Sun Trading
The American Stock Exchange’s look-see into who was heavily trading Sun Savings & Loan stock just before the company’s announcement of a major capital infusion deal last month has yielded four names.
But no one connected to Sun seems to know who they are, sources at the company report.
Sun’s stock soared to $6.75 from $4.50 in the four days before last month’s capital infusion announcement. The stock since has settled back down, closing at 5 3/8 on Monday.
About 15,500 shares of Sun common were traded in a three-day period, extremely heavy trading for Sun’s stock but considered relatively light in terms of large companies.
No matter, according to one AMEX official.
“There is no minimum volume cutoff for an investigation,” the source said. “If there is an appearance of impropriety, then it doesn’t matter (how many) shares were traded.”
Coastal Watch
Anxious former investors in Coastal Equities may have to wait a bit longer before the bankruptcy trustee in charge of the fraud-ridden real estate investment firm doles out a final cash disbursement.
According to trustee attorney Keith McWilliams, the delay is caused by a stalled piece of property in Escondido that is permeated with toxic waste, by the legal entanglement of a $900,000 impound account that is expected to be ruled on by a Court of Appeal in the fall, and by the lack of a full-blown audit of Coastal Equities by the Internal Revenue Service and the state Franchise Tax Board.
“We want to (disburse cash) badly,” McWilliams lamented.
Coastal Equities took in about $50 million from 2,500 clients with promises of double-digit annual returns in its real estate investments. The firm’s top executives were eventually indicted and sentenced to prison.
Historic Ruling
Local attorney Michael Aguirre says he scored a coup of sorts when the investors he represented in a federal civil lawsuit were declared victors against Common Sense Capital, Western Investors Network, corporate attorney Jeffrey Cheyne, and businessmen Daniel Pulvers and Lawrence Brophy.
But the victory--U.S. District Judge William B. Enright handed down a 47-page order substantiating the plaintiffs’ claims that they were defrauded in a real estate limited partnership--isn’t so much the $2.5-million total payment to investors, nor the healthy chunk of legal fees, Aguirre maintains.
Instead, Enright’s ruling marks the first time that an attorney has been found in violation of a state regulation governing the opinions given to investors by legal experts. Enright found that Cheyne is “culpable” under a California Corporations Code section that applies a “standard of care” to experts who supply information in an offering prospectus to investors.
The ruling means that “attorneys who load the gun by providing expert documents to people who take no safeguards are going to be subject to liability,” Aguirre said. “It will make it more difficult for fraud artists to use attorneys to perpetrate frauds.”
Crackdown on S&Ls;
When it was revealed earlier this month that Sun director Tad Fujita had served jail time for his conviction in an alleged payoff involving some Orange County land leases in 1973, state Savings and Loan Commissioner William J. Crawford vowed to improve his agency’s review of S&L; directors.
True to his word, Crawford last week sent new guidelines to S&L; executives in California. Confidential biographical information now is required for all new directors or the employment of a new managing officer, according to Crawford’s letter. Previously, only founding directors were required to submit the data.
In addition, Crawford is requiring that the new directors and officers submit financial statements and fingerprint cards.
“The responsibility and potential liability that a director and managing officer now face in making policy decisions,” Crawford wrote, “make it imperative that (they) have experience and character to assure that the association will be operated in a safe and sound manner.”
Meanwhile, Fujita made a final appearance last week at Sun’s board meeting. He stopped in just long enough to say his good-bys--and before, board members quickly add, the meeting was officially called to order.
