Evening star. [volume] (Washington, D.C.) 1854-1972, 1963-12-15
ARC Statement Splits Leaders
Proposal to Bottle SEC in Courts
Lacks Support of All Directors
began in November. 1861.

began in November, 1861.
When the Tel purchases
began, he had pledged 400, 100 Of
his ARC shares as collateral on
more than 81 million of loans
from banks and brokerage
houses.
Pine Ridge purchases &C.
counted for around Is per cent
of the reported round-lot volume
on the exchanges in the period
in which they were executed.
From May l through July 8,
1862, Tel purchased $500
shares or So per cent of the
total trading volume in ARC
stock at that time.
In three days preceding the
ARC annual meeting on May 26,
1862, Tel purchased 1900
shares or around As per cent of
total ARC trading on the ex-
changes. Although the stock had
been going down, it firmed and
gained slightly in a generally
lower market, the commission
found.
Law Is Outlined
In May, 1862, the SEC report
ed that DR.. Scurlock had debit
balances of 81, lac, 900 and $685.
900, respectively, in two margin
accounts with Washington brok-
erage firms. Officers of these
firms testified they discussed
with DR.. Scurlock the condition
of his accounts and that in the
week preceding the annual
meeting, one firm had indicated
that DR.. ScurlOck should sub
stantially reduce his debit ba-
lance and preferably eliminate
it altogether.
The SEC concluded that under
the Securities Act of 1893, Texas
Capital, a STRAW" company
utilized by ARC, was and should
have been treated as a subsidi-
airy of the company and the
financial statements of TCI
should have been consolidated
with those Of registrant compa-
ny.
An interesting part Of the SEC
evidence is a letter written by
Mr.. Bowers to DR.. Scurlock on
December II, 1858 informing
the latter that Texas Capital
had been organized and that
Mr.. Bowers was waiting for
plans from Gerald Halpin, a
vice president of Atlantic Re-
search.
81 have formed a Texas cor
poration called Texas Capital
Investments, Inc, and sent a
copy Of the charter along with a
signature card for Bolton OF
whoever" he wrote DR.. Sour.
lock. Mr.. Bolton told the SEC
he could not recall having been
named assistant treasurer Of
Tel. He was a mutual friend of
DR.. ScurlOck and Mr.. Bowers.
The letter continued: 81 will
issue the stock certificate for all
10 shares ($1OO par and en-
dorse it in blank for forwarding
to you" DR.. Scurlock told the
SEC he did not receive the GER
tificate. Mr.. Bowers testified he
sent it to ARC and it was re-
turned to him in 1859.
Letter Is Quoted
The letter added: "The corpo-
ration was formed as of Decem-
Der IL, 1858, and was available
for any transactions on or after
that date. The corporations
bank account is zero since l
used the $50 for filing fee. l
will probably hear from Jerry
(Halpin) on the plans soon."
What could be described as a
"turn-around note" for which
funds never left Riggs National
Bank, also had a place in the
evidence of the complicated
ARI-TCI relationship. The ma
neuver had the effect of in.
creasing the ARCS cash posi-.
ton and decreasing its notes re.
celvalbe from TCI.
owed Atlantic Research more
owned Atlantic Research more
than SIS million, DR.. Scurlock
arranged for a loan of SIS mil
lion to TCI from a bank which
previously had made loans tt
Tel" SEC stated.
'Mr. Bowers furnished a TCl
: note payable to the bank fol-
SIS million and gave ARC {
Tel check signed in blank. Al
employee of ARC filled in the
date of the check as of June %
: 1862, named ARC as payee anC
inserted SIS million as the am
cunt.
"The check was presented tt
the bank, which in turn issued ;
cashiers check to Atlantic Re