Archive for September 30th, 2011

Boca Raton Imperial Holdings stock drops 60% after FBI raid on headquarters

Friday, September 30th, 2011

In the hours before investors learned that Imperial Holdings was the target of a federal investigation, investors made a large number of bets that the company’s stock would plunge.

Volume for puts to sell shares – a bet that the stock price would fall – totaled 1,948 on Tuesday. That was 85 times the daily average since the options were listed on exchanges in February, Bloomberg News reports today.

Call volume was 35 times the normal activity. The most active options were October $5 puts, which accounted for more than half of all volume. Those contracts, which had never traded before that day, changed hands in blocks as large as 80, Bloomberg reported.

The options trading began at 11:25 a.m. Tuesday, Bloomberg said. The New York Stock Exchange halted trading of Imperial Holding (NYSE: IFT) at 1:42 p.m.

Investors learned that FBI agents had raided the company’s Boca headquarters at 2:26 p.m., when The Palm Beach Post reported the raid.

The spike in options activity raised eyebrows.

“This feels like a trade with prior knowledge of a news event, or extraordinarily good timing,” Ophir Gottlieb, managing director of client services at San Francisco-based Livevol Inc., told Bloomberg.

Imperial is a specialty finance firm that finances insurance premiums, buys life insurance policies from policyholders and buys structured settlements from plaintiffs in lawsuits.

Chief Executive Antony Mitchell, 45, and Chief Operating Officer Jonathan Neuman, 38, are among the Imperial Holdings employees “under investigation in the District of New Hampshire” in connection with the company’s life-finance business, the company said in a statement.

Imperial Holdings shares fell 65 percent Wednesday and have jumped 23 percent today.

FBI, police raid Boca Raton Imperial Holdings

Friday, September 30th, 2011

FBI agents and Boca Raton police closed the offices of finance firm Imperial Holdings on Tuesday as they executed a search warrant.

On Tuesday afternoon, an empty U-Haul truck was backed up to the entrance of the company’s headquarters at 701 Park of Commerce Blvd., apparently ready to be filled with documents.

An FBI agent at the scene said the search warrant came from the U.S. Attorney’s office in New Hampshire, which declined to comment. Imperial Holdings President Jonathan Neuman also declined to comment.

One person who spoke to an Imperial Holdings employee said workers were sent home while the FBI gathered documents.

It’s unclear what agents were looking for or what the raid means for shareholders of Imperial Holdings (NYSE: IFT, $6.30), but the New York Stock Exchange halted trading Tuesday afternoon. Shares in the Boca Raton-based company have fallen 41 percent since it went public in February.

Imperial Holdings lends money to policyholders to pay life insurance premiums. It also buys so-called structured settlements, awarded to plaintiffs in lawsuits who want to trade future payments for cash now.

The company reported a loss of $15.7 million in 2010 and lost money in 2008 and 2009. Imperial Holdings had 131 employees as of Dec. 31.