House Leaders Want Maxwell Stock Sale Probe
WASHINGTON (AP) _ Two House leaders asked the investigative arm of Congress Monday to include the collapse of the late Robert Maxwell’s media empire in a probe of private stock placements that bypass full disclosure.
In a letter to the General Accounting Office, Reps. John Dingell, D-Mich., and Edward Markey, D-Mass., asked the watchdog office to ″expand the scope of your report to include the Maxwell debacle.″
″Commentators say that lax British accounting rules masked a massive fraud,″ Dingell and Markey said in their letter to Comptroller General Charles A. Bowsher. ″It appears that American investors are among the victims.″
Also Monday, Maxwell Communication Corp. PLC, one of Maxwell’s flagship public enterprises, said it had filed for bankruptcy court protection in the United States because the ″bulk of its revenue and operating profit″ was generated by American businesses.
The congressmen noted the Security and Exchange Commission’s Rule 144a allowed Maxwell’s Mirror Group Newspapers to sell a private stock offering valued at more than $96 million to large U.S. institutional investors without registering it with the SEC.
The rule exempts U.S. and foreign companies selling stock or bond offerings privately to a large institutional investor - such as a mutual fund or insurance company - from the costly and time-consuming process of registering and disclosing pertinent information.
Dingell, chairman of the House Energy and Commerce Committee, and Markey, chairman of the panel’s finance subcommittee, have frequently criticized the rule and corporations’ use of it to avoid disclosure.
″We would appreciate particular focus on the relevant British accounting standards, the nature of the disclosure given the purchasers in the offering and what steps have been taken to make sure that these investments are not passed on to unwitting retail investors,″ they said in their letter to Bowsher.