Wall Street: Demand to Delist

Don Smith is a very meticulous man. At the plant of his Wolverine Aluminum Corp. in Lincoln Park, Mich., where aluminum corners, gutters and sills for houses are made, he rides about in a small electric cart, making sure that workers use ashtrays and do not throw gum wrappers on the floor. When Smith listed his growing firm (1964 sales: $7.2 million) on the American Stock Exchange last month, he traveled to Manhattan to get the usual VIP treatment: a tour of the exchange, lunch with the officers, the chance to buy the first shares of the traded stock. What he experienced did not sit well with Smith, who first began stamping out roof fittings on a press in his father's basement. Last week, in a controversy that vastly embarrassed the exchange, he demanded that Wolverine stock be delisted.

The trouble began when Smith, having bought the first 100 shares of Wolverine at 12⅛, discovered later in the day that it had closed at 11¾. As Smith saw it, nothing had happened that day to change the stock's value. He made inquiries: "I found out that the specialist who'd sold me stock at 12⅛ immediately turned around and tried to buy it back at 11⅞. He'd sold short, and then what he'd done, in effect, was knock a quarter of a million dollars off the value of the company."

Smith went back to Lincoln Park, fired off an angry ten-page letter to his stockholders. He attacked the entire specialist system as "an invitation to disaster," said that the floor of the American Exchange "sounded more like a fish market than like a sedate place of business" and that its securities' traders "looked like a bunch of grownups playing cowboys and Indians." What was more, added Smith, "many of the clerks were extremely busy throwing paper wads at each other."

Amex President Edwin ("Ted") Etherington, who has successfully improved the exchange's once-tarnished image since he took over three years ago, called Smith's charges an "appallingly unjustified, unfair and inaccurate attack." Smith showed "a lack of understanding of the subjects involved," said Etherington, and exchange officers had unsuccessfully tried to explain to him how the specialist system works. At week's end Smith issued another attack on the specialist system, confirmed that he wants his stock to go back to the over-the-counter market, where there are no tours or free lunches but where Wolverine's stock for two years has remained relatively steady.