The Securities and Exchange Commission yesterday charged the Allied Chemical Corp. with failing to tell its investors it was knowingly polluting the environment with Kepone from its Hopewell, Va., plant and thereby subjecting itself to high financial risks.
Immediately after the charges were filed, the SEC and Allied signed a consent agreement in which Allied did not contest the charges but was formally blocked from committing such acts in the future.
Allied already has been fined $5 million in a court case brought by the Justice Department in connection with Kepone pollution, and has made an $8 million contribution to a Virginia environmental fund.
The SEC suit alleged that Allied allowed Kepone and other chemicals to be discharged into the water and the air although "it knew that tests showed that animal and marine life which ingested Kepone suffered adverse effects."
The manufacture of Kepone exposed the company to "material potential financial liabilities from companies, individuals and state and local governments exposed to significant amounts of Kepone," the SEC added.
By failing to tell investors of that financial risk, Allied violated securities reporting requirements the SEC said.
In addition to the previous fine. Allied faces numerous lawsuits over the manufacture of Kepone. Its attorneys say the company already handle the litigation.
In the agreement signed yesterday, Allied said it has begun an independent investigation of the various environmental risks in the chemical business and will report to the SEC on that probe as it develops.
Allied also agreed to "maintain, review, modify and provide information" to the SEC in connection with its current policies of advising its investors and management of such enviromental risks.
The discharge of Kepone into the James River forced Virginia Gov. Mills Godwin to close the river to fishing.