This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Compudyne: 'Damaged' in FBR Scandal

Friedman Billings Ramsey (FBR - Get Report) may not be out of the woods yet on a stock sale that already has landed the firm in talks with securities regulators.

The Virginia-based investment outfit still could face potential litigation from Compudyne (CDCY), the Maryland security-systems manufacturer that hired Friedman Billings four years ago to handle the $12 million deal.

Martin Roenigk, Compudyne's chairman and chief executive, says the small-cap company is considering "whatever remedies" are available to it in the wake of the revelation that Friedman Billings and three of the firm's top executives may have engaged in insider trading with regard to the company's 2001 PIPE, or private investment in public equity, deal.

FBR shocked Wall Street this week with the news that it proposed a $7.5 million settlement of the matter to securities regulators. The company said a charge associated with the settlement would slash first-quarter earnings.

One of the executives involved in discussions with regulators is Emanuel Friedman, a co-founder of FBR. He announced three weeks ago that he's stepping down as co-chairman and co-chief executive. Friedman's decision to suddenly leave the firm is related to his role in the scandal, sources say.

Compudyne "feels damaged and intends to pursue whatever remedies will result from that," says Roenigk, who has had lawyers looking into the matter for several months.

Bill Dixon, a Friedman Billings spokesman, declined to comment on the possibility of Compudyne suing the firm.

Trying to estimate Compudyne's potential damages is difficult, especially because much is still unknown about Friedman Billings' alleged misdeeds. People familiar with the inquiry say regulators have focused on trading activity by Friedman Billings in shares of Compudyne in advance of the PIPE becoming public. The investment firm may have been trying to profit from the typical decline in the shares of company that undertakes a PIPE deal.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,652.56 -20.04 -0.11%
S&P 500 2,054.08 +2.26 0.11%
NASDAQ 4,763.6890 +5.81 0.12%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs