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remaining 160,000 pledged shares consisted of stock he purchased
at various times after 1980.
Merrill Lynch’s Sale of the Pledged Stock
On May 2, 1997, Merrill Lynch sent a letter to Mr. Rendall
demanding payment of the margin loan in the amount of
$4,195,022.80, “plus all accrued interest”, by May 9, 1997. If
Mr. Rendall failed to repay the margin loan by that date, Merrill
Lynch stated that it would liquidate sufficient shares of Solv-Ex
stock from the margin account to cover the margin debt. The
letter further stated that, if $2 million were received by May 9,
the due date for the balance would be extended until May 16,
1997.
In ensuing correspondence between Merrill Lynch or counsel
for Merrill Lynch and Solv-Ex and/or counsel for Solv-Ex, counsel
for Solv-Ex disputed and counsel for Merrill Lynch defended
Merrill Lynch’s right, under the Federal securities laws, to sell
the pledged stock. In a letter dated May 22, 1997, Merrill Lynch
requested Solv-Ex and its transfer agent to register 1,100,000
shares of the pledged Solv-Ex stock for transfer in the name of
Merrill Lynch. In a response to that letter and in a letter to
the transfer agent, both dated May 27, 1997, counsel for Solv-Ex
acknowledged that the requested reregistration/reissuance of
shares was accomplished by the transfer agent without permission
to do so from either Solv-Ex or counsel for Solv-Ex.
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