High-Volume Trading of Comparator Systems Shares Raises Eyebrows

NEWPORT BEACH — In a turn of events that has mystified company executives and undoubtedly piqued the attention of stock market investigators, trading in shares of Comparator Systems Corp. set another record Monday on the Nasdaq market, topping a previous mark set by the company on Friday.

More than 151 million Comparator shares were traded, after 121 million shares had changed hands on Friday. Both marks shattered the previous record of 69 million shares of Intel Corp. that were traded Jan. 17.

Comparator stock closed at $1 per share Monday, up 72 cents, in a run-up that company officials attributed to their first important product development news since 1984.

Chief Executive Robert Rogers described himself as “numb” after the second record day of trading, but he added that he suspects the activity has been prompted by next week’s planned unveiling of the company’s new fingerprint identification system.

“We’ve talked to all of our market makers,” Rogers said, referring to the brokers who trade the company’s stock. “And we still have the same belief we did on Friday, that this new product introduction was leading to an increase in demand.”

Nasdaq officials said such heavy trading activity and price swings automatically trigger investigations. “I can’t confirm that we’re investigating this company,” said Marc Beauchamp, a spokesman for Nasdaq, “but this is the kind of activity that causes bells and whistles to go off.”

He added that despite the price and volume leaps, Comparator’s stock remains a low-priced issue, and its record is hardly in the same league as the mark set by Intel when its stock was trading at about $50 a share.

“It’s like comparing a Little League batting average with Ken Griffey Jr.,” Beauchamp said.

Comparator has a whopping 610 million shares outstanding, which means the tiny company with 29 employees and just $90,161 in sales last year has more shares circulating than even Microsoft Corp., the computer software powerhouse.

Comparator reported a loss of $1.85 million last fiscal year, after posting a $2.05-million loss on sales of $258,376 in fiscal 1994, Rogers said.

Rogers said the company first traded shares publicly in 1979 and has relied on sales of millions of additional shares since then to raise money for research. “We have no investment banking firm, and all of our financing since the initial public offering has been raised by me,” he said.

He said he is the company’s largest shareholder, with about 11% of the company, but that there are about 13,000 other shareholders, including “several multimillionaires in Southeast Asia.”

One of the company’s market makers, La Jolla Capital Management in San Diego, said it has sold about 29 million Comparator shares in the last two days. “We’ve been buying it at 6 cents for eight years, waiting for God knows what,” said Robin Rushing, a trader at La Jolla.

She said Monday’s rally alone made nine of the firm’s investors millionaires.

Bloomberg Business News contributed to this report.