Newspaper article THE JOURNAL RECORD

Third of Merger Activity Attributable to Macroeconomic Factors/since 1960, Says Federal Reserve Economist

Newspaper article THE JOURNAL RECORD

Third of Merger Activity Attributable to Macroeconomic Factors/since 1960, Says Federal Reserve Economist

Article excerpt

About one-third of the fluctuations in merger and acquisition activity in the United States between 1960 and 1985 is attributable to macroeconomic factors such as interest rates and capacity utilization, said Sean Becketti, a visiting scholar at the Federal Reserve Bank in Kansas City.

Becketti conducted a study to determine how macroeconomic variables such as interest rates, stock prices, capacity utilization and money supply have influenced mergers.

Changes in real interest rates appear to have the greatest influence on merger activity, he said, and capacity utilization also affects activity in the short run. Where there are delays in obtaining new capital goods, Becketti said firms may choose to expand through acquisitions rather than through traditional investments in plant and equipment. . .

- Rooney, Pace Inc., a New York brokerage firm, was charged last month by the Securities and Exchange Commission with participating in a stock manipulation scheme that produced more than $4 million in illegal profits, it was reported by the San Francisco Chronicle.

Also named in the suit were Randolph K. Pace, the firm's president; Capt. Crab Inc., a Florida-based chain of fast food restaurant, and its chairman, Edward R. Scharps; a Rooney Pace stock trader and two other brokers.

The petition charged that from 1982 to 1983 the defendants used devices to artificially support the stock price of two predecessor companies that were later merged to form Capt. Crab, the report said.

A Rooney Pace attorney said the firm would contest the SEC claims.

On another matter, Rooney Pace was ordered to pay $1.1 million to a former manager of the firm's Atlanta office by a New York Stock Exchange arbitration panel, according to the Wall Street Journal.

Harry Henzel said he requested arbitration against Rooney, Pace after it placed 189,732 shares of Computer Store Inc. in his margin account in March 1985 without his permission. The firm charged him an inflated price for the stock, and it subsequently dropped about half price, he said.

Henzel said he was fired when he told Rooney Pace he intended to file an arbitration case.

Rooney Pace has been the target of a number of suits filed in U.S. District Court in Oklahoma City, along with several former brokers for the firm who handled stock of American Educational ComputerInc.

American Educational Computer and Rooney Pace agreed in April to a settlement of litigation stemming from a near-fatal price drop in American Educational's stock in February 1985.

The litigation involved allegations by Rooney Pace officials that American Educational and others had violated state and federal securities laws.

As a part of the settlement, Rooney Pace dropped its litigation against the Economy Oklahoma City, a major stockholder of American Educational.

A letter of intent to purchase the publishing assets of the Economy Co. was signed by McGraw Hill Inc. earlier this month. . .

- David H. Pendley, executive vice president of Signal Capital Corp. …

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