SEC Sues L.A. Firm, Alleges Phony Offer for Superior Industries
The federal government sued a small Los Angeles investment firm Thursday, alleging that the firm misled the public a year ago by falsely saying it had made a “firm offer” to buy Superior Industries International Inc. in Van Nuys.
The Securities and Exchange Commission filed the civil suit in federal court in Los Angeles against privately held Rana Research Inc., which does business as Vista Group Ltd., and its president, Vipin Sahgal. Vista specializes in arranging mergers and acquisitions.
Robert H. Bretz, a lawyer for Vista and Sahgal, said his clients would fight the lawsuit. “No one tried to defraud or mislead anybody,” Bretz said.
The purported takeover offer for Superior, a leading maker of wheels for the major U.S. auto makers, triggered widespread confusion after it surfaced the evening of Feb. 8, 1988. A press release from Vista said the firm, together with the big investment house Prudential-Bache Securities, had made a “firm offer” to buy Superior for $16 a share, or $93 million.
But the next morning, Prudential-Bache issued a statement from its New York headquarters saying it had not made a “firm offer” with Vista. Later that day, a Prudential-Bache spokesman acknowledged that his company had talked with Vista and sent Superior “a normal introductory type of business letter,” but that Vista announced the offer “completely unbeknown to us.”
‘Cold Water Thrown’
Vista then insisted that “there, in fact, was an offer with Prudential-Bache” made for Superior.
Meanwhile, trading of Superior’s stock on the American Stock Exchange was halted for the day, and when trading resumed Feb. 10, the stock soared to $15 a share from $11.50. But no offer materialized.
In its suit, the SEC alleged that Vista’s “announcement was false in that Prudential-Bache had authorized neither a firm offer nor the issuance of a press release.”
The SEC also alleged that Sahgal “misrepresented” to Prudential-Bache that Superior Chairman Louis L. Borick was interested in pursuing a “friendly leveraged buyout” of the company and that Sahgal falsely told Prudential-Bache that Borick had requested an offer price.
The SEC’s suit did not claim that Vista or Sahgal personally benefited by trading Superior’s stock. But the agency did allege that “as a result of Vista’s and Sahgal’s misleading statements,” Superior’s stock soared when trading resumed.
Bretz disputed that allegation, however. Because “so much cold water was thrown on the press release” issued by Vista, the lawyer said, “no one could have bought or sold any shares in reasonable reliance” on the announcement.
He also chastised the SEC for not alleging any wrongdoing by Prudential-Bache which, he contended, approved a letter from Vista to Borick that outlined an offer and was the basis for the offer’s announcement to the public.
“If, in fact, you’re going to fault us for the press release and the letter, then you can’t separate Vista and Vipin and let the Wall Street firm take a walk,” he said.
Prudential-Bache spokeswoman Eleanor Mascheroni declined comment on the case. R. Jeffrey Ornstein, Superior’s chief financial officer, said only that “we’re pleased to see the SEC take the action that was necessary.”