Douglas Elliman, the luxury real estate brokerage, is facing scrutiny from a Wall Street watchdog regarding trading activity preceding a failed takeover bid. The Financial Industry Regulatory Authority (FINRA) is investigating who knew about Anywhere Real Estate’s offer before it became public in late May, according to letters seen by Reuters and sources familiar with the matter. Douglas Elliman is a 114-year-old New York-based company known for brokering deals for multi-million-dollar homes. Its clients include the rich and famous, and its agents have starred in reality TV shows.
FINRA’s market abuse division requested details from Douglas Elliman in June and August about the sequence of events leading up to news reports of Anywhere Real Estate’s takeover bid. These reports caused Douglas Elliman’s share price to jump 50% on May 23. The watchdog’s requests included board minutes, a list of individuals privy to the offer, communications with advisors, and details of employee share trading policies. FINRA oversees trading in U.S. markets and refers hundreds of suspected insider trading cases to the U.S. Securities and Exchange Commission (SEC) annually.
Douglas Elliman’s response to FINRA highlighted that on May 7, board director Patrick Bartels sought and received permission to buy $250,000 worth of the company’s stock. This trade was later disclosed in an SEC filing. Reuters could not confirm what triggered the FINRA review or if it specifically focused on Bartels’ trade. Anywhere Real Estate made an initial offer of $5 per share on March 5, but later backtracked, leading to the deal’s collapse in early June.
According to sources, talks dissolved when Douglas Elliman deemed the revised offer inadequate. Recently, Compass agreed to acquire Anywhere in a deal valued at approximately $4.2 billion. Spokespeople for Douglas Elliman, FINRA, and the SEC have declined to comment on the ongoing investigation.
