Management: The Broadsider

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In 1961, Houston's Ernest M. Hall Jr. headed Hall-Sears Inc., an obscure electronics outfit with earnings of $10,781 on gross sales of $95,000. Three years later, Hall merged with a small uranium mining company and became president of the new firm, now known as Westec; its share sold for 4¼ on the American Stock Exchange. For the first half of 1966, Westec announced earnings of $5,345,567 on sales of $31,-693,395; the company's stock soared to a high of 67⅛ in April.

Chief beneficiary was Hall, who held more than 400,000 shares. A Texas-born electrical engineer, since 1961 Hall expanded Hall-Sears and later Westec by buying out even smaller firms, 17 in all. He also made a Wall Street reputation as a "broadsider"—an executive who keeps his company's name in the news with a never-ending series of self-congratulatory public-relations releases.

After April, Westec stock prices drifted off a bit. From Aug. 8 to Aug. 11 it hovered at around $60 a share.

That was about when 160,000 shares were purchased, according to Westec's board of directors, "by or on behalf of" Hall with "no adequate arrangement" to pay for them; five brokerage firms in Texas and one in New York had simply extended to Hall an all-out line of credit.

Westec stock dropped 16 points in 13 days. Then, as word got around that Hall could not cover the debt, panic set in. So massive were the sell orders that the Securities and Exchange Commission soon stepped in, ordered all trading in Westec stock suspended for ten days, pending an investigation. Westec's board of directors met and voted to 1) fire Hall, and 2) have the company's books audited immediately.

Had Ernest Hall deliberately inflated Westec's profit reports in order to build up the value of its stock? If not, just what had he done to deserve firing? As of last week, no one was quite willing to say. Hall himself remained incommunicado in his expensive Houston home, emerged at one point in his bathrobe to shoo newsmen away. Outsiders could only recall the boast of one Westec official last May that, while Westec was not yet "a Litton, a Textron or other industrial giant, it is our intention to earn a position among such a line-up." Some lineup!