Jeffrey Epstein May Be Gone. But His Crimes Could Still Do Damage to These Public Companies.
Big problems. Scandals. Crimes. A company “cooking the books” or manipulating market prices. An airplane tragedy that may have been affected by human error or rushed deadlines or an understaffed governmental agency. A politician’s son who received a curiously large sum of money, from a company that may have sought to curry favor with the politician. These are situations that tend to unfold in news stories over multiple months, gaining larger audiences as additional facts, witnesses and participants are revealed.
And then there’s Jeffrey Epstein, a convicted criminal who may have been part of a much larger, international criminal endeavor; who may or may not have taken his own life, been murdered, or been whisked away by either fellow criminals or a witness protection program. It’s a situation that makes for fascinating headlines. Grab the popcorn!
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But then one day, the CEO of a famous company has his name linked to Jeffrey Epstein, and suddenly this situation is not so amusing, because you own shares of stock in that famous company.
If you’re an experienced investor, here’s what you know: Each time the CEO makes negative headlines, more investors take a sour view of the stock. They might sell their shares, which can drive the price down. Other investors might short – or bet against – the stock, which can also drive the price down. The company might lose clients who don’t want to be associated with a company that had close ties to Jeffrey Epstein, which in turn could lead to lost revenue and profits. The company’s sullied reputation could lead to a drop in sales to consumers, compounding the company’s financial problems.
Do you own shares of stock in a company where a current or former key managerial figure had a close relationship with Epstein? Here are names of some prominent people and companies that have been credibly linked to Jeffrey Epstein and/or his alleged crimes:
4 Stocks Potentially Affected by Jeffrey Epstein
Leslie Wexner is the founder and CEO of L Brands (LB), parent company to the Victoria’s Secret retail apparel company. Mr. Wexner had a decades-long relationship with Epstein that included Power of Attorney over Wexner’s financial affairs and gifts of assets to Epstein.
Leon Black is the founder and CEO of Apollo Global Management (APO), an alternative asset manager. According to the New York Times, Mr. Black’s relationship with Epstein was “largely limited to tax strategy, estate planning and philanthropic advice.” The relationship was serious enough that Mr. Black felt compelled to explain it to Wall Street analysts and investors in a conference call and a letter to investors in July 2019.
George Mitchell, former U.S. Senator and former Chairman of Walt Disney Co. (DIS), is alleged to have participated in Epstein’s crimes. Disney is also linked to Epstein through their wholly-owned subsidiary ABC television. In a widely reported story this fall, ABC News anchor Amy Robach did a tremendous amount of research into Epstein’s crimes. The network then refused to air the story.
Bill Gates, co-founder of Microsoft (MSFT), has reportedly met with Epstein numerous times, flown on Epstein’s plane, undertaken a financial transaction with Epstein, and publicly commented on their relationship.
What to Do With These Stocks
Be cautious; there’s no need for panic. Here’s how I would handle the situation if I owned shares of a company that was tied to a widely-publicized and negative news story: I would first use a stop-loss order on my stock, and I would not later succumb to an inclination to relax and cancel the stop-loss. That’s because problems and scandals have a way of becoming more and more serious as months pass, when new, damaging information is revealed. Don’t let your guard down!
Then I would review my ownership of the stock. Does the stock still fit with my investment strategy? If it does not meet your investment criteria, sell the stock and be done with the worrying. If it does meet your investment criteria, keep the stock, use a stop-loss order for downside protection, and monitor both news stories and price action in case new information changes your outlook for the stock.
My experience with problematic news stories tells me that there is much more information that will be slowly revealed in relation to Jeffrey Epstein’s crimes and acquaintances in the coming year. Continue to monitor your affected stock positions until the entire Jeffrey Epstein scandal seems to be completely resolved.