The Securities and Exchange Commission yesterday said that trading in four stocks will resume today, ending a suspension that began March 14 when the price of the issues dropped precipitously.
Attorneys from the SEC here have been in Chicago probing the collapse of a small brokerage house whose fall is tied to the stocks.
Trading will be resumed on various exchanges and over the counter in Lawry's Foods, Inc., of Los Angeles, Olympia Brewing Co. of Olympia, Wash., Stange Co. of Chicago, and Fays Drug Co. of Liverpool, N.Y.
The SEC charged that the brokerage, Swift, Henke & Co., had debts that exceeded net capital by 2,000 per cent. In federal district court last week the brokerage consented to entry of an insolvency judgment and appointment of a temporary receiver.
Swift, Henke went under after a registered representative with the firm reportedly put a number of big investors into the four stocks.
On March 7, Alan Abelson, a columnist for Barron's magazine, poublished a negative article about Olympia Brewing. The price of Olympia stock dropped by more than 50 per cent during the next week.
According to published reports, the fall of Olympia's stock forced Swift Henke shareholders to sell their holdings in the other four companies in order to pay balances owed the brokerage house on their Olympia puchases.
What is more, some customers who had put in orders with Swift Henke for Olympia and the other three stocks refused to pay once they began to fall.
The SEC announcement of resumption of trading in the four companies, which was made public yesterday, included a stern reminder to broker-dealers. They were told to observe the "know-your-customer" rules published by the SEC.