Word: sec
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Dates: during 1940-1949
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...Otis & Co. to underwrite $11.7 million of new stock for the Kaiser-Frazer Corp. (TIME, Feb. 23). His out was a suit filed by Stockholder James F. Masterson against K-F in connection with the new issue. (K-F's counsel called the suit a "phony.") When SEC began to investigate,Witness Eaton swore that he knew nothing about the Masterson suit until after it was filed...
...shocked and alarmed when they suggested it," said Kaiser. "I wanted to know what the SEC thought about this sort of thing." Eaton, he said, assured him that it was "not unusual," and a hasty telephone check with SEC verified it. Eaton thought that no more than 20,000 to 25,000 shares would have to be bought. Kaiser told him to go ahead. It took less than half an hour to fill the first order for 15,000 shares-but to Kaiser's surprise the market was not stabilized...
Next day, when Eaton and his underwriting syndicate started to float the issue, the stockmarket was falling and so was K-F stock. Eaton called off the sale. Witnesses before SEC said they heard him say: "We would be just damned fools to go through with this deal ... I would rather have a lawsuit on my hands than be dead broke." Eaton's own lawyer testified: Eaton had asked him if there was any escape clause in the underwriting contract with K-F. Eaton reportedly said he was going over it with a "fine-tooth comb" to look...
...This Way. This week SEC heard well-groomed, white-thatched Cy Eaton tell his side. Wearing a dark blue suit with a light blue tie to match his eyes, Eaton gave photographers a big grin and then proceeded to deny K-F's charges...
Sure, said Eaton, he was there when they talked about stabilizing the stock, but he didn't say anything; he just listened. The stabilizing was not Eaton's idea; it was that of Henry's son Edgar. "Did you approve it?" asked the SEC examiner. Eaton replied: "No." Eaton said he would have been glad to carry out the underwriting "if conditions were right...