Trading was halted yesterday in the stock of Biscayne Federal Savings and Loan Association, an insolvent institution seized last month by the Federal Home Loan Bank Board, which is looking for a buyer for the S&L.
The trading halt, which came on the opening day of a trial in Miami to reverse that seizure, was ordered by the bank board "pending a regulatory announcement."
Following the takeover April 6, the bank board reopened the stock S&L as a mutual institution under the name New Biscayne Federal Savings and Loan Association.
The board has received seven bids for New Biscayne and will spend the next month or so analyzing them. Though the board declined to identify the bidders, it said the two banks and five thrift institutions were all located outside Florida. They are believed to include Citibank and Chase Manhattan of New York and California Federal Savings and Loan.
In its announcement yesterday the board said it was "considering the terms and possible effects of the bids received for New Biscayne, including whether any of the bids will have an effect on the shareholders of Biscayne Federal."
The principal shareholder of the defunct Biscayne Federal is Kaufman & Broad, a Los Angeles builder that owns 25 percent, or 472,000 shares. After Biscayne was seized, the stock plunged from $6 a share on the New York Stock Exchange to $1.50 bid and $2.50 asked over the counter.
Kaufman & Broad and other Biscayne stockholders have filed suit against the bank board charging that its seizure was illegal. On the first day of the trial the Biscayne stockholders tried to introduce minutes of meetings of the bank board staff to demonstrate that the board had acted in bad faith. A Biscayne representative said the minutes indicate the staff discussed problems with the seizure because there was no emergency. After the government objected, the judge recessed the trial until today.
The bank board cannot award the bid for New Biscayne until the trial over the old Biscayne is concluded. If the stockholders win, they would again own the S&L. If the government wins, their stock would be worthless.
Reportedly, speculators have been trading Biscayne stock in the hope that the stockholders will be successful and that the price will go back up. Should Kaufman & Broad and the other stockholders then sell Biscayne, the speculators would stand to make substantial profits.