SEC lets California retailer trade stock on Internet

["Joseph M. Reagle Jr." <reagle@rpcp.mit.edu>]

         WASHINGTON, June 27 (Reuter) - A California company that  
sells energy-saving solar panels has received Securities and 
Exchange Commission approval to trade its stock over the 
Internet, extending the boundaries of off-exchange trading 
into cyberspace. 
         The approval, the first the SEC has issued on stock  
trading over the Internet, was given earlier this week to 
Ukiah, Calif.-based Real Goods Trading Corp., through a ``no 
action'' letter. 
         In such a letter, the SEC allows a petitioning company to  
perform what it requested to do, without fear of any 
enforcement action. In approving Real Goods' request, however, 
the agency imposed conditions in the interest of investor 
protection. 
         John Schaeffer, president, chief executive and founder of  
the company said in an interview he hoped to get the new 
system operational ``within a couple of weeks.'' 
         Schaeffer said that since 1991, his company has sold $4.6  
million of its company's stock to the public through direct, 
small offerings and without having to pay fees to investment 
bankers. 
         ``The 'off the grid' trading of our stock is a logical  
extension of our service to our customers, who will now be 
able to buy and sell our security without going through a 
broker,'' Schaeffer said. 
         ``This is also consistent with our mission of creating  
independent energy alternatives for our customers,'' he added. 
         Real Goods is currently traded thinly on the Pacific Stock  
Exchange, at a price range of between $5 to $7 in 1995. The 
stock closed at $7.25 on June 26. 
         In its application, the company said its system would  
function as a passive Internet bulletin board that will 
provide the names, addresses, including E-mail, and phone 
numbers of interested buyers and sellers and number of shares 
offered for sale or desired to be purchased. 
         Those participating may transmit the information through  
the company's World Wide Web site or by telephone, fax, mail 
or E-mail. Real Goods will then enter the data into the 
system. 
         Real Goods posted a loss of $175,000 last year on sales of  
$15.3 million, Schaeffer said. 
         ``We expect to be profitable this year,'' he said, adding he  
estimates sales to climb to about $20 million. 
         Earlier this year, the SEC permitted Spring Street Brewery  
Co., of New York, to make an initial public offering over the 
Internet. The agency asked the company to suspend trading, 
pending review of legal implications of such a trading system. 
         Spring Street subsequently said it planned to establish an  
online stock exchange through a unit. 
                

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