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Comparator Trading Held Again

Stocks: NASD extends its ban as it seeks additional information on Orange County firm's executives and stocks.

May 14, 1996|DON LEE | TIMES STAFF WRITER

Trading in shares of Comparator Systems Corp. remained halted Monday as regulators widened their investigation to include the sale of stock by the company and its officers.

It was the third day that stock trading has been suspended for Comparator, a tiny Newport Beach company whose recent, sudden run-up in trading volume and price has sparked an inquiry of possible market manipulation.

The National Assn. of Securities Dealers, which regulates the Nasdaq Stock Market, unexpectedly extended the trading ban Monday because investigators wanted additional information from the company.

A Nasdaq spokesman declined to provide details or say when trading might resume.

However, sources said regulators are now probing insider sale of company stock in addition to its broad-based investigation that includes Comparator's valuation of assets and its market makers, or brokers that trade the company's stock.

Two Comparator vice presidents reportedly sold a chunk of stock in the last 30 days, but company representatives said Monday that they both sold the shares for 4 cents each--well within the stock's trading range for most of the last five years.

A company representative said one of those vice presidents, Gregory Armijo, sold 250,000 shares on May 2. That was one day before the stock began its climb, setting Nasdaq trading records and lifting the price to as high as $1.87. The stock closed at 56 cents before trading was halted Wednesday.

Armijo could not be reached for comment. It was unclear when and how much stock was sold by the other vice president, Fred Bezold, who also could not be contacted.

Officers and directors of Comparator, a maker of high-tech fingerprint identification systems, owned about 131 million shares, or 23%, of the company's stock, as of June 30, 1995.

Company executives have attributed the stock surge to the imminent release of a new product at an Atlanta trade show beginning today.

Chief Executive Robert Rogers did not return messages at the company's office or at the trade show in Atlanta, where he and other officers were setting up a booth for the show. Organizers of the event said they did not have details about Comparator's exhibit.

Rogers spoke again with Nasdaq officials on Monday. Neither the company nor Nasdaq would comment on those discussions, but sources said regulators are seeking more information and clarification following the company's disclosures Friday.

Prompted by Nasdaq's inquiry, Comparator acknowledged Friday that it may have overstated the value of three-fourths of its corporate assets. The company, which has never posted a profit in 17 years of operation, also admitted it does not have funding to produce its new product and that it failed to notify investors when a funding source fell through last year.

An accurate accounting of the company's assets is significant because Nasdaq requires companies to carry $2 million in capital and surplus when the price of their stock falls below $1.

Comparator said Friday that 77% of its assets, which totaled about $5.7 million as of June 30, 1995, are under review.

The Securities and Exchange Commission, which is also investigating the company, declined to comment Monday.

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