The Bakalars Pay Up

In the days when electronics stocks were glamorous, few were more so than Transitron Electronic Corp. of Wakefield, Mass. Its stock went from 36 to 60 in six months, and its sales from $7.4 million to $47 million between 1956 and 1960. But when electronics dipped in mid-1961, partly because of fast-rising imports, none felt the shake-out so sharply as Transitron (which closed last week at 7 3/8). And nobody had more trouble than its enterprising brother-founders, David and Leo Bakalar.

Transitron stockholders, including five mutual funds, filed federal suits against the Bakalars. who made a personal profit of $56 million by selling off 30% of their stock. The charge: Transitron registration statements had contained false or misleading information or significant omissions about sales, inventories, plant values and patent rights. Though they denied the charges, the Bakalars nevertheless agreed to an out-of-court settlement unique in financial history.

Under terms approved last week by Boston Federal District Judge Charles E. Wyzanski Jr., the brothers will put up $5,300,000. Of that the five mutuals, who claim $4.000,000 losses on Transitron. would be reimbursed for litigation costs up to $300,000. The remaining money would be split among them and individual stockholders who held Transitron between December 1959 and February 1962. Either the Bakalars or the plaintiffs may yet back out, but the settlement could actually be a saving for Transitron: in return, Judge Wyzanski granted the brothers an order barring similar suits against their now sagging company, which has lost $2,000,000 in the past two years.

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