On paper, the region's second most valuable public company in mid-July was a tiny, unheard-of operation called Typhoon Touch Technologies...

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On paper, the region’s second most valuable public company in mid-July was a tiny, unheard-of operation called Typhoon Touch Technologies.

This incongruity did not escape the attention of the Securities and Exchange Commission (SEC). It has halted trading in Typhoon shares for two weeks, ending next Thursday.

Typhoon, meanwhile, is suing a former SEC chief economist and business-school professor, accusing him of a “short and distort” scheme to profit from bad-mouthing the company.

The Typhoon affair may be a tempest in a teapot, but it’s quite a teapot. With 6.2 billion issued shares, according to its Web site, and sporadic over-the-counter trades that lifted the stock price from 10 cents to $25 in about two weeks, the company suddenly reached a market capitalization of $155 billion.

That’s a big number for any company — it’s two-thirds of Microsoft’s market cap, or three times Boeing’s.

It’s especially big for a company that uses a downtown “virtual office” center as its business address, and according to regulatory filings has just one employee. He is CEO and top shareholder James G. Shepard, who simultaneously operates a British Columbia trade-show production firm.

The SEC declared July 18 “that the public interest and the protection of investors” warranted the trading halt “because there is a lack of current and accurate information concerning its securities.” It cited the unexplained rise in the stock price after a recent 100-for-1 stock split, “when no material information about the company would explain such a price increase.”

Typhoon’s current business is going after computer and electronics companies with assertions of patent infringement. It says it owns “two foundational patents covering many common aspects of portable touch screen computing.”

The company reports reaching settlements with a couple of minor tech firms, and says it is suing Apple, Dell, Lenovo, Palm and others.

Its filings say that after the 100-for-1 share split on July 7, another 30-for-1 split was scheduled to take effect July 18.

The company’s prospects and practices were attacked on an investment blog early this month by Lawrence E. Harris, who spent two years as the SEC’s chief economist and now teaches finance at the University of Southern California’s Marshall School of Business. He acknowledged shorting the stock, meaning he would profit if its price falls.

Typhoon sued him July 14, alleging that when its stock price jumped instead of falling, he threatened he would use his influence at the SEC to have it investigated.

On July 18, the day the SEC ordered the trading halt, Typhoon announced a financing deal to sell shares to a company that operates from Panama and Liechtenstein, two havens of financial secrecy.

It’s beginning to sound like a John Grisham novel. Stay tuned for the next chapter.

Clash of the

400-foot towers

Two years ago, when it increased building height limits downtown, the Seattle City Council also adopted rules banning towers from being built too close together in much of the central city.

This past week those rules — intended to protect views, privacy and sunlight — got their first test before the Downtown Design Review Board, an advisory group.

It showed no inclination to compromise.

The protagonist here is Seattle developer Intracorp. Back in 2006, when the downtown condo market was white-hot and the new tower-spacing rules weren’t yet in force, it won city approval to build a 240-foot condo tower on Second Avenue between Stewart and Virginia streets, across from The Josephinum and the Moore Theatre.

That project never broke ground. “By the time we got ready to put it under construction, the market had tanked,” project manager Andrew Miller said.

Now Intracorp has come back with a new plan for a 400-foot apartment tower on the site, to take advantage of the increased height limits.

But the new rules say that, from 125 feet on up, that tower must be at least 80 feet from any other tower. And The Justen Co., another Seattle developer, has applied for permits to build another 400-foot hotel-condo tower at Second and Virginia — right next door.

Since it’s farther along in the permitting pipeline, the Justen project has priority.

The tower-spacing rules do allow Diane Sugimura, director of the city’s Department of Planning and Development, to grant exceptions. Last week Intracorp proposed to the design review board that it be allowed to build its tower as close as 56 feet to Justen’s.

Architect Wolf Saar presented renderings showing that some corners of the Intracorp building had been cut back to let in more light and allow better views from Justen’s building. The views would be almost as expansive as with 80-foot spacing, he said.

But neighborhood representatives raised objections, as did Justen principal William Justen. He said the issue wasn’t just views from his building, but views from farther away.

Design review board members took a straw vote. Intracorp lost, unanimously. Members said the developer hadn’t offered any benefits to offset the impact on view corridors.

If Intracorp got an exception, Chairman Wilmot Gilland said, it would be difficult to enforce the tower-spacing requirements anywhere.

All this seems to leave Intracorp with three choices:

• Continue to pursue the exception. Sugimura isn’t required to follow the board’s lead, but bucking its advice could be problematic.

• Build its new tower 80 feet from Justen’s. Saar said that would make each floor 1,000 square feet smaller, making the project “very challenged in terms of the economic viability.”

• Build the 240-foot tower for which it already has permits. But project manager Miller told the board that rising construction costs and holding costs have eroded its economic viability as well.

What will Intracorp do? After last week’s meeting, it wasn’t returning calls.

— Eric Pryne

Comments? Send them to Rami Grunbaum: rgrunbaum@-

seattletimes.com or 206-464-8541