The American Stock Exchange halted trading in Auto-Train Corp. yesterday and asked the Washington railroad for more information about its precarious financial condition.
Amex had warned Auto-Train a few weeks ago that because of its on-going fiscal problems the company did not meet the Amex's standards for continued listing on the exchange, but had agreed to let the Auto-Train stock continue to trade after company officials said they hoped to raise new capital.
The stock exchange suspended trading ysterday after the Interstate Commerce Commission vote Friday to sue Auto-Train for refusing to comply with an ICC order meant to protect passengers if Auto-Train goes out of business.
The ICC is expected to go into U.S. District Court today seeking an injunction to require Auto-Train to put $500,000 into a special bank account to repay passengers who have paid in advance for Auto-Train tickets.
The ICC also is considering legal action against Auto-Train for failing to pay refunds to customers who have canceled their Auto-Train reservations, said Daniel Linhardt of the ICC Office of Consumer Protection.
Last December the ICC ordered Auto-Train to set up the advance-sales escrow account and to pay refunds promptly, but the railraod has not complied with their provision. In addition to going to court to force the railroad to follow its mandates, the ICC also has the authority to penalize Auto-Train for defying its orders.
ICC officials say Auto-Train has collected between $2 million and $3 million from customers for advance ticket sales and owes passengers who have cancelled reservations an estimated $450,000. Because it is short of cash, Auto-Train has been using the customers' money to pay its operating expenses.
The railroad also has financed its operations with $1.6 million in federal taxes and railroad retirement contributions that were withheld from employes' paychecks. The Internal Revenue Service last month filed a tax lien against the company, which had the effect of putting the IRS first in the line of the company's creditors.
Linhardt said the ICC decided to move against Auto-Train because "the commission is extremely concerned that the refund situation has seriously deteriorated in the last few months." Customers complaints against Auto-Train have doubled recently, he added. "Our concern is the consumer," Linhardt said. "We believe we have to take this action to protect the consumer now."
The ICC has ordered Auto-Train to pay refunds within 30 days, but a Florida resident complained that she received a letter from the railroad on July 3 saying her refund check would not be mailed until October, Linhardt said.
The Securities and Exchange Comission revealed yesterday that "another federal agency" has reopened an investigation of Auto-Train that the SEC closed a few months ago without taking action.
The SEC turned down a request for details of that investigation which was filed under the Freedom of Information Act. The SEC said it was rejecting the FOI request "due to the fact that another federal agency has begun an investigation into the affairs of Auto-Train Corp. and has requested that the commission not make available publicly its investigative files." The SEC did not identify the other agency involved; ICC and IRS officials refused to confirm or deny that they had asked for the SEC files.
Auto-Train executives did not respond yesterday to a request for comment on the Amex action and the ICC lawsuit.