Evening star., 1938-11-26
Transamerita Corp. S
Officials Denounte
81. {. Charges
Call Action Move to
Prejudice Firm in
Eyes Of Public
By the Associated Press.

Securities and Exchange Commits
sion charges that eTransamerica
Corp. made false financial reports
brought from company officials today
a prediction that they would be
completely vindicated."
A. P. Giannini, founder, and John
M. Grant, president of the corpora
ton, added in a statement at San
Francisco that they believed the
motive behind the S. E. G. complaint
was calculated definitely to preju-
dice Transamerica Corp. in the
eyes Of the public"
The S. E. G. yesterday ordered a
hearing January Is to determine
whether the stock of the $1O0, 900 900
investment company should be sus-
pended from trading on exchanges
in New York, Los Angeles and San
Francisco.
Financial Data Cited.
In its order, the S. E. C. said it
had reasonable grounds to believe"
that Transamerica's applications
for registration Of stock under the
Securities and' Exchange Act of
1884 contained false and misleading
statements of material facts" in
cluding financial statements which
did not correctly reflect the true
financial condition of the corpora
ton and its subsidiaries.
The commission charged 18 specific
faults in the Transamerica regis
tration.
Mr.. Giannini and Mr.. Grant said
the complaint appeared based en-
tirely on theory of accounting
and added that Transamerica's re-
ports had been prepared by an in
dependent firm of accountants.
The officials contended the corpor-
alton had complied with rules of the
Security Exchanges.
Supplemental Report.
practically all of the items en-
bodied in the complaint" they added
were covered in supplemental re-
port in connection with our resigtra-
ton statement under the 1884 act"
The S. E. C. order contended
among other things that the corpor-
alton failed in its registration state
ment of August 8. 1887, to disclose
certain facts concerning the method
by which it was controlled and that it
misled the commission "in the elm
ination of reserves on the books OF
certain companies and the creation
of fictitious reserves in similar or
substantially similar amounts on the
books of other companies in the
Transamerica group"
The latter transactions, the COM
mission said, were intended to utilize
the reserves Ito absorb losses with
consequent distortion of the true
financial condition of the separate
corporate entities and Of the entire
group as whole"
The commission also alleged that
Mr.. Giannini received $65,9l4 from
the Bankitaly Co. in 1896 at a time
when Bankitaly Co. was subsidiary
Of Transamerica. whereas the cor
poration reported in its registration
statement that Mr.. Giannini's only
salary was 81 per year as chairman OF
the board of Transamerica.
The commissions order relates to
to 50 par value stock of Trans
american Corp, of which II $50, ,784
shares have been registered on the
three exchanges. The commission
has the power to suspend trading in
the stock for period up to one year
or revoke the listings on the ex-
changes altogether if it determines
the registration statement was false
or misleading.
Prior to July, 1887. the corporation
by its ownership of Bank of America
National Trust and Savings Associ-
alton, was one of the largest bank
holding companies in the country
Although Transamerica now is tech
nically not bank holding company
the S. E. C. allegations referred to
financial statements prior to the
changes.
Sale Of Assets in 1881.
Among the bookkeeping trans
actions criticized by the commission
was the handling of a $35 ,214,0O0 sale
of assets by the Bank of America
to an affiliated company in 1881.
The commission alleged that the as
sets were sold on credit and that
from time to time Bank of America
reduced the item set up on its books
to reflect the obligation of Inter-
America Corp. by write-up of un-
related assets and by various other
means"
Bank of America is particularly
noted in banking circles as the
largest operator of branch banks in
the country. 1t operates on the
West Coast.
The S. E. c. order containing the
allegations was signed on behalf of
the commission by its secretary,
Francis C.. BraSSOr.