Gulf & Western Executives Given Easy Out on Fund-Mishandling Raps

Gulf and Western, Donald Gaston (the company's executive vice president), and Charles Bludhorn (the company's chairman, chief executive officer and largest shareholder) settled a suit in late October which the Securities and Exchange Commission (SEC) had filed against them two years ago.,

The SEC in November, 1979 accused Bludhorn and the company of having "engaged in fraudulent courses of conduct" from 1968 to 1979. "As part of these fraudulent courses of action," the SEC suit alleged, "the defendants engaged in improper financial reporting, made false and misleading disclosures and omitted to disclose material information concerning Gulf and Western's business operations, financial condition and management activities."

In addition, the SEC charged that the defendants "subjected millions of dollars of assets of the company to risks through, among other things, unauthorized and undisclosed commodities trading and an unauthorized transfer of the profits from such trading to the Dominican Republic." Bludhorn and Gaston, the SEC alleged, "utilized funds of Gulf and Western for personal benefit without properly accounting for the use of such funds."

As part of the settlement, Gulf and Western, its officers and directors agreed to not violate the securities acts that the SEC had charged them with violating.

They also agreed to grant the company's audit committee additional "responsibilities, functions, and powers" concerning the company's finances.

There was no admission of guilt on the part of the defendants.

"Basically, we got what we asked for," says Fred Friedman, the SEC's lawyer on the case.

"The agreement clearly speaks for itself," says Bill Blodgett, public relations officer for Gulf and Western.