December 30, 1974
Several hours after receipt by telecopier last Friday afternoon of our recommendation for injunctive action against Sam Sloan, Ron Cheney and Fred Franklin were able to secure Commission authorization for us to file this action.
This case was an emergency type situation where, during the last week, Sloan submitted almost 400 listing applications with the NQB for the trading of stocks. [section deleted under FOIA] Sloan also denied us access to inspect his brokerage books and records on December 26. After Ron and Fred secured the authorization last Friday, we filed the injunctive action today.
I want to compliment both Ron and Fred for the super job they did. Obviously, Sloan's conduct required swift action by the Commission. Without this kind of cooperation, the prompt action called for could not have been taken.
Sincerely,
Donald N. Malawsky
Associate Regional Administrator
cc: Alan Blanchard
[Stamped Received January 2, 1975]
[The above requires a bit of explanation. Sloan's plan was to trade in these 400 stocks on the last day of the year and on that day only. That day was December 31, 1974. The purpose of these trades was to allow stockholders to take tax losses by selling their shares that year. All of these 400 stocks had been suspended from trading by the SEC at some time in the past, but in all cases the suspensions had been lifted and the shares were free to trade now. Nevertheless, by threatening the brokers with legal action if they traded in these 400 stocks, the SEC had been able to stop these securities from being traded. Sloan sought to revive trading in these securities by having them all trade on the last day of the year. By bringing its injunctive action on the next to the last day of the year, the SEC was able to stop these 400 securities from being traded. Sloan went to Iceland on a late night flight on December 30, 1974 and for that reason could not be served on the next day. Almost none of these 400 securities have ever been traded in the 23 years which have passed since.]