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Rating:Another Suitor Approaches Value Line Funds Not Rated 3.0 Email Routing List Email & Route  Print Print
Friday, September 03, 2010

Another Suitor Approaches Value Line Funds

News summary by MFWire's editors

Another aspiring buyer has approached Value Line Inc. [see profile] about selling its mutual fund business. The Wall Street Journal's Eleanor Laise reports today that Finra and NYSE regulatory director Richard Pechter offered on Wednesday to buy the fund firm from its beleaguered parent.

However, an attorney for Howard Brecher, Value Line's acting chairman and CEO, told the WSJ that "Value Line hadn't received Mr. Pechter's offer."

Pechter, a former chairman of Donaldson, Lufkin & Jenrette's financial-services group and a Value Line shareholder, isn't the only one that has expressed interest in buying Value Line Funds.

Yesterday, the WSJ reported that Guggenheimer Partners subsidiary Guggenheim Transparent Value approached the Value Line funds' board this spring about taking the funds over.

The offers stem from a recent scandal involving the SEC. Last year Value Line, then-CEO Jean Buttner and ex-chief compliance officer David Henigson agreed to pay almost $45 million to settle in the face of SEC claims that Value Line inflated brokerage commissions. As part of the settlement, Buttner (who stepped aside, handing the reins to acting chairman and CEO Brecher) cannot be affiliated with the funds or Value Line's broker-dealer, yet a holding company Buttner controls owns the bulk of Value Line's shares. She can still work with its financial publishing business (which releases the Value Line Investment Survey).

In response to the settlement, in July Value Line's board decided to transform the fund business into a trust (with profits split between Value Line on one side and the five trustees running the fund business on the other).

According to the WSJ, Pechter sent a letter to Brecher on Wednesday, offering to throw in $250,000 in cash while he and his affiliates take the place of the fund firm's trustees in the deal. 

Edited by: Neil Anderson, Managing Editor

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