Evening star. [volume] (Washington, D.C.) 1854-1972, 1963-12-08

real estate and market dealings
in company stock, which had
not been divulged by the reg
iStration statement or other
company reports to StockhOld-
ers.
In one of its most cauStic opin-
ions on record, it criticized in
tereStS of various ARC officers
and directors in firms renting
facilities to the company, deal
ingS in company stock which it
charged gave the wrong impress
sion Of company affairs and
loans to outside companies and
individuals, whose relationships
with the company it said were
not explained.
The commission charged the
company under DR.. Arch Sour
locks direction as president had
engaged in artificial market &C.
Invites, which were designed to
present to investors and others
a fictitious picture of the COM
pany activities and finances.
The 1862 statement reflected a
pattern of corporate camOu-
flage and concealment, it de-
clared.
ScurlOck Key Figure
Central figure in the dealings,
which the SEC charged had not
been properly disclosed, was
DR.. Scurlock, who relinquished
the presidency to become board
chairman in November, 1862,
after the transactions took
place.
DR.. Arthur W. Sloan became
vice chairman and chief execu-
tive officer of ARC at that time
and NJ. Lee Rice became presi-
dent.
The SEC stop-order will have
no direct affect on trading in al
re dy registered company
shares on the American Stock
Exchange, but the outcome Of
various suits filed by owners Of
the $4,000 unregistered shares
which have been barred from
resale to the public could ulti-
mately affect the value Of all
company shares.
Atomics, Physics & Science
Fund, Inc, of Washington, is
one Of three mutual funds which
have filed suits against ARC,
claiming damages to their hold
ings as a result Of company vio-
lations and SEC action.
The Washington company has
around $4,000 shares Of ARC,
costing a little more than 81
million. These shares and u.s.
600 shares owned by Teleyision-
Electronics Fund, Inc, are part
Iof the 179, OOO-share block
barred from resale. Also part Of
the block are 5000 shares
which American Potash &
Chemical Corp. received for a
division it sold to ARC. Both
Televisio n-Electronics an d
American Potash have filed
suits.
1t also was learned yesterday
that the Axe-Houghton Group,
which owns $4,000 unregistered
shares of ARC that were not in
cluded in the 49, 900 block, also
has filed suit. The group in
cludes Axe Science Fund, Axe
Houghton Fund A and Axe
Houghton Fund B.
ARC Statement
In its strongly worded answer
to the SEC decision, the ARC
statement said the commits
sion'S conclusion that Texas
Capital Investments, Inc, and
Pine Ridge Corp, are Subsidiar-
les within the meaning Of rules
under the Securities Act, is
based on the SECS determine
ton that these companies were
controlled entirely by Atlantic
Research. Atlantic Research
has disclaimed previously that
these companies are Subsidiar.
les and believes that as a queS-
ton Of law, it is correct in its
disclaimer of any such owner
hship, the statement said.
Since 1860, in the case Of Pine
Ridge, and at all times in the
case of Texas Capital Invest
ments, neither ARC nor any o.
its directors, officers or EN-
ployes have had any ownership
interests, either direct or indi
rect, in either Of the LANDLORD
! companies, it emphasized.
The statement said it is tn
company's belief and that Of it
independent auditors, Pric e
. Warehouse & Co., that adjust
ment of accounts and estab
liShment of reserves in the 1856.
| annual report fairly presented
the financial condition of ARC.