Stock promoter, NASD have long history
Don Bauder
January 5, 2002
Long-time San Diego stock promoter Jack A. Alexander, 68, has been barred from associating with members of the National Association of Securities Dealers because of alleged market manipulation.
Alexander also is required to cooperate with the NASD staff in any further investigation into the matter.
I left messages requesting comment on two of his phones yesterday. Also, a former employer said he/she would e-mail him and ask him to call me. He did not contact me.
The NASD announced the move recently, but it had made the order on Oct. 8. Alexander agreed to the arrangement without admitting or denying the allegations of the complaint.
NASD records show that this was Alexander's fourth brush with the NASD in a career that extends to the 1960s. A flashy dresser and smooth talker, Alexander had been president of the old Roberts, Scott brokerage, which closed in the early 1970s.
He then was a founder of the former First Affiliated Securities, leaving in the mid-1980s and working for a number of firms.
The NASD's most recent charges concern a firm named FAS Wealth Management Services, of which Alexander was chief executive. FASW was a subsidiary of FAS Group, which agreed to buy assets of a company named Biltmore Securities.
As part of that agreement, FASW agreed to purchase $1.5 million of securities from Biltmore. In September 1998, FASW purchased 330,000 shares of the common stock of Worldwide Equipment Corp., "a speculative security that was thinly traded" on the Bulletin Board, according to the NASD. Price: $1.50 per share.
In September and October of 1998, FASW offered for sale to customers 742,000 shares of Worldwide that it had purchased from Biltmore. Since that represented 18.5 percent of the shares, FASW was precluded from making a market in the stock at the same time it was distributing it, said the NASD.
But "Alexander, at a minimum, recklessly caused FASW to act as a market maker in, and enter bids for" the Worldwide stock, said the NASD in its complaint. During one period of about five weeks, FASW purchased 310,886 shares of Worldwide in wholesale transactions and sold 1.15 million to its customers, in violation of NASD rules, according to the NASD.
"Alexander intentionally or recklessly engaged in a series of activities that were designed to arbitrarily and artificially increase the price of Worldwide," charged the NASD. During the period, FASW was the sole high bidder or shared the high bid 99.7 percent of the time, said the NASD.
FASW's activity "effectively maintained and raised the price of Worldwide" from a low of $1.75 to a high of $2.375 during the period, despite the lack of any favorable news, said the NASD.
"FASW's manipulation of the price of Worldwide interfered with the fair and honest market in Worldwide," said the NASD. The regulatory body charged Alexander with using devices, schemes or artifices to defraud, and with making untrue statements of material facts or omitting material facts and engaging in acts that were "a fraud and deceit upon any persons."
In 1996, according to NASD records, Alexander was censured and suspended from association with NASD members for five days because of violations of the rules of fair practices in a new issue of stock.
In 1990, he was censured and fined $7,500 for violations of the rules of fair practices in sales transactions in which "prices were not fair," according to NASD records.
In 1969, while with Roberts, Scott, he was suspended for 60 days without pay for failure to supervise, according to NASD records.
Alexander was a major subject of one of the first investigative pieces I did for the San Diego Union in 1974. Roberts, Scott had underwritten the public offering of Burnham American Properties, a limited partnership that eventually became part of Burnham Pacific Properties. Burnham Pacific later became a successful real estate investment trust, but recently fell on hard times and is now in liquidation.
Roberts, Scott had been the only consistent market maker in the shares. After Burnham announced that no cash distribution would be made in one quarter, Roberts, Scott said it no longer would make a market in the issue. The stock dropped sharply, but there was a wide gap between the bid and asked prices. Shareholders didn't know what their stock was worth.
On Nov. 2, 1973, Burnham had announced that two motels accounting for 21 percent of the portfolio had gone bankrupt. The next month, Roberts, Scott had issued a bullish report on Burnham, making no reference to the bankruptcies that had been publicly revealed earlier.
Alexander explained that the research report was a description of "the uniqueness of the tax vehicle" and didn't need such specificity.
Union-Tribune library researcher Merrie Monteagudo assisted with this column.
Don Bauder: (619) 293-1523; don.bauder@uniontrib.com
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