Fraud at Continental?

In many of Louis Wolfson's battles and deals, his associate was David B. Charnay, longtime New York Daily News reporter, now chairman and part owner of a Manhattan public relations firm. Last November Wolfson sold a trailer company controlled by one of his interests to Detroit's Trans Continental Industries, of which Charnay is chairman, and it became Trans Continental's chief asset. Last week the Securities and Exchange Commission ordered a ten-day suspension of trading in Trans Continental stock on the American and Detroit stock exchanges. Reason: "To prevent fraudulent and manipulative practices."

The SEC charged that Trans Continental shares were being sold by telephone by high-pressure operators, with the claim that the stock would double in 30 to 60 days and that the company had a good profit position and would soon declare a substantial dividend. The truth of the matter, said SEC, is that the company has operated at a loss since 1955. It cannot pay dividends until it pays off $3,000,000 in loans. Furthermore, said SEC, substantial trading in the stock was being conducted by an unnamed "foreign source," which had pushed the stock from 2 7/8 to 4 in a few days.

Trans Continental management denied any complicity in the selling, said it did not even know about it. One question the SEC may want answered as it investigates: Where did the high-pressure operators get their hands on a large enough chunk of stock to peddle?

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