Word: wolfsons
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From the day Raider Louis Wolfson became chief stockholder of American Motors, Wall Streeters wondered what he planned to do with the 420,000 shares (7%) owned by him and his family. Last week the SEC enlightened them. It discovered that Wolfson had sold all his A.M.C. stock while publicly proclaiming his great faith in the company. Then he and associates had sold short at least 150,000 shares, i.e., sold borrowed stock in the expectation of buying it back at lower prices. After that, charged the SEC, they had made "false and misleading statements," and put out "bogus information...
Cleaned Out. As long ago as April, there were rumors that Wolfson was selling. But on April 7 Wolfson announced that he was "perfectly satisfied" with the progress of American Motors, seeming to imply that he still had his stock. Later, when reporters checked with William A. Shea, an attorney for Wolfson, he blandly denied any selling. Yet by that time, the SEC discovered, Wolfson and his associates had already disposed of 134,300 shares of stock through two Manhattan brokerage firms...
...Wolfson group continued to sell until it had cleaned out its holdings. Estimated profit on the sale: $2.5 million. Then, said the SEC, Wolfson began to sell short in the belief that A.M.C. sales would slide and the price of the stock drop. But A.M.C. car sales rose and the stock did not drop; the Wolfson accounts were eventually caught in a short position of about 150,000 shares...
Fortnight ago, when Wolfson no longer owned any American Motors stock, Alexander Rittmaster, a business associate who Wolfson once said "speaks for me," told the New York Times that Wolfson had sold a quarter of the shares, still had 300,000 to go. Another Wolfson associate got out a statement the same day saying that Wolfson confirmed this. The news knocked the price of A.M.C. stock down 1⅛ points to 11⅝, and about 50,000 shares were bought for Wolfson accounts to help cover their short positions before the SEC got its court order...
Contempt Charges? The SEC will argue its case against Wolfson in court Aug. 5. Meanwhile, Wolfson can cover his short position only at the risk of contempt proceedings, and any broker who aids him may face the same charge. If the short sales are not covered, he runs the risk of losing heavily if A.M.C. shares rise. At week's end American Motors Boss George Romney stepped in to clear the air, also gave one reason why the stock may well rise. American Motors had no way of knowing that Wolfson was disposing of his stock,* said Romney...