Post Mortem

As a war baby, Globe Aircraft Corp. grew fast. In three war years it built $18.5 million worth of trainer planes for the Army. Its first plant was a converted barn near Fort Worth. At war's end, Globe felt strong enough to venture into the peacetime market with a small civilian plane, the Swift. It floated a $1.5 million stock issue, at $10 a share, to help finance it. Nine months ago, when the small-plane market hit stormy weather. Globe crashed.

Last week, with a great to-do over the wreckage, SEC suspended the "effectiveness" of Globe's stock registration statement. The registration, said SEC in its belated findings, had contained "false and misleading information." Items: Globe had failed to disclose losses of $17,000 and a $200,000 increase in liabilities; it had also understated its need for working capital. In short, SEC should never have approved the statement.

For doing so, SEC was roughly curried by Leslie Gould, financial editor of Hearst's New York Journal-American, an old SEC baiter. Why, asked Gould, had it taken SEC so long to find out that Globe stock was worthless? "This Globe case," said he, "happens to be about the sorriest of the many issues floated last year--issues that should never have been offered to the public--even as speculations. . . . The underwriters of this stock were the Stock Exchange firm of New-burger & Hano of Philadelphia and Gearhart & Co. of New York. . . . What are the Stock Exchange and the National Association of Security Dealers doing about cases such as these?"

But Gould had missed one important point. Now that SEC had found the registration statement misleading, it would ease the way for several stockholders' suits now pending against Globe President and Chairman John Kennedy and the underwriting houses.

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