Business: HOW TO BOOST STOCKS.

Means Are Many, Some Are Honest

THE more primitive Wall Street shenanigans to rig the price of a stock have long been outlawed. But Wall Street is confronted with a new, more complicated phenomenon: the growing refinement of the art of running up a stock by legitimate publicity techniques—and by some not so legitimate. This year the number of people criminally indicted by SEC for false or misleading stock information has increased 38%. The New York Stock Exchange, concerned over the flood of inside tips on corporate developments, last week issued a warning reminder to listed companies that any information likely to affect a stock's price—whether about dividends, new products or new management—should be made public at once.

In the past, some hot tips have put the tippers in hot water. Two years ago Speculator Louis Wolfson, then chief stockholder in American Motors Corp., announced that he was selling his American Motors stock because he thought it had reached its peak. Actually, he had already sold out, and sold short, hoping the stock would drop, making him additional profits. SEC quickly stepped in and froze his holdings. Result: when the stock rose instead of dropping, Wolfson lost heavily.

Stock-boosting maneuvers are not always so easy to identify or trace. TelAutograph stock zoomed from 9 to 24 in eight hectic trading days last fall after the company created the impression in a press release that it had a franchise on a machine able to transmit writing over telephone wires. The SEC set the record straight (TelAutograph had the machine, but not the only one of its kind). Three weeks ago Sperry Rand Corp. privately showed a group of stock analysts a new product for a computer, although the official announcement was one week off. The company also sent out hold-for-release stories to the press. Within two days, predictably, Sperry stock shot up 4 3/8 points. The New York Stock Exchange "suggested" that the company declare at once all details about the product. It did. Ever since Manhattan Lawyer Roy Cohn, onetime aid to the late Joe McCarthy, bought Lionel Corp. a year ago, the model-railroad maker's stock has risen, helped by better earnings, rumors, new flashes and promotional splashes. A month ago Lionel President John B. Medaris was scheduled to speak before the prestigious New York Society of Security Analysts, and word went around that there he would reveal that Missile Expert Wernher von Braun was joining Lionel. Next day Lionel was the second most heavily traded stock on the Ex change, jumped two points. Medaris had nothing to say about Von Braun, except to deny the rumor.

Stock price boosting succeeds so well because Wall Street is full of investors looking for a lower-priced stock that may develop a new electronics or space product and become a fast-rising glamour stock. The spread of stock-option plans as a form of executive compensation has made stock-minded men of many corporate bosses who once paid little attention to Wall Street. An option is good only if the stock rises. Merger-minded companies also want their stock to have a higher price-earnings ratio; it gives them an advantage in a stock-trading merger with another company.