Mr. HARKINS. Wasn't the decision to acquire stock in Great American based upon your conversations with Mr. Alan, Mr. Carter, and Mr. Berlind? Mr. KLEIN. No, the decision was not based upon our conversations. Mr. HARKINS. Was your interest stimulated by the conversations with those gentlemen? Mr. KLEIN. My interest was stimulated by conversations with Mr. Alan Alan and Mr. Carter. Mr. HARKINS. On May 9, 1968, did you have a meeting with Mr. Arthur Carter and Mr. Alan at the Twenty-One Club? Mr. KLEIN. May 9. I can't recall the date. I do recall I had dinner with Mr. Arthur Carter and Mr. Alan Alan at the Twenty-One Club. The date may be correct. Mr. HARKINS. You do recall that? Mr. KLEIN. I recall the dinner specifically with those two gentlemen. Mr. HARKINS. What did you discuss at that dinner meeting? Mr. KLEIN. Mr. Carter told me he would like to become involved with National General, he would like to do business with National General. He thought we were a growing, vibrant, viable company. He told me that we had done-in his opinion, we had done very well financially over the years in turning the company around and in building a fine company and that he would like to personally be associated with the company and personally help us grow and personally do some investment banking business with the company. Mr. HARKINS. Did you discuss at that meeting the possible purchase of the stock in Great American Holding Co.? Mr. KLEIN. I don't think so. Mr. HARKINS. Did you discuss at the meeting the fact that the Great American Holding Co. had a surplus surplus? Mr. KLEIN. I don't believe so. I am trying to get the dates straight in my mind. I don't recall if there was any discussion on Great American at that meeting or not. I cannot fix that date in my mind accurately. Mr. HARKINS. But it is not unlikely that there was such a discussion? Mr. KLEIN. I Would like not to speculate, sir. Mr. HARKINS. During the week of May 13, 1968, did you receive a call from Alan Alan, recommending that National General purchase the shares of Great American Holding Corp.? Mr. KLEIN. I can't really fix the time of phone calls, but in that period it is very probable that I received calls from Mr. Alan Alan and/or Mr. Carter, recommending that we purchase stock in Great American. It is very difficult for me to fix the time. I believe in that period of time those things did happen. Mr. HARKINS. In this telephone conversation with Mr. Alan-and I am basing this question on the document you have before you Mr. KLEIN. I have not read the document. Mr. HARKINS. Would you care to look over it? Mr. KLEIN. I would like to. I have now read the document, sir. Mr. HARKINS. Now, my question was: During the week of May 13, 1968, did you receive a call from Alan Alan, recommending National General purchase shares of Great American Holding Corp.? Mr. KLEIN. I believe I answered that. Mr. HARKINS. You answer that affirmatively now that you have read the document? Mr. KLEIN. My answer is the same-I can't fix the dates, but I do believe it occurred in that period of time; yes. Mr. HARKINS. As a result of your conversation with Mr. Alan, you called Mr. Arthur Carter for additional information? Mr. KLEIN. I believe Mr. Arthur Carter called me, but it is immaterial; anyway, I spoke with Mr. Arthur Carter. Mr. HARKINS. In that conversation at that period of time, did you discuss contract terms with Arthur Carter? Mr. KLEIN. Contract terms? Mr. HARKINS. Yes. Mr. KLEIN. No, sir. Mr. HARKINS. On June 3, 1968, did you have Carter, Berlind purchase stocks on your behalf? Mr. KLEIN. On behalf of National General? Mr. HARKINS. Yes. Mr. KLEIN. Yes, sir. Mr. HARKINS. And you did this without a contract? Mr. KLEIN. What kind of contract? Mr. HARKINS. Didn't you discuss terms-you had a discussion with Arthur Carter where he recommended that you buy Great American Holding Co. stock; you testified to that? Mr. KLEIN. Yes. Mr. HARKINS. And then on June 3, Carter, Berlind purchased stock of Great American on behalf of National General? Mr. KLEIN. Correct. Mr. HARKINS. My question is whether at that time you had arrangements concerning consultant fees or any other contractual relationships? Mr. KLEIN. No, sir; absolutely not. Mr. HARKINS. You must have had some contractual relationships with the broker. Mr. KLEIN. I testified and I tell you we had no contractural relationship or any relationship whatever. We bought stock from him and he received a commission therefrom. Mr. HARKINS. And you were buying stock from him on a cash basis? Mr. KLEIN. On a regular settlement basis. Mr. HARKINS. Regular settlement basis? Mr. KLEIN. Absolutely. Mr. HARKINS. You had no arrangement for any kind of special account? Mr. KLEIN. I so testified. We had no arrangement. The only arrangement we had when we purchased stock then was we purchased the stock and paid for it at regular settlement. We paid the normal brokerage fees. Mr. FOGT. Carter, Berlind didn't set up a numbered account for you with regard to these shares? Mr. KLEIN. I don't know what you mean by that account. I assume they set up an account for National General. Mr. FOGT. Special "K" account? Mr. KLEIN. Special "K" account, that is right. Mr. HARKINS. Mr. Klein, could I have that document back? Mr. KLEIN. Yes. Mr. HARKINS. At the May 28 meeting, National General's executive committee authorized the purchase of 500,000 shares of Great American Holding Co. stock at $55 per share; then you started your purchase orders through Carter, Berlind, is that right? Mr. KLEIN. Yes. Mr. HARKINS. Did you review these? Were you using any other broker to purchase this stock at that time? Mr. KLEIN. No, sir. Mr. HARKINS. Mr. Klein, National General submitted information consisting of order sheets of Burnham & Co. and certain work papers relative to the purchase by National General of 403,700 shares of Great American Holding Co. common stock during the period of June 3 to June 11, 1968. Our examination of these materials shows on June 3 there were 14 purchase transactions made for a total of 5,700 shares of stock at a cost of $227,924.25. Mr. FOGT. That is, 14 transactions. Mr. HARKINS. Fourteen that is correct. On June 3, there were 14 purchase transactions on the one day for a total of 5,700 shares. I recognize that the document that has been submitted to us did not have the information in this form-and I will hand our table down to you. I am not going to ask you to agree at this time to these figures, and computations. I want your counsel or whoever you want to go over it and supplement the record with any comments or corrections later. At this time, I show you for your examination the results of our computations. If you disagree with these figures, I repeat, please correct the record. This is the staff's computation. Our examination showed that the following purchases were made, and you have the table there. The purchase date is the second column. On June 3, 1968, 5,700 shares were purchased for $227,924.25; and on June 4, 1968, 12,700 shares were purchased; and on June 5, 1968, 8,000 shares were purchased; and on June 6, 1968, 2,600 shares; and on June 10, 1968, 108,400 shares were purchased; and on June 11, 1968, 266,300 shares were purchased. A grand total of 403,700 shares purchased in this period, with a grand total in dollars paid of $20,455, 734.69. These purchases were all made by Carter, Berlind; would you agree to that? Mr. KLEIN. They seem to be substantiated by our figures, sir. I believe those are approximately correct. Mr. HARKINS. Do you agree that these stocks were all purchased by Carter, Berlind-all of them-on your behalf? Mr. KLEIN. Yes. These were all effective-all of these orders were effected by Carter, Berlind, or Cogan, Berlind, as it is now known, and I believe these dates are the trade dates. The trades were made on those dates; I believe that is correct, sir. Mr. DONOHUE. Where was this $20 million obtained from to purchase this stock? Mr. KLEIN. The corporation's working capital. Mr. DONOHUE. Which corporation? Mr. KLEIN. National General, sir. Mr. DONOHUE. Was this stock being traded on one of the exchanges? Mr. KLEIN. New York Stock Exchange, sir. Mr. DONOHUE. Was there any spread between the $55 authorized and the highest figures paid during this period when they were being purchased? Mr. KLEIN. To my recollection, the highest we paid was $52 and the lowest we paid was $40; I think we started buying at $40 or approximately $40, and I believe and the records will show that the highest price we paid was $52 a share. Mr. DONOHUE. Subsequently, when you were buying, did the price go up or down? Mr. KLEIN. Well, it went up. Mr. DONOHUE. To what degree? Mr. KLEIN. I think it got as high as and, of course, we can always go back and check the records-I believe it got as high as the low 80's. Mr. DONOHUE. In other words, the highest price you paid for it was $52? Mr. KLEIN. For the initial purchase, yes, sir. Mr. DONOHUE. And you did mention a figure of $40? Mr. KLEIN. Sir? Mr. DONOHUE. You did mention a figure as low as $40? Mr. KLEIN. Yes. We started purchasing the stock, I believe, at either 40 or low 40's. Mr. DONOHUE. And it went up as high as $80? Mr. KLEIN. Correct, sir. Mr. DONOHUE. Over what period of time? Mr. KLEIN. Six months. Mr. DONOHUE. And at any time during that 6-month period or subsequent to that 6-month period, did you dispose of any shares of Great American? Mr. KLEIN. No, sir; not a share. Mr. DONOHUE. Did you buy-during that 6-month period, did you buy any more of it? Mr. KLEIN. Yes, sir. We tendered for any and all additional stock that we could get. Mr. DONOHUE. And did you buy any of it above $52 per share? Mr. DONOHUE. Thank you. you Mr. HARKINS. Mr. Klein, on June 5, 1968, did have a conversation with Mr. Alan? Do you recall this conversation with Mr. Alan? Mr. KLEIN. I had many conversations with Mr. Alan, sir, I really can't specifically pick out a date. Mr. HARKINS. Do you recall having an arrangement to have lunch on June 10, 1968, at 200 Central Park South, Apartment 24-A? (The document referred to appears at p. 284.) Mr. KLEIN. Yes, sir. Mr. HARKINS. Do you recall that? Mr. KLEIN. Yes, sir. Mr. HARKINS. You had a luncheon on June 10? Mr. HARKINS. Was Mr. Arthur Carter present? Mr. HARKINS. Was Mr. Alan D. Alan present? Mr. HARKINS. Was Edward Netter present? Mr. HARKINS. You were present? Mr. KLEIN. Yes. Mr. HARKINS. Who else from National General was present? Mr. KLEIN. Harold Lipton, Samuel Schulman, Irving Levin, Jack M. Ostrow, Don Reynolds, Mr. Marvin Finell, and I believe that those are the people that were present. Mr. HARKINS. During that conversation, did Edward Netter advise that you might be able to secure an additional 600,000 shares of Great American Holding Corp.? Mr. KLEIN. He advised me he might be able to secure substantial amounts of shares of Great American Holding. Mr. HARKINS. Did he identify the sources of these shares? Mr. KLEIN. No, sir. Mr. HARKINS. Did he identify them generically as funds? Mr. KLEIN. No, sir. Mr. HARKINS. Did you have any idea whose stock he might get these shares from? Mr. FOGT. When he was talking about these shares, did he indicate to you that should National General be interested in taking over Great American, his firm could warehouse the shares, keep them in friendly hands until the time was right? Mr. KLEIN. No, sir. Mr. HARKINS. On June 10 The CHAIRMAN. Is Alan Alan a representative of Cogan, Berlind? Mr. KLEIN. Yes; he is a registered representative of Cogan, Berlind and Weill, and Mr. Herbert Allen, Jr., is a different individual than Mr. Alan Alan, sir. |