Thomas Lamont Charged With Fraud In Connection With Stock Purchase

The Securities and Exchange Commission has charged Thomas Lamont '21, Harvard Fellow and director of Texas Gulf Sulphur company, with fraud and deceit in 1964 purchase of 3000 shares of Texas Gulf Sulphur stock.

The charge expands a civil suit that was brought against Lamont and 12 other "insiders" in April 1965. The suit claimed that the 13 men had bought, or urged others to buy, Texas Gulf stock on the basis of advance formation of a major ore strike by the company.

No Personal Gain

At that time, the SEC indictment said that Lamont was the only one of the 13 not to have received personal gain from the transaction. He was allowed only to have telephoned one of the bank's other officers and given him advance notice of the ore discovery. The bank subsequently purchased 8000 shares of stock for its clients.

The new charge, announced after a pre-trial hearing on Tuesday, suggests that Lamont may have benefitted personally from an illegal purchase. The charge "came up as a matter of the routine progress of a law suit," according to the SEC's office of General Counsel in Washington. Lamont had been told several times that a personal stock purchase of his might be questioned, they said.

Lamont's trial will open Monday in the New York Federal District Court. If the court finds that stock was purchased as a result of with-held or misleading information, the defendents will be ordered to reimburse the sellers.

Lamont bought 3000 shares of stock for himself on April 16, 1964--the same morning that Texas Gulf Sulphur had held a public news conference to announce the rich Timmins ore discovery.

The suit covering this purchase, like the earlier charge, rests on the allegation that Lamont, an "insider," was involved in stock transactions based on information not made public. In the case of the new charge, however, there is some question as to what constitutes public knowledge.

The SEC, in the pre-trial brief, maintained that a "reasonable amount of time" had not elapsed between the press conference and Lamont's purchase. The investing public, it said, did not have time "to evaluate the development and make investment informed decision."

Lamont, however, said in a statement issued Tuesday that his purchase of Texas Gulf Sulphur shares had been made only after "announcement of the ore find had been widely disseminated through a variety of media."

He claims, that the SEC, by amending its complaint to claim as illegal "a purchase which was made hours after the news had become public," has shown that it has no rule to determine either when news become public," has shown that it has no rule to determine either when news becomes public, or "when it is proper for a party to buy stock."