners saying that their operational and management expertise enable PTG Partners to pursue turnaround opportunities that others are often unwilling to consider.
It is important to note that PTG also called itself TPG in several places, and that their statement had typographical errors. TPG, a real equity firm based in Texas, said it had no affiliation with PTG.
Robert Heim, a former lawyer at the SEC, informed that there are fake filings every year, however they typically involve fictional companies that don’t exist, not ones that try trick people into believing they’re real companies such as TPG.
Image Source: cosmeticideas.com