Crowell-Collier Crackdown

As their final issues reached the newsstands last week, Collier's and the Woman's Home Companion folded with a bang that echoed clear to Washington. The Securities and Exchange Commission announced that it was investigating the financial operations of the Crowell-Collier Publishing Co., ordered one of its rare public inquiries to determine whether the company had made "false and misleading reports" in connection with $4,600,000 worth of debentures it had issued in 1955 and 1956. The investigation also covers the activities of the Manhattan brokerage house of Elliott & Co., which handled the securities sale, and the group of 15 New York and Chicago investors, headed by Financier J. Patrick Lannan, who had bought the debentures (TIME, Dec. 24).

Though Crowell-Collier claimed the sale was a private transaction, SEC charged that it was in effect a public sale, and that the company had thus violated the law by failing to register the securities offering or make full disclosure of company records. However, Wall Streeters suspected that the SEC was less interested in this aspect of the case than in the sudden spurt in Crowell-Collier stock early this year on optimistic estimates of company earnings prospects. By last August more than $500,000 worth of debentures had been quietly converted into shares of common stock, said SEC; shares were then sold at a profit to "numerous" other investors. Financier Lannan replied that Crowell-Collier's new board of directors, which decided to fold the magazines last fortnight, included none of the investors who had converted debentures. Said Lannan: "The company's 1,000% clean."

Meanwhile, a committee representing 650 fired staffers still lacked assurance that the company would give them severance pay, though President-Editor Paul Smith conceded that Crowell-Collier had a "moral obligation" to make some kind of settlement. Readers of the magazine also were frustrated when they discovered that both magazines had suspended in the middle of serialized novels. At the end of the second installment of Collier's "Doom Cliff" by Luke Short, the hero had been left "drowning in an ocean of pain." But in Aspen, Colo., Author Short (real name: Fred Glidden) told telephoners what they might have guessed anyway: the hero recovers, kills off the bad guys and confides to the pretty hired girl that he will hang up his guns for good.

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