Anheuser Busch Case Analysis

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Anheuser-Busch also experienced damages in both of its financial situation and intangible asset. The stock price of Campbell Taggart experienced a $5 growth in July due to a large increase in holdings by the insider traders, resulting in the increase of the takeover premium. Though Emanuel Goldman of Sanford C. Bernstein & Co. claimed that the acquisition price was reasonable, it could be lower without the insider trading. This lawsuit against Thayer and tippees would also cost Anheuser-Busch a big amount of money in legal expenses. Besides the economic loss, the reputation of Anheuser-Busch also experienced severe damages that its former board director, who was later assigned as the deputy secretary of Defense by President Reagan, was involved in insider trading scandal, and prompting Anheuser-Busch to file a lawsuit against a former board director of its own. This series of scandal might further pressure Anheuser-Busch’s stock price, resulting in the decline of its market value.

Giving the damages that caused by this incident, the stockholders of Anheuser-Busch as well as the previous Campbell Taggart stockholders who chose to convert their holdings into new Anheuser-Busch convertible preferred stock, are going to experience economic loss due to the decline of stock price. Anheuser-Busch also needs to be responsible to them besides the other damage that it experienced.

Decision

Anheuser-Busch should file a lawsuit against Thayer and the 8 tippees even though this is going to be a tough decision. Giving the severity and extent of damage of this incident, Anheuser-Busch should sue the tipees for compensation of civil penalty that is three times of the profit they made ($5.7M), $5M individual fine for Thayer, $4M individual fine for tippees who purchased over 20,000 shares of Campbell Taggart stock, $3M individual fine for tippees who purchased 10,000-20,000 shares, $2M individual fine for tippees who purchased 5,000-10,000 shares, and $1M individual fine for tippees who purchased under 5,000 shares. The compensation will be used for financial and reputation recovery of Anheuser-Busch and dividends for its stockholders to make up their lost.