Word: sec
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Dates: during 1970-1979
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...Securities and Exchange Commission suspended trading in shares of Westgate-California Corp., the conglomerate of which Smith is chairman, after its accountants withdrew their certification of the company's 1972 financial statements. Then last week two lengthy federal investigations into Smith's affairs suddenly bore fruit. The SEC filed a suit in San Diego federal court alleging that Smith, Westgate President Philip A. Toft, Michael J. Coen, a former Westgage director, and several corporate defendants had systematically looted the conglomerate of some $100 million in assets. In a separate action, the U.S. Comptroller of the Currency moved against...
...details of the alleged looting of Westgate's holdings are exceedingly complex. Essentially the SEC charges, which Smith dismisses as "unfounded," say that he, Coen and Toft arranged sales of the company's holdings to various co-defendants at bargain prices. The purchases purportedly were made for cash, but the SEC says that they were actually financed by loans from U.S. National. To hide the fact that Smith was on all sides of the transactions, the SEC says, the loans were channeled through a thicket of holding companies that were also under Smith's control...
...same time, the SEC alleges, Smith's co-defendants were selling Westgate a number of far less valuable properties at inflated prices. To make these investments appear sound, Smith and Toft supposedly manufactured $17.5 million worth of phony profits for the new acquisitions between 1969 and 1972 and fraudulently reported them in annual reports to the SEC. On top of that, Westgate shifted control of the grossly overvalued companies to other cogs in Smith's financial machine, which used their assets as collateral to obtain huge loans from U.S. National. These funds were diverted to Smith...
...Look. The SEC'S civil complaint asks that Westgate be put into the hands of a receiver and that Smith and Toft be barred from running any publicly owned companies-about the harshest penalty the SEC can ask for, since it cannot bring criminal charges. The IRS investigation, which could result in criminal prosecution, reportedly covers much of the same ground as the SEC complaint and also looks into the possibility that Smith-controlled firms made contributions to Nixon's 1972 campaign, in violation of federal laws that prohibit corporate political gifts...
Levitt said that other options besides readministering the test were discussed with the SEC members, but were discarded because they tended to lower the academic standards of the exam...