received monthly reports, promoted the company’s financial interests, attended board meetings, received inventory reports and therefore should have known of the improper activities of its sales employees.” Had Philip Proctor chosen to testify, rather than invoke the Fifth Amendment, Ling would have had a more difficult time on the stand. Proctor, a Ling & Co. broker, said under oath in his SEC deposition last October, that Ling made periodic checks on his firm’s heavy dealings in NBL, Master Control and Olympic Life stock. Judge Hughes ruled that she would not take the SEC depositions and exhibits into consideration unless they were individually and specifically introduced into evidence during the hearing. The judge probably chose not to use the raw depositions, even though they were taken under oath, because the defendants were not allowed the right of cross examination. Thus, under the law, the depositions could be considered here say. THE INJUNCTIONS are rather meaningless, since all they do is prohibit the defendants from doing illegal acts, that is, from selling certain unregistered stocks and conspiring to manipulate the price of certain stocks. Being the subject of an injunction, however, as one of the defendant’s lawyers pleaded, “places a great stigma on a man.” There is speculation that the SEC introduced its 7,000 pages of testimony in the hopes that the publicity concerning the sensational case would put businessmen all over the United Stats on warning that the SEC will take action against fraudulent activities concerning securities. Even more important as far as this state is concerned, the testimony placed in evidence makes the statements concerning public officials part of the public record. Thus, the press can print the devastating testimony without fear of libel. The widespread publicity makes it more likely that some sort of legal action might be taken against politicians and others who are not named as defendants in the injunction suit. Had the SEC waited to introduce portions of its sworn depositions in court, the public would have learned significantly less about the alleged activities. There would have been profoundly less public pressure to make sure that something like this doesn’t happen again. K .N The cement is cracking in Sharpstown Houston After being directed to several desks and assorted secretaries, I realized that I was being instructed to go into Frank Sharp’s own office. The only other time I had been in there I had been almost paralyzed at the thought of facing the white haired old man; but now the tables were turned. Actually, I wasn’t looking for Frank Sharp but for some minor FDIC official who could correct an error of $5.25 on my bank statement. The official had taken the big front office at the Sharpstown State Bank, but either lacked the sense of humor to see the irony of our situation or had already heard so many wise-cracks about his position that he preferred to insulate himself from my efforts at conversation. Frank Sharp’s big desk was no command post from which the FDIC man was supervising the closing down of the bank, but a center around which he could orbit picking up adding machine tapes and customer’s complaints. He listened to me during one orbit and then moved out the office door and upstairs in search of a former bank employee who might be able to explain the mistake, leaving me downstairs knee deep in adding machine paper and what looked like the blank check material that the FDIC was using to pay off fifty million dollars in claims. The blank checks came four to a sheet and one sheet was already in a nearby electric typewriter. I could have typed out my own check for $5.25 or for almost any amount up to fifty million. AS I WAITED for a report on the FDIC’s error and mused on the possibility of cashing a three million dollar check in Rio de Janiero I had a chance to listen in on the problems of my neighbors. One family, with the breadwinner still in work clothes, was complaining that they couldn’t meet the payments on their auto 8 The Texas Observer and home loans since the payments he depended on in his plumbing business had come in the form of Sharpstown Bank checks. He was left with no money until he could collect real money for them. Another man shook his head incredulously at the balanace the FDIC claimed he had. There must be more than that, he kept insisting, though he had no evidence to back up his claim. Now, as in moments of prosperity, the Sharpstown residents were not too unlike their banker. Like him, many of them enjoyed only an apparent paper prosperity, built largely on over-extended credit and a dream that somehow there really was more money in the bank than the auditors finally found. I remember the first time I visited the bank some five years ago to open an account. This was the best neighborhood I had ever lived in; quite an improvement over San Antonio’s west side. As I waited for service then, these same people were in line struggling with the bank over bad checks and problems meeting notes. Innocent as I was at the time, I couldn’t believe that people who lived in thirty thousand dollar homes and drove new cars had the same troubles that the poor people I had grown up with had, only worse. The only other time I had been in Frank Sharp’s office I had come as president of the Sharpstown Civic Association to try to interest Sharp in our plan for the beautification of the esplanades in the area, starting with the ones around his shopping center. Like so many residents in his subdivision, Sharp had shown little interest in beautifying the area. Or perhaps like them, he was too busy at the time this was just a few months before his alleged stock manipulations. Perhaps he had too many more important things to do with his time and money. THE LARGE stretches of weed and beer-can covered esplanades in Sharpstown, some without curbing, some flanked by cracked cement streets, probably poured with below specification cement, when compared with the carefully . planted esplanades in neighboring Westbury or Maplewood South, suggest a whole neighborhood of Frank Sharps, overextended financially and with little concern for improving the quality of life in the community. Now the bank was in the hands of an agency of that very federal government held in such suspicion here in Republican, southwest Houston. Everyone had to admit that the agency was doing a good job. By the third day, when I went in to settle my claims, there was no line. The whole process took only a couple of minutes, barring mistakes such as the one I found. For all their suspicions, one had the feeling that many residents in the area would have little trouble handing over all of their responsibilities to an efficient government agency. But however efficient the FDIC showed itself to be, the receivership operation offered insights into what a government operated bank would be like. The janitor service seemed to have fallen below the level of most post-offices. The coldly efficient the first FDIC imn to wait on me literally had blue lips personnel showed little interest in the customers. The former Sharpstown Bank employee, now an employee of the U.S. government, she explained to me, who had joined in the search for my $5.25 assured me that she was hot on the trail and that everything would be straightened out the next day. Sure enough, she called early the next day to say that my check for $5.25 would be. waiting for me in Frank Sharp’s old office. Now I don’t know whether to cash the check or frame it as a symbol for a whole neighborhood or even larger society in danger of going into receivership. Hilary Smith
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