STATES TAKE A SHOT AT CHOP-STOCK FIRMS
I would like to bring to your attention several initiatives to combat firms and brokers that employ the nefarious schemes mentioned in your excellent special report "Investors beware: Chop stocks are on the rise" (Cover Story, Dec. 15).
On May 29, 1997, the North American Securities Administrators Assn. announced a crackdown on micro-cap brokers in the New York City area: the "Northeast sweep." Twenty state securities agencies took part in the sweep, which uncovered the use of numerous abusive sales practices and other violations of securities laws by the targeted firms, many of which you discuss in your story.
As a result of the sweep, a large number of states instituted actions against the targeted firms, including Investors Associates Inc. and Meyers Pollock Robbins Inc., which you prominently mention. At least 17 states have terminated Investors Associates' right to do business by revoking or suspending its license or barring them from the state. The cumulative effect of all these state actions was to put the firm out of business.
Future plans include another cooperative multistate sweep of micro-cap brokerage firms, state task forces to focus on individual problem firms, and additional criminal prosecutions of firm principals and brokers. State initiatives, along with the Securities & Exchange Commission, self-regulatory organizations, and other enforcement authorities, can and do make a difference.
The more publicity shined on the problematic areas in the securities business, the better educated the public will be. We congratulate you on bringing...the chop-shop issue to the attention of the American public.
Denise Voigt Crawford
North American Securities
WashingtonReturn to top
`I HAVE NEVER BEEN THE TARGET OF AN INVESTIGATION'
"The heat on Clinton's moneyman" (Government, Dec. 22) provides an excellent example of the noxious atmosphere in Washington. The Republicans desperately seek parity on the scandal hunt and the media is too often the willing medium. The story gave the misimpression that grand juries in New York and Washington were considering action against me. This is untrue.
You failed to note that I have been a cooperating witness in both investigations and have never been a target of either investigation. Moreover, the suggestion that the grand jury in New York is conducting an investigation into my involvement in the credit card business is dead wrong. As I told your reporter, I have never been the target of any kind of investigation in my life.
Finally, while you correctly noted that I am not the subject of any Labor Dept. investigation involving the International Brotherhood of Electrical Workers' financing of projects in which I have an interest, you omitted mention of the fact that the IBEW made a healthy 10.5% overall cash-on-cash return in connection with all its dealings with me, as you were told by an auditor for the real estate partnership of which I am a principal.
Terence R. McAuliffe
Editors' note: The IBEW/National Electrical Contractors' Assn. pension fund says it received a 6.5 percent overall return on its investments with Mr. McAuliffe. Mr. McAuliffe had other dealings with IBEW that were not part of BUSINESS WEEK's story.Return to top
PILOTLESS PLANES ARE TAKING OFF
Your article emphasized the crashes of test vehicles and the "problem-plagued" aspects of multibillion-dollar programs ("Pilotless planes: Not cleared for takeoff," Science & Technology, Dec. 8). Our experience at AeroVironment Inc. with electrically powered, remotely and autonomously controlled planes provides a more positive picture.
On July 7, a solar-powered Pathfinder climbed to 71,500 feet, higher than any other propeller aircraft has ever flown. NASA is the sponsor for this stratospheric-monitoring-and-surveillance vehicle, having picked up the ball after initial Defense Dept. support ended. The program puts high priority on reliability--achieved through extensive test procedures, redundant systems, careful planning, a step-by-step flight program, and a realistic and helpful sponsor.
Our hand-launched, video-equipped surveillance drone, the 9-pound Pointer, has been used by many military units as a pair of "roving eyeglasses." In a decade, this design has probably accumulated more flights than any other type of unmanned airplane, or perhaps all of the others together. Many Pointers have made more than 300 flights each.
As a glimpse of the future, we have demonstrated indoors a tiny, 1 1/2-ounce battery-powered plane that, like Pointer, sends back what its video camera sees.
Autonomous flight is far more complex than most people appreciate. Careful programs, however, can produce reliability and economy. With success, the high value of vehicles that perform useful missions without endangering pilots assures the growth of this field.
Paul B. MacCready
Monrovia, Calif.Return to top