WSJ: Cuomo Probes Stock Sales at Arbitron

Improper Stock Sales At Arbitron Investigated

NEW YORK Attorney General ANDREW CUOMO is investigating whether executives at ARBITRON improperly sold company stock in advance of the radio ratings firm's disclosure of news that hurt its share price, reports THE WALL STREET JOURNAL.

CUOMO's office is focused on seven executives who sold a total of about $8 million in stock last year before the company disclosed a delay in the rollout of its PPM ratings system, a person familiar with the matter said. That disclosure and a related earnings warning contributed to a 15% drop in the company's shares in one day.

The review is in its early stages and any allegations of insider trading should be taken as only that -- just allegations. It remains to be seen where the facts will lead.

The insider-trading probe follows litigation CUOMO and the NEW JERSEY attorney general filed this month alleging that ARBITRON's new ratings system, the Portable People Meter, undercounts minority listening, which the company denies.

"We have begun a review of stock sales made before the PORTABLE PEOPLE METER delay announcement in NOVEMBER 2007," CUOMO spokeman ALEX DETRICK said in a prepared statement. "The review is in its early stages and any allegations of insider trading should be taken as only that -- just allegations. It remains to be seen where the facts will lead."

CUOMO's office is looking at whether ARBITRON executives -- presumably aware that criticisms over sample audiences for the PEOPLE METER could cause a delay in its rollout -- continued to issue positive statements about the system and sold stock before announcing that the company would push back the introduction of the PEOPLE METER in several big cities.

The sales by ARBITRON insiders grew particularly active in the weeks before the company's NOVEMBER 26th announcement that it would delay the PPM rollout and cut the company's earnings forecast for 2007 and 2008 as a result. The company's shares plunged after the announcement. 

Bouvard, Charlevoix, Dupree And Morris Targeted

ARBITRON Pres./Sale & Marketing PIERRE BOUVARD sold shares valued at more than $2 million in total in OCTOBER and NOVEMBER 2007, and about $90,000 in SEPTEMBER. Those sales were made under a stock-sale plan adopted in SEPTEMBER, according to securities filings. Pres./Research & Development OWEN CHARLEVOIS sold roughly $1.5 million in stock in OCTOBER, but none in SEPTEMBER. EVP LINDA DUPREE sold roughly $2 million in stock over OCTOBER and NOVEMBER, but none in SEPTEMBER.

CEO STEPHEN MORRIS sold about $300,000 a month in SEPTEMBER through NOVEMBER, but public filings indicate the sales were based on a stock-sale plan adopted in 2006.

A lawyer for BOUVARD declined to comment. Lawyers for DUPREE, CHARLEVOIX and MORRIS said their clients were cooperating with the investigation.

CUOMO's office is pursuing the investigation under NEW YORK state's Martin Act, which spells out a broad definition of securities fraud and can be used to pursue civil and criminal penalties. The 1921 law has become a hammer in recent years for NEW YORK prosecutors in cracking down on securities manipulation and misleading stock research on WALL STREET. Most recently, CUOMO used the law to investigate WALL STREET firms' handling of auction-rate securities.

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