Page 534 - WhyAsInY

Why (as in yaverbaum)
correct, the statements could easily be seen as misleading. That could lead to trouble of a different sort: if there were to be a failure of the company, people who invested in reliance on those statements would take the position that they had been defrauded. Which is ultimately what occurred.
Q: And?
A: Arthur Beckerman, who had, as I said, invested in Coronet Capital,
seemed very nervous, and there were signs that he and Norman were on the outs.
Q: Anything else?
A: Investors in Coronet Capital Company were starting to pressure
Norman.
Q: How did you feel about the situation?
A: My trust in Norman had eroded; I became worried that his
responses to the bad market might cross the line and that he would keep those facts from me. For instance, Warner was being asked by Norman to deal with some of the borrowers, and I was not advised about what he was doing. Then Stuart, who had indirectly invested in Coronet Capital, came to me and told me of his concerns.
Q: And?
A: In June, I received the call from Allen Rothman telling me of a
potential failure of Coronet Capital Company—and I soon found myself in consultation with the bankruptcy lawyers.
Q: What was your reaction to that?
A: Obviously, I was concerned about the economic situation that
Coronet was in and how that would ultimately affect me. Taking a bankruptcy is not, however, troublesome on an ethical or a legal level.
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