Capital Markets

Did Spurned Analyst Spur Altera Probe?

The SEC's San Francisco office has reportedly requested copies of letters, E-mails and phone-call recordings between analysts and the microchip maker.
Stephen TaubSeptember 22, 2005

The Securities and Exchange Commission is looking into Altera Corp.’s dealings with Wall Street analysts, according to Dow Jones, citing an analyst contacted by the SEC during the investigation.

The analyst reportedly stated that the SEC’s San Francisco office had requested copies of letters, E-mails and phone-call recordings with Altera, a San Jose, California-based maker of programmable microchips.

In July, veteran Wells Fargo Securities analyst Tad LaFountain reportedly dropped coverage of the company, claiming that it was not communicating with him or letting him ask questions on earnings calls. LaFountain noted that he would replace Altera with a company “that takes a more appropriate view of the role of independent investment research,” according to an account in The New York Times.

Altera CFO Nathan Sarkisian then issued a public apology in a company press release. “Regrettably, as a result of our action and the ensuing press coverage, some have concluded that our intention was to manipulate opinion,” he stated. “In retrospect, our decision to disengage was in error, and I apologize to Mr. LaFountain, our investors, and the investment community.”

LaFountain had a “sell” rating on Altera at the time, but Sarkisian denied ever stopping relations or challenging an analyst because of a rating, according to a contemporary report.

The subject of the SEC’s reported investigation is unclear. Altera’s actions do not appear to violate Regulation Fair Disclosure, which bars selective release of information to a few individuals.

LaFountain, who no longer works for Wells Fargo, could not be reached for comment by Dow Jones; the SEC would not provide comment to the wire service. An Altera spokeswoman would not comment except to say she had not heard of the probe.

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