Film Stock Drops Over SEC Inquiry

Ventura Entertainment Group’s common stock briefly plunged last week on the news that a securities firm that has performed investment banking services for the company is being investigated by the Securities and Exchange Commission.

Ventura Entertainment’s shares fell $1.125 to $1.375 bid on June 10, after it was learned that the SEC was investigating Stratton Oakmont Inc., which is based in Lake Success, N.Y. By Monday, however, Ventura Entertainment’s shares had rebounded to $2.375 bid.

Stratton Oakmont was the underwriter on an offering last year by Ventura Entertainment of 400,000 units, according to a prospectus dated March 12, 1990. Each unit consisted of one common share of stock and one redeemable class A warrant.

A spokeswoman for the financially troubled North Hollywood film and television concern refused to comment on the drop in stock price.

For the nine months that ended March 31, Ventura Entertainment lost $3.5 million on sales of $12.4 million, compared with a loss of $1.4 million on sales of $4.7 million in the similar period a year earlier. More than 60% of Ventura Entertainment’s revenues for the recent nine months came from a subsidiary that makes television commercials, with most of the rest coming from licensing television productions such as “Golden Age of Rock ‘n’ Roll,” “The Spirit of Rock ‘n’ Roll” and “Hollywood Detective.”

Ventura Entertainment had a profit of $202,456 on revenues of $3.4 million in the quarter that ended March 31, compared to a loss of $961,216 on sales of $1.4 million in the like period a year earlier.

The SEC investigation of Stratton Oakmont was disclosed in a prospectus issued in May for the initial public offering of Ropak Laboratories Inc., a company unrelated to Ventura Entertainment.

Separately, Ventura Entertainment disclosed that it has changed accountants. According to a May 3 filing with the SEC, Ventura Entertainment selected Cooper & Lybrand to replace KMPG Peat Marwick.

Ventura Entertainment said in the filing that it had no disagreements with Peat Marwick, and that the accounting firm had not issued “adverse” or “qualified” opinions about the accuracy of the entertainment concern’s financial statements.