"Massive fraud to rig share prices”

Press, Volume CX, Issue 32462, 24 November 1970, Page 18

"Massive fraud to rig share prices”

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WASHINGTON, November 23.

The Justice Department announced that 15 persons had been indicted in what was described as a massive fraud to manipulate the price of a share, control of which was obtained by beatings and threats.

Three New York underworld figures are included: John Dloguardi (Johnny Dio), Vincent Aloi, and Carmine Tramunti, who have been publicly identified in organised criminal activities—the jargon the Department usually employ* to Identify Mafia criminals.

The price of Imperial Investment Corporation was forced up from zero to $24 before being suspended by the Securities ano Exchange Commission (S.E.C.), the Government regulatory agency. Sueh manipulations used to be comparatively common in the early years of this century on Wall Street, before the Government clamped on tight controls in the early 19305. The indictment said that

control of Imperial, a corporate shell with no assets, was obtained by torture and threats.

After that arrangements were allegedly made to have various brokerage firms use the "pink sheets” of the national daily quotation service to create an artificial market in Imperial shares. This refers to a system whereby groups of brokerage houses trade shares in an over-the-counter stock among themselves and then publish the resulting price of the share in “pink sheets.” The indictment said other members of the conspiracy opened accounts at brokerage houses and bought and sold Imperial stock to convey the impression it enjoyed an active market and ‘thereby drive up the price.