Just off Yahoo
By Ben Sullivan, Daily News
BURBANK -- The U.S. Securities and Exchange Commission has issued a
sweeping subpoena to BAT International, requesting virtually all of the
records and internal documents of a company whose share price has
increased from 8 cents to as much as $3.25 in the last six weeks.
Officials with the commission's Los Angeles office said Thursday they
could neither confirm nor deny the subpoena, nor any pending investigation
of BAT.
But a copy of the 10-page order obtained by the Daily News identifies 46
categories of documents the SEC has requested, including all technical and
financial information relating to BAT's "pulse-charge" engine technology,
business deals between BAT and any Barbados-based firms or individuals,
and a complete copy of the company's bookkeeping records.
BAT has until Wednesday to supply the documents, the SEC said. Typically
if a company does not respond to an SEC subpoena, the commission will
either file in federal court for a judicial subpoena or modify its request
for information.
The SEC subpoena comes in the wake of heavy trading in the tiny
automotive engineering company prompted by its claim to have developed a
car engine that can achieve 100 miles per gallon of fuel. Since Jan. 1, more
than 130 million BAT shares have traded hands; BAT closed Thursday at
83 cents, off 18 cents.
Because BAT had fewer than 500 investors and $10 million in assets at
the end of 1997, it is not required to file financial statements with the
SEC despite being publicly traded. BAT founder and CEO Joseph LaStella
has said his company will file financial statements with the SEC within
three weeks.
LaStella said Thursday that based on the recent run-up in his firm's stock
price, he was not surprised by the SEC's interest. But he said the scope of
the SEC's request is unacceptable.
In particular, LaStella said, he was unwilling to provide technical
information on the pulse-charge engine because he has yet to gain patent
protection for the device.
"I wouldn't give that kind of information to anybody, so right off the bat
we're at odds," he said. "If it means I've got to go to jail on this one, I
will."
LaStella said BAT's attorneys are examining the subpoena and determining
which documents to provide.
BAT conducted a public test of its engine Tuesday at the California
Speedway in Fontana. Three observers hired by the company said a Geo
Metro modified to incorporate the pulse-charge engine achieved roughly 93
miles per gallon of diesel fuel.
The test spawned extensive debate on the Internet over the validity of
BAT's claims. Since the start of the year, the Internet, and particularly a
BAT chat room hosted by Yahoo! Inc., have been the battleground for
skeptics and supporters of the company.
An official in the Utah Commerce Department's securities division said he
contacted the SEC Wednesday with concerns that LaStella himself had
been involved in chat room discussions. Before moving to Burbank in 1994,
BAT was headquartered in Salt Lake City.
Kelly Bowers, assistant regional director for enforcement at the SEC's
Los Angeles office, said that on its own, a company official participating in
an online chat does not violate SEC rules. Indeed, he said, it is potentially
no worse than a CEO speaking at a public breakfast.
"But the commission would be concerned about any public statements on
which potential investors may rely in making their investment decisions,"
Bowers said. Whether electronic or in person, such statements must be
"accurate and complete."
LaStella said that on five occasions in recent weeks he has participated in
chat rooms to discuss his company, but has never misrepresented BAT or
its technology.
Copyright 1998 Daily News Los Angeles
Transmitted: 02/13/98 01:50 (biz1)
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Maybe this will bring forth the facts
Regards, Fitz |
