Solv-Ex Suit Against Investment Firms, Short Sellers Dismissed|
Albuquerque, New Mexico, May 2 (Bloomberg) -- A federal judge dismissed a lawsuit brought by Solv-Ex Corp. against Deutsche Bank AG and about 20 other investors that the oil processing company accused of engaging in a stock market tug-of-war that crushed the company's value.
U.S. District John Conway in Albuquerque, New Mexico, dismissed the lawsuit, filed in December 1998, saying he found no evidence of a conspiracy.
Solv-Ex, which is developing technology to extract oil from tar sands in northern Canada, claimed Deutsche Bank and its Morgan Grenfell unit artificially inflated Solv-Ex's stock price, and then short sellers misused confidential information to drive down the Albuquerque company's share price.
As evidence, Solv-Ex submitted electronic mail messages exchanged among short sellers, investors who profit when stocks fall.
``The e-mails and discussions are merely opinions about the relative value of Solv-Ex stock,'' Conway wrote in his order dismissing the case. ``If such discussions were sufficient to prove a conspiracy, then every person in the securities industry would be a potential conspirator.''
Solv-Ex Chief Financial Officer Frank Ciotti said the company's attorneys were still reviewing the decision, which was issued earlier today.
The ruling comes less than a month after another federal judge found Solv-Ex, Chairman John Rendall and Senior Vice President Herb Campbell ignored negative test results regarding their technology and cautions from consultants, then issued press releases and statements to shareholders almost weekly that created ``a misleadingly optimistic picture'' of Solv-Ex technology.
That decision stemmed from a lawsuit filed in July 1998 by the U.S. Securities and Exchange Commission.
In its lawsuit against the investment firms, Solv-Ex claims Morgan Grenfell, now known as Deutsche Bank Securities, manipulated Solv-Ex's stock as part of a larger scheme to defraud investors.
Deutsche Bank fired former fund manger Peter Young in 1996 for allegedly disguising his funds' holdings in Solv-Ex and other risky stocks through a series of dummy corporations. Solv-Ex officials maintained they were unaware of Young's activities.
Deutsche Bank ultimately paid $664 million in fines and restitution related to the scandal.
Also named in Solv-Ex's lawsuit were eight investment firms and their principals, who Solv-Ex claims sold the company's shares short. Short sellers targeted Solv-Ex in 1996 and 1997, as the company's shares soared, generating a market capitalization of more than $800 million.
In addition to Deutsche Bank, the defendants in the lawsuit were: Quilcap Corp. and its principal, Parker Quillen of New York; Martin Zweig and New York-based Zweig Advisors; Michelle Sarian and her firm, New York-based Fahnestock & Co.; New Orleans-based Rice Voelker Bros. & Frantzen and its principals, George Voelker and Tim Rice; Mikles/Miller Management Inc. of Santa Monica, California, and its principals, Lee Mikles and Mark Miller; Stanley Trilling and his Los Angeles-based Trilling Partners, as well as their affiliate, Paine Webber Group Inc.; and Manuel Asensio and his firm, Asensio & Co. of New York.
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