to have violated section 10(b) of the Securities Exchange Act and Rule 10b-5 by using to their own advantage material inside information which had not been disclosed to the general public. Defendant Thomas P. O'Neill, who was a TGS accountant, failed to answer the summons and complaint or appear. SEC moved for a default judgment against him. SEC may seek a hearing to determine what remedy Mr. Clayton and Mr. Crawford must give. In its original complaint, SEC asked that the defendants be permanently enjoined from future acts such as those alleged and that they offer to return the stock to the persons from whom they bought it. SEC is now studying whether to appeal Judge Bonsai's decision and what course of action to take. On the issue of who is an insider, Judge Bonsai sided with SEC, saying that the term insider as applied to Section 10(b) and Rule 10b-5 "may include employees . . . who are in possession of material undisclosed information obtained in the course of their employment." Thus, the term would not be limited, as proposed by the defendants, to officers, directors, or principal stockholders. In reaching a decision on SEC's charges judge Bonsai divided the time from Nov. 12, 1963, to April 16, 1964, into three periods. The first covers the time from the drilling of the initial hole (Nov. 12, 1963), which established the presence of mineralization in the particular hole drilled, until 7 P.M., April 9, 1963, when drilling had progressed to the point that "there was real evidence that a body of commercially mineable ore might exist." The judge says that "at 7 P.M. on April 9, those with knowledge of the drilling results had material information which it was reaso3iably certain, if disclosed, would have had a substantial impact on the market price of TGS stock." The information available before then was not material information and TGS people were free to buy TGS stock. The judge cleared defendants Stephens, Fogarty, Lamont, and Coates because they did not possess material information before 7 P.M., April 9, 1963. He also said there was no attempt to use material information for personal gain on the part of those accepting stock options in this period. The second period—a critical one for defendants Clayton and Crawfordwas from 7 P.M., April 9, 1963, to 10 A.M., April 16, 1964. The judge says that by 7 P.M., April 9, the status of information available had changed from "not material" to "material," and those with this knowledge were under a duty not to use it for personal 32 C&EN AUG. 29, 1966
TGS president Stephens No material information
advantage without first disclosing it. Judge Bonsai decided that Mr. Clayton and Mr. Crawford possessed the information and used it for personal gain by purchasing stock without first disclosing the information to the public in violation of Section 10 (b) and Rule 10b-5. The third crucial period was from 10 A.M. (the time of the press conference announcing the ore find) to the close of business April 16, 1964. SEC wanted the court to fix some time period following the announcement during which the public would digest and "absorb" the information and insiders would be prohibited from trading in the firm's stock. "It may be, as the commission contends, that a more effective rule should be established to preclude insiders from acting on information after it has been announced but before it has been absorbed by the public," Judge Bonsai said, but that is up to the commission or Congress, not the court. Finally, the judge ruled that the company's April 12 press announcement (which said that newspaper reports and rumors of a TGS ore find exaggerated the scale of operations) was in keeping with the information then available to the men who wrote it. "While, in retrospect, the press release may appear gloomy or incomplete, this does not make it misleading or deceptive on the basis of the facts then known," the judge observed.
Swift reorganizes ag chemicals Swift & Co. has reorganized and streamlined its agricultural chemicals operation. The Agri-Chem division and the phosphate division of the widely diversified Chicago, 111.-based meat packer have been combined and renamed the agricultural chemicals division.
The company is already big in agricultural chemicals and is growing. In the past two years it has committed more than $35 million to building and expanding fertilizer capacity. By 1968 Swift will be basic in all three primary plant nutrients (nitrogen, phosphorus, and potassium ). Vice president William F. Price remains in overall charge of the company's agricultural chemicals operation. He says the reorganization is aimed at increasing efficiency in sales, marketing, and distribution as Swift moves to meet the growing demand for plant food both at home and abroad. Swift notes that this worldwide demand should triple in the next 15 years. General manager of the new division is Joseph P. Sullivan, former head of the Agri-Chem division. Howard P. Gould, who was general manager of the phosphate division, is now administrative assistant to Mr. Price. The new division has two major arms—marketing and operations. Marketing, which involves industrial minerals, international sales, and the company's garden line of plant foods and pesticides, has seven sales and production areas—six in the U.S. and one in Canada. Swift's expansion plans, announced over the past two years, cover phosphate, potash, and nitrogen. The company has recently started a $10 million program at its Florida phosphate operation. To be completed next year, this project will increase production at the company's Silver City phosphate mine by more than 50%. It will also increase refining and upgrading capacity there. In Saskatchewan, construction of the Allan Potash Mines, in which Swift Canadian Co., Ltd., has a 20% share, is running ahead of schedule. The plant should be on stream in 1968. It will have an annual potash capacity of 1.5 million tons. The rest of the operation is owned by U.S. Borax and a subsidiary of Homestake Mining Co. In the Republic of South Korea, construction of the 844 million fertilizer complex in which Swift has a 25% interest is well under way. Due to be on stream early next year, the plant will produce 300,000 tons of prilled urea and granulated mixed plant foods per year—all to be used in Korea. The plant will be managed by Swift personnel. Swift is already basic in nitrogen in the U.S. The company owns 50% of Hawkeye Chemical Co., Clinton, Iowa (Skelly Oil owns the other 5 0 % ) . Hawkeye runs a 400 ton-per-day anhydrous ammonia plant and makes a range of other nitrogenous agricultural products.
