Solv-Ex link to Mafia investigation

Click to follow
The Independent Online
The company that was at the heart of the Morgan Grenfell trading scandal in London last year has surfaced again in connection with a potentially explosive inquiry in the United States into Mafia infiltration of the securities industry. One of several targets of the investigation is Solv- Ex Corp.

Peter Young, a manager of three Morgan funds, was suspended last autumn after it was discovered he was trading in unlisted stock in Solv-Ex. Morgan Grenfell Asset Management discovered he had secretly built up a 12.4 per cent holding in Solv-Ex.

The National Association of Securities Dealers (Nasd) revealed yesterday it had opened investigations into alleged wrong-doing, some of it Mafia- related, involving 10 US brokerages and 19 Nasdaq-listed companies.

All were first identified in an article in the magazine Business Week last December.

Solv-Ex was among the companies named in the article, entitled "The Mob on Wall Street".

Nasd has confirmed in letters to members of the US Congress that every company and securities house mentioned by the magazine is now part of its inquiries.

"Organised crime is included but our look is much broader than that, at any violation of securities rules or criminal behaviour," a spokesman for Nasd said of the investigations, which are being conducted in tandem with the FBI.

Mary Schapiro, president of Nasd regulation, told one Congressman that a task force had been created to "aid criminal authorities taking part in investigations and undercover operations involving the securities industry".

In its article, Business Week suggested that Mafia crime members were infiltrating securities firms and manipulating the trading and pricing of some stocks.

Using tactics that included physical intimidation and bribery, it claimed, Mafia operators would, among other things, force stock on to the market at an inflated price and make a profit through selling short.

Solv-Ex had confirmed even last year that it was the subject of an investigation into possible illegal short-selling of its stock.

Mr Young, who was dismissed along with five other fund executives, was accused of using Luxembourg-based holding companies to disguise his holdings in unlisted Solv-Ex stock.

Two of those companies were named as Alulux Mining and Sandvest Petroleum.

Based in New Mexico, Solv-Ex is developing technology to extract oil from tar sands in northern Canada.