SECURITIES AND EXCHANGE COM'N v. RA Holman & Co.

• Decision Date: 15 May 1967
• Docket Number: No. 418,30276.,Dockets 30039,419,418
• Citation: 377 F.2d 665
• Parties: SECURITIES AND EXCHANGE COMMISSION, Plaintiff-Appellee, v. R. A. HOLMAN & CO., Inc., Richard A. Holman and Irving Bienenstock a/k/a Irving Burns, Defendants-Appellants. R. A. HOLMAN & CO., Inc., Petitioner, v. SECURITIES AND EXCHANGE COMMISSION, Respondent.
• Court: U.S. Court of Appeals — Second Circuit

377 F.2d 665 (1967)

SECURITIES AND EXCHANGE COMMISSION, Plaintiff-Appellee, v. R. A. HOLMAN & CO., Inc., Richard A. Holman and Irving Bienenstock a/k/a Irving Burns, Defendants-Appellants.

R. A. HOLMAN & CO., Inc., Petitioner, v. SECURITIES AND EXCHANGE COMMISSION, Respondent.

Nos. 418, 419, Dockets 30039, 30276.

United States Court of Appeals Second Circuit.

Petitions for Rehearing Submitted October 20, 1966.

Decided May 15, 1967.

Sidney P. Howell, Jr., New York City, (Rogers, Hoge & Hills, New York City, Arnold & Porter, Washington, D. C., and

Richard A. Holman, New York City, on the brief), for petitioners.

Philip A. Loomis, Jr., Gen. Counsel, David Ferber, Solicitor, Martin D. Newman, Atty., S. E. C., Washington, D. C., for appellee.

Before WATERMAN, MOORE and KAUFMAN, Circuit Judges.

PER CURIAM.

The opinions of this Court in the above entitled proceedings were filed on September 21, 1966. See SEC v. R. A. Holman & Co., 2 Cir., 366 F.2d 456 (No. 30039) and R. A. Holman & Co. v. SEC, 2 Cir., 366 F.2d 446 (No. 30276). R. A. Holman & Co., Inc., Richard A. Holman and Irving Bienenstock, as defendants-appellants in No. 30039 and R. A. Holman & Co., Inc., as petitioner in No. 30276, now petition for rehearings of the appeals in said cases. We grant the petition for rehearing in No. 30276 and amend our former opinion in conformity with this opinion. The petition for rehearing in No. 30039 is denied, as we adhere to our former opinion.

The most serious allegations of factual error, contained in R. A. Holman & Co.'s rehearing petition in No. 30276, pertain to that part of the Court's opinion that deals with the offer and sale of Precise stock. 366 F.2d at 448-450. We there upheld the Commission's findings that petitioner (1) purchased Precise stock while still participating in its distribution in violation of Rule 10b-6; (2) engaged in activities designed to induce or effect the purchase or sale of Precise stock without disclosing the fact of its control of Precise in violation of Rule 15c1-5; and (3) made misleading and unjustifiable representations to customers as to the value of Precise stock.

Petitioner claims that the Court confused the "unit" of Precise stock offered to the public (consisting of one share of common stock and one share of preferred convertible into four shares of common) with a "share" of Precise common, equivalent to only 1/5 the value of the "unit." Thus with respect to the Kabian transaction, petitioner complains that it was misleading for this Court to state that 13,000 units were allocated to Mr. Kabian's account on December 30, 1958 on a delayed delivery basis, and that after Mr. Kabian cancelled, Richard A. Holman, petitioner's president, subsequently put 10,000 shares of Precise common into petitioner's trading account and sold them to the public. Petitioner asks whether we fully realized that after the sale of 10,000 shares there were still 55,000¹ (or its equivalent) shares of common in petitioner's account left over from the cancelled Kabian order. We were not under any basic misconception as to the distinction between shares or units with respect to this transaction; certainly the purchase and sale of 10,000 shares by petitioner during "distribution" is enough to establish a serious violation of Rule 10b-6. In the next paragraph, 366 F.2d at 449, however, we did refer to 33,200 shares of stock being sold by December 31, 1958 when the reference should have been to 33,200 units. This appears to have been a mere slip in view of the correct reference to 33,200 units earlier on the same page. Thus, while the mistake is noted and corrected, it did not undermine the factual basis for the Court's finding against petitioner with respect to the Kabian transaction.

The factual basis for our conclusion that Holman was "controlling" Precise on December 9, 1958, is also challenged. Prior to the public offering, 130,000 shares of Precise common stock were outstanding — 55,000 in the name of Byron, 75,000 in the name of Silber. This Court stated that by December 9, 1958 (the date Holman bought Silber's 75,000 shares) 15,220 shares of the new offering had been sold so that the total shares of common stock then outstanding...