Ask the Scholar
Document scope · 1 page
Scholar
Ask about this object, its catalog metadata, its source description, or the page inventory.
For page-specific OCR and visual context, open one of the page chats.
Scholar Source Context
Document identity
localId
258225404
label
Smith, C. Arnholt
core
doc
dtoType
document
citationUrl
pageCount
1
Source metadata
id
258225404
contentType
document
title
Smith, C. Arnholt
citationUrl
collections
White House Staff Member and Office Files (Nixon Administration)
Leonard Garment's Files
thumbnailUrl
largeImageUrl
imageCount
1
hasImages
yes
source
import
hasTranscription
no
Source extras
naId
258225404
levelOfDescription
fileUnit
recordType
description
ocrSource
nara-archive
Single page context
seq
1
pageIndex
0
type
document
mediaId
0911e57cc895e7cc
ocrText
Date:
May 23, 1973
From the desk of William E. Simon
To:
GENERAL HAIG
The Deputy Secretary of the Treasury
Room 3326
Ext. 2801
Reproduced at the Richard Nixon Presidential Library and Museum
Office Memorandum
UNITED STATES GOVERNMENT
THE COMPTROLLER OF THE CURRENCY
TO
: Mr. J. T. Watson
DATE: May 22, 1973
Acting Comptroller of the Currency
FROM
Robert Bloom
Chief Counsel
SUBJECT: United States National Bank, San Diego, California - SEC
I had telephone calls this morning from Irving Pollack, Director
of Enforcement, and also from SEC Commissioners Loomis and Evans.
They confirmed that the SEC was close to filing their fraud complaint
against Westgate California Corporation and C. Arnholt Smith.
We had previously supplied SEC with drafts of our Notice of
Charges and Cease and Desist Order and had kept them advised of our
progress. Present plans call for the signing of the Order by Smith
and the Board of Directors of U. S. National at a special meeting of
the Board to be held Thursday, May 24.
Based on our obtaining the signed Cease and Desist Order,
Commissioners Loomis and Evans stated that it was the intent of the
Commission not to name the bank as a party to the Westgage complaint.
We discussed the timing of the Commission's action, and it was
tentatively agreed that if all goes well at the Board meeting on
Thursday and our Order is signed, the Commission would file its
complaint with a public announcement on Friday, May 25.
A matter of crucial importance is how the publicity concerning
the SEC action is handled. Both the staff and the Commissioners were
insistent about the necessity of our making some kind of simultaneous
public announcement with them concerning the actions we have taken
against Smith and the bank. The Commission's concern is about trading
in the stock of the bank which may take place in ignorance of the
self-dealing problems in the bank necessitating governmental action.
I advised both the staff and the Commissioners of the provisions of
12 U.S.C. 1818 which require our proceedings to be private unless the
Comptroller determines that the public interest requires otherwise.
The SEC Commissioners and staff advised that their law is the opposite
and prohibits a private proceeding. I pointed out to both the staff
and the Commissioners that the value of the minority stock interest
in U. S. National is much smaller than the amounts of uninsured deposits
which could be lost in the event of insolvency of the bank. Commissioners
Evans and Loomis appeared to understand the problem. Commissioner Evans
especially was receptive because of his recent experience with the
Senate Banking and Currency Committee prior to becoming a Commissioner.
Reproduced at the Richard Nixon Presidential Library and Museum
- 2 -
Commissioner Loomis stated that in the absence of some method of
informing the public of the existence of the problems of the bank, the
Commission would have to consider the necessity and effect of suspending
trade in the bank stock. I stated that I thought such a suspension of
trading would probably create more serious problems than any press
release.
The way I left it with the Commissioners was that we would continue
close coordination with their staff advising them whether the Order was
signed on May 24 as scheduled. If it is, the SEC will probably file
their complaint on May 25 with publicity to be coordinated with this
office.
In a later conversation with Mr. Pollack, I confirmed with him
that we would be given an opportunity to review any press release to
be issued by SEC prior to issuance. I also asked to see a copy of
their complaint prior to filing. Pollack said that while this would
ordinarily be no problem, that because of the recent heavy publicity
about deletions from SEC complaints (Vesco and ICC cases), he doubted
if he could do it and that even if I did see it, it wouldn't do me any
good because they could not change anything in it. I pointed out that
this could create serious problems because the financial reporters
could go beyond the press releases and pick up derogatory information
about the bank directly from the complaint.
About 3:00 P.M. Pollack called again and made an appointment for
us to see the SEC complaint and press release at this office, 10:00 A.M.,
May 23. I plan to go over there with Wes Murphy and Gail Pohn.
Attached is a draft of a short press release which we may have to
issue on Friday to satisfy the SEC as well as the press.
Attachment
Reproduced at the Richard Nixon Presidential Library and Museum
The Acting Comptroller of the Currency today issued the following
comments in connection with the filing by the Securities and Exchange
Commission of injunction proceedings against Westgage California
Corporation and Mr. C. Arnholt Smith:
The Board of Directors of U. S. National Bank, San Diego,
recently [on Thursday of this week] entered into a consent cease and
desist order with the Office of the Comptroller of the Currency
agreeing to take all steps necessary to achieve the orderly liquidation
of the loans presently held by the bank which involve Mr. C. A. Smith,
Westgate California Corporation and other related companies. Mr. Smith,
former board chairman of the bank, agreed in the order to indemnify
the bank against any future losses in connection with such loans.
The above actions were taken by the Acting Comptroller in
cooperation with the Securities and Exchange Commission.
Reproduced at the Richard Nixon Presidential Library and Museum