The University of Oklahoma's head football coach, the chairman of Texas International, the general manager of an Oklahoma City television station and several of the city's prominent businessmen were accused of illegal insider stock trading yesterday by the Securities and Exchange Commission.
The SEC charged that Oklahoma coach Barry Switzer, TI chief George Platt and others unlawfully made a profit of $720,000 on the purchase of stock in Phoenix Resources.
Switzer contends he merely overheard a stock tip at a track meet and did nothing illegal.
In a complaint filed in U.S. District Court in Oklahoma City, the SEC said 13 investors bought stock on non-public information provided by a Phoenix Resources director in the spring of 1981. At the time the company, which engaged in oil and gas production and exploration, was considering liquidation. Investors can make money in a liquidation if the value of the assets sold exceeds that of the stock.
Through their Washington law firm, Pierson, Ball & Dowd, the defendants issued a statement "categorically denying" allegations of insider trading and saying they plan to "vigorously contest" the charges.
"Through this case . . . the SEC is attempting to test a new theory that it should be illegal for anybody to buy stock in a company if he happens to be in a public place and by mere chance overhears a conversation about that company."
Referring to the television commercials for the brokerage firm of E.F. Hutton, they added, "As the ad goes, when a certain firm talks, people listen. But if you do listen, the SEC says you shouldn't be able to keep your profits."
Phoenix Resources was a subsidiary of Texas International, a large Oklahoma City oil and gas drilling firm. Platt, TI's chairman, served as a director of Phoenix.
The SEC alleges that a week before the announcement that Phoenix was considering liquidation, Platt disclosed this fact at a track meet to Switzer. The defense claims that Switzer, seated in the bleachers in front of Mr. and Mrs. Platt, overheard the couple's conversation about the liquidation.
The SEC also said Platt told his son, Stephen Platt. The younger Platt and Switzer "shared this information, directly and indirectly, with the other defendants, all of whom purchased Phoenix stock while knowing or having reason to know it came from a confidential source," the SEC said.
Two of the defendants, Harold L. Hodges and Robert M. Hoover Jr., are accused of splitting their trading profits with Switzer and Lee Allan Smith, the general manager of an Oklahoma city television station.
The investors made their profits by selling their holdings shortly after the public announcement of a possible liquidation caused the price of the stock to rise. In the end, Phoenix was not liquidated, but wholly acquired by Texas International. All of the defendants have been ordered by the SEC to disgorge their profits, or give back the money.