Landmark brokerage company is under investigation Business took firm run by North public

August 10, 1996|By NEW YORK TIMES NEWS SERVICE

Landmark International Equities, a Westbury, N.Y., brokerage firm best known for taking public a company run by Oliver North, is being investigated by the National Association of Securities Dealers in the wake of running afoul of net capital requirements and quitting as a Nasdaq market maker Wednesday, according to a person familiar with the inquiry.

Landmark quit making markets at about 11: 30 a.m. Wednesday in seven Nasdaq-traded securities, including shares of Guardian Technologies International, whose chairman and president is North.

Landmark executives were not available for comment yesterday. Guardian makes, among other things, body armor.

George Johnson, president and chief executive of Hanifen Imhoff Clearing Corp. of Denver, which operated as Landmark's clearing agent, said Landmark was trying to raise new capital to reopen its market-making business.

Johnson said that Landmark became imperiled when the stock price of Guardian, among other companies in which Landmark made a market, fell sharply in the last half of July and early August. As a clearing agent for Landmark, Hanifen guaranteed that Landmark trades would be completed and paid for.

After Landmark's withdrawal as a market maker on Wednesday, those stocks plunged even more. Guardian's stock price, which more than doubled from its $5 offering price on its first day of trading in May, had already fallen to $6 in late July and to $4 this week.

Wednesday morning, it fell to $1.75 from $3.75. Yesterday, the shares rose 6.25 cents to $2.1875.

Also Wednesday, shares of R. F. Management Corp., which serves outpatient surgery centers and whose shares Landmark took public in July 1995, fell to 87.5 cents from $2. Yesterday, the shares rose 43.75 cents to $1.50.

Market makers are securities firms that stand ready to buy and sell shares in a given stock on the Nasdaq securities market. For the largest Nasdaq-traded stocks, like Microsoft or Intel, dozens of companies make a market, and a market maker's withdrawal would be unlikely to affect the shares.

But for smaller companies trading is often highly dependent on the underwriter, and its retail clients usually make up the bulk of the shareholders. Thus, the underwriter's withdrawal as a market maker can have a catastrophic effect on the stock price.

In Guardian's case, when Landmark stopped making a market in the stock and warrants, so did six other firms, said Reid Walker, an NASD spokesman. Landmark also quit making a market in the stock and warrants of R. F. Management, shares and warrants of Greenman Technologies Inc. and shares of Atec Group Inc.

Pub Date: 8/10/96

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