FINRA Probes Pre-Deal Trading Tied to Douglas Elliman's Shelved Anywhere Bid: Report

FINRA has opened an inquiry into pre-deal trading related to a shelved takeover approach for Douglas Elliman Inc. The watchdog has requested information from the brokerage, including a timeline of events leading up to the media coverage that sent Douglas Elliman's shares sharply higher. FINRA's review is a routine examination of unusual activity and may not indicate any violations.

The Financial Industry Regulatory Authority (FINRA) has opened an inquiry into trading activity at Douglas Elliman Inc. (DOUG) ahead of reports of a shelved takeover approach from Anywhere Real Estate Inc. (HOUS). The investigation, which began in June and was reiterated in August, is part of a routine review by FINRA's market abuse division to examine unusual trading patterns that may indicate misuse of material nonpublic information.

FINRA requested a comprehensive timeline and supporting materials from Douglas Elliman, including board minutes, communications with external advisers, and details on any pre-clearance requests made in the month preceding May 23, when news of the potential merger sent Douglas Elliman's shares sharply higher. The regulator also sought information on who knew about Anywhere's bid before it became public.

Douglas Elliman responded to FINRA's initial request in June, noting that director Patrick Bartels sought and received permission on May 7 to purchase $250,000 of company shares. The transaction was subsequently disclosed in an SEC filing. However, Reuters could not determine the specific reason for FINRA's review or whether it focuses on any particular transaction.

The inquiry highlights FINRA's increased regulatory scrutiny of potential insider trading and misuse of material nonpublic information. It underscores the importance of transparency and compliance with securities regulations in the financial industry.