Yup, the wole world vs. Solv Ex. Sounds like a comic book. When are you longs gonna break out the Kryptonite?
SEC Probes Solv-Ex Chmn's Stk Collateral On $1M Loan >SOLV
Dow Jones News Service ~ May 22, 1997 ~ 1:18 pm EST
By Terzah Ewing
HOUSTON (Dow Jones)--The Securities and Exchange Commission is investigating
whether Solv-Ex Corp. (SOLV) Chairman John Rendall illegally pledged restricted stock as
collateral for a $1 million loan, according to documents the agency filed in federal court in
Bridgeport, Conn.
According to the filing made late last year, the SEC also is looking into whether the
Albuquerque, N.M., company ''misrepresented or failed to disclose material information to
investors.''
The SEC declined to comment on its filing or provide additional details about its inquiry,
which the court documents indicate began in March 1996.
In its 10-K financial filing for the year ended last June 30, Solv-Ex says it is aware that the
SEC is investigating public trading in its stock, but doesn't make any mention of any
review of actions by the company or its officers.
In an interview, Rendall said the issue in the court records ''has to do with my personal
finances'' and not the company. ''The only connection is that I'm Solv-Ex's chairman,'' he
said. But he added that the SEC ''has gone through every transaction that Solv-Ex has
done.''
According to the court documents, which were filed by the SEC in opposition of a motion
by Waldron Mackey Development Corp. to quash the SEC's subpoena of bank records
related to the loan, the commission's staff is looking into whether Rendall turned over
restricted shares to a securities brokerage firm in exchange for the loan.
Restricted shares aren't registered with the SEC and have restrictions on how they can be
pledged, the SEC court document says. In addition, the SEC believes the legend showing
the shares were restricted was removed from the pledged securities.
Marshall Martin, Solv-Ex's general counsel, says the shares that Rendall pledged weren't
marked as restricted, but said, ''it's not illegal to give them as collateral for a loan.'' He
identified the brokerage house as Smith Barney Inc. and said the firm ''was put on notice
via letter that those shares were restricted.'' A spokeswoman for Smith Barney confirmed
that Rendall formerly was a client. She also noted that the firm routinely accepts restricted
securities as collateral for loans.
Martin said the loan has since been repaid and the restricted securities returned to Rendall.
He said the company has ''no factual reason to believe that particular transaction is still an
issue'' in the SEC's probe.
Martin said that since the investigation began, the company has ''produced a substantial
volume of documents, mostly relating to plant expenditures and financing.'' He said
Solv-Ex, which processes, extracts and recovers minerals from oil sands, believes the SEC
isn't targeting the company.
(MORE) DOW JONES NEWS 05-22-97
1:18 PM
SEC - Solv-Ex -2: Latest In Series Of Investigations >SOLV
The SEC's inquiry is the latest in a series of investigations of Solv-Ex. Earlier this year, the
company said federal prosecutors in New York had impaneled a grand jury to look into
short-selling in its stock by outsiders. Last year, a grand jury in Los Angeles issued
subpoenas in connection with a probe of whether two international stock swindlers were
involved in trading of Solv-Ex's shares. However, there isn't any evidence that the
authorities recently have asked questions about the swindlers in connection with Solv-Ex.
The company blames many of its woes on short-sellers, who it says have tried to discredit
it with false information about its oil-sands extraction plant in Alberta. Short sellers borrow
stock and sell it, betting that the price will fall and they can buy the stock back at a cheaper
price.
Still, the company has yet to turn a profit. In its fiscal second quarter ended Dec. 31, 1996,
Solv-Ex lost $3 million, or 13 cents a share, on revenue of $278,961.
Solv-Ex's stock, meanwhile, has had dizzying ups and downs. In early 1996, it rose to a high
of 38. By mid-year it fell back to the mid-teens. Solv-Ex shares recently were trading
unchanged at 7 1/2 on volume of 123,000, compared with average daily volume of 332,400.
The shares hit a 52-week low of 6 on Wednesday.
(END) DOW JONES NEWS 05-22-97
1:19 PM
Company Symbols: SOLV |
