MAYBE IT IS CONGRESS!!!!!!!
Dear Congressman X,
I need your help in obtaining information from a government agency about a matter that has directly and negatively affected my finances as well as the nation's environment. That same government agency is suffocating a small, emerging company with a very important environmental product -- a product that offers the lowest cost solution to a major part of The Nation's environmental problems. The company is Solucorp Industries Ltd., headquartered in West Nyack, New York. The agency is the Securities and Exchange Commission. I am a person with a keen interest in the nation's environment and a stockholder in Solucorp Industries .
The ostensible cause of Solucorp's difficulty is an investigation by the SEC into certain public statements made by the Company. The investigation was initiated on May 1, 1998, when the SEC temporarily suspended trading in the Company's stock for a ten day period. I believe that the SEC's actions are misguided. The SEC's actions are surrounded in mystery. To this very day, no one outside of the SEC knows what, if anything, the Company did to trigger such a drastic action. Many have suggested that the SEC's action was instigated by a bad tip to the SEC by the Company's competitors or by traders that had accumulated huge short positions in the stock. These are the only persons that are benefiting from the SEC's actions.
What makes the SEC's actions all the more questionable is the fact that the Company, on December 22, 1997, voluntarily subjected itself to the scrutiny of the SEC. On that date, the Company filed all of the necessary papers with the SEC to become a full Exchange Act reporting company. Prior to that time, the Company's stock had been trading as a totally unregulated NASDQ Bulletin Board stock. The voluntary filing with the SEC was a step in the Company's goal of qualifying for listing on a national stock exchange. In addition, on April 24, 1998, the Company filed an application with the NASDQ to become listed on NASDQ's Small Cap Exchange, thereby subjecting itself to additional oversight by the NASDQ. The Company was not required to take either of these steps. Clearly, if the Company was not totally legitimate and was involved in some sort of "funny- business", it could have remained as a NASDQ Bulletin Board stock free of any oversight and reporting requirements. ONE HAS TO ASK, WHY WOULD A COMPANY THAT HAS DONE SOMETHING WRONG VOLUNTARILY SUBJECT ITSELF TO REGULATORY SCRUTINY AND OVERSIGHT BY TWO AGENCIES, THE SEC AND THE NASDQ.
More importantly, the time distraction of the SEC's ongoing investigation and the legal costs being generated by it are hampering the Company's business efforts. Moreover, the SEC's action comes at a critically important time for the Company. After spending 10 years and $4.5 Million dollars in developing its now patented Molecular Bonding System (MBS), the Company had just turned the corner from a research and development phase to a commercialization, profit- making phase. The Company's MBS process has been approved by the Environmental Protection Agency's stringent Superfund Innovative Technology Evaluation (SITE) program and is recognized as being the lowest cost, permanent process for cleaning up land that has been contaminated by toxic heavy metals. The MBS process reduces the toxic characteristics of contaminated soils to levels far below the current regulatory limits established by the EPA as well as its proposed new more stringent standards. In May of this year, tests conducted by the Brookhaven National Laboratory under a contract with the Department of Energy demonstrated that the MBS process successfully treats mixed radioactive wastes. Solucorp's MBS process has more recently been approved by Chinese State governing bodies as well as by the British Columbia Ministry of the Environment.
I believe that there is something about the SEC's action that is not right, that makes no sense. In my view, the SEC's action has, and continues to cause needless suffering and financial hardship to thousands of Solucorp's existing shareholders.
To this very day, no one has been told what or who initiated the SEC's suspension and investigation. No one knows specifically what the SEC thinks the Company may have done wrong. The SEC's sole statement on the matter says only that "Questions have been raised" about public statements made by the Company. The SEC's statement does not say what those questions are or who raised them, i.e., by the SEC or by an outside party.
Meanwhile, the effect of the suspension and subsequent investigation on Solucorp and its stockholders has been devastating. As Mr Justice Rehnquist said in a case where the SEC was overturned for abusing its temporary suspension power. (SEC v. Sloan, 46 U.S. 103 (1978):
"...[T]he power to summarily suspend trading in a security
even for ten days, without notice, opportunity to be heard,
or findings based upon a record, is an awesome power with a potentially devastating impact on the issuer, its shareholders, and other investors."
In the weeks preceding the suspension the Company's stock showed a significant increase in value based upon numerous positive business developments and the Company's meeting the required standards for listing on the NASQ's Small Cap Exchange. These business developments included the endorsement of the MBS process by Kemper Environmental, a major issuer of environmental liability policies. The availabilty of this insurance meant the Company would now be able to overcome market resistance to the use of a new technology. These positive developments caused the value of Solucorp's stock to rise to $5.875. When the ten day suspension ended, the stock opened for trading at 7/8 ths !!! Last week the stock traded on the "pink sheets" between 12 CENTS! and 62 CENTS!! per share.
To add insult to injury, it has recently come to my attention that the SEC attorney responsible for the SEC's action against Solucorp, had for a period time before joining the SEC, worked for a large lawfirm that had represented Solucorp's biggest direct competitor, as well as another company that is deeply involved in the environmental services market. Because of the low cost of Solucorp's MBS process and the permanence of its effectiveness, these competitors have a lot to lose if Solucorp is allowed to grow unhindered by the SEC's secretive government proceeding and interference. While I am unaware of any specific incidents of official misconduct in this regard, this situation has of course raised my suspicions about the motivation behind the SEC's initiating its activities against Solucorp. The fact that 19 months have passed without the SEC telling the public what, if anything, the SEC has uncovered that Solucorp did wrong has only magnified my suspicions. This is a small company that I could have investigated in month, or less.
All of this would not be so tragic if Solucorp was in some trivial consumer products business. BUT THIS IS A COMPANY THAT CAN MAKE A MAJOR CONTRIBUTION TO THE QUALITY OF LIFE FOR THE CURRENT AND FUTURE GENERATIONS!!!
I am requesting that you make an inquiry to Arthur Levitt, Chairman of the SEC asking for an explanation. I believe that as a stockholder in Solucorp and as a citizen interested in the quality of the human environment, I am entitled to an explanation. I want to know; 1) What caused the SEC to suspect that Solucorp may have done something wrong? What, or who initiated the suspension? If the SEC had specific concerns, why didn't it contact the Company to ask questions before it acted? What is the status of the investigation and when can we expect a final resolution of the matter?
Several stockholders have made such inquiries themselves. Despite the fact that the Company has on several occasions advised us about the existence of the SEC's investigation, at best we only get rubber stamped replies saying that the SEC won't even acknowledge whether or not there is such an investigation. At worst, one stockholder that made such an inquiry had his home searched by the F.B.I. and the Los Angeles Police Department's bombsquad at the behest of the SEC!!!! The SEC gives us as the reason it won't acknowledge the investigation that it is protecting the innocence of Solucorp. Who are they kidding?
Thank you in advance for your expeditious consideration of this matter.
Respectfully,
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