KaiserTech Sues Clore, Calls Trades Illicit
Since becoming chairman of KaiserTech last year, British investor Alan E. Clore routinely has executed quick and illegal trades of company stock, making more than $4 million in the process, the company charged Tuesday.
In a lawsuit, KaiserTech--parent of Kaiser Aluminum--said Clore violated U.S. securities laws by purchasing and selling company stock without holding it for six months as required for company officers, directors and major shareholders.
The announcement followed by one day an agreement by Clore to sell his 27% stake in the Oakland-based company to Maxxam Group, a New York-based real estate and lumber products company indirectly controlled by Texas financier Charles E. Hurwitz.
In addition to Clore’s common and preferred stock, Maxxam is negotiating to buy other KaiserTech common stock from other entities purchased for Clore that would give Maxxam a 32.1% voting stake in KaiserTech.
Also on Tuesday, the Jefferies & Co. securities firm said it has agreed to sell nearly 1.4 billion shares of KaiserTech common stock that the Los Angeles company bought for Clore but for which he never paid. Maxxam will pay $12 per share for the stock, or $16.7 million. Maxxam could pay as much as $233.7 million if it buys the common stock and exercises an option to buy Clore’s preferred stock and pays nearly $10 million in expenses.
Jefferies had reported a loss on the stock in the fourth quarter and expects to record a $1.2-million pre-tax gain on the sale for 1988. Jefferies and other creditors are entitled to receive some of the proceeds from the sale of the preferred stock.
Clore was forced to put his KaiserTech holdings up for sale after the October market crash caused him to default on loans secured by the stock.
In its lawsuit filed in federal court in Manhattan, KaiserTech sought to recover profits from what it called Clore’s “flagrant and continuing violations of federal securities law.” KaiserTech charged that Clore and his companies violated a rule that prohibits directors, officers and holders of at least 10% of a company’s stock from buying stock in the firm and selling it within six months.
Clore’s New York lawyer could not be reached for comment late Tuesday. Clore lives in Geneva, Switzerland.
“There are daily movements in stock price,” a KaiserTech spokesman said, “and if you trade on the basis of short swings you can and he did, we are contending, . . . make substantial short-swing profits.”
A filing by Clore with the Securities and Exchange Commission Tuesday listed eight pages of stock trades he had made since he became chairman of KaiserTech on May 1, 1987, following a lengthy takeover battle.
