HOUSTON -- Three members of the Tidel Technologies (Nasdaq: ATMS - news) Board of Directors, including Chief Executive Officer James T. Rash, have filed reports on Form 4 with the Securities and Exchange Commission (S.E.C.) reflecting open market purchases of the company's common stock in October.
Jerrell G. Clay purchased 40,000 shares, while Raymond P. Landry and Rash purchased 10,000 shares each.
Tidel also reported that James L. Britton III, who had served as a member of the Board of Directors since 1990, had tendered his resignation on Oct. 11. Tidel is reviewing candidates to fill the vacancy created by Britton's resignation.
As reported earlier on ATMmarketplace, Britton acquired 100,000 Tidel shares for $81,500 through the exercise of warrants on July 12, 2000. He then sold 133,800 shares for proceeds of $1,556,494 over the next 12 days.
One month earlier, Rash sold 250,000 shares for proceeds of $2,917,839 during an eight-day stretch starting June 13. Mark Levenick, the company's chief operating officer, also sold 105,000 shares on June 14-16, for a profit of $1,246,070.
According to Leonard Carr, Tidel's senior vice president, none of the executives sold more than 30 percent of their personal holdings. The sale of stock is typical for executives at public companies who, like outside investors, hope to make a profit by buying stock when the price is low and selling when the price rises, Carr told ATMmarketplace in an earlier interview.
"(The executives) had not sold a share in 13 years and had never realized a gain. The stock had not gone above $4 in more than a decade, then it escalated above $12 in six months," Carr said. "We thought it was headed to $30."
At the time of the stock sales, no one in the company anticipated future problems with Credit Card Center (CCC), the now-bankrupt ISO that was Tidel's biggest customer, Carr said.
Tidel, Rash, Levenick, Britton and Clay are all named as defendants in a suit filed by the New York law firm of Schoengold & Sporn in U.S. District Court for the Southern District of Texas.
The complaint, filed on behalf of all persons and entities that purchased Tidel stock from April 6, 2000 through Feb. 8, 2001, alleges that Tidel falsely reported its sales of ATMs at a "record" pace, which led to an artificial inflation of its stock price that allowed Tidel to begin trading on NASDAQ.
The suit also claimed that when Tidel disclosed that orders from CCC would fall in 2001's first quarter, its stock price declined precipitously. The lawsuit alleges that Tidel earlier knew but did not disclose that CCC was switching to competing manufacturer NCR and reducing its orders for Tidel machines.
