By  on June 8, 1994

WILKES-BARRE, Pa. -- The Securities and Exchange Commission plans to expedite its investigation into The Leslie Fay Cos., it was revealed here Tuesday at a Congressional hearing into the company's plan to shut down its U.S. production.

The session, called by the House Subcommittee on Labor Management Relations, heard government and labor officials condemn Leslie Fay's decision to close its factories, which are primarily located in this area. The shutdown proposal is the prime issue in the strike against the company by the ILGWU on June 1, after negotiations for a new labor contract stalemated.

Jay Mazur, president of the ILGWU, said after the hearing that both sides have agreed to sit down Friday with a federal mediator to try to get their negotiations back on track. The session also heard proposals -- including financial assistance -- from state government to keep the production in Pennsylvania.

United States production accounts for 28 percent of Leslie Fay's business, according to the company, which says it needs to move this production overseas as well, to remain competitive.

Meanwhile, Rep. Paul E. Kanjorski (D., Pa), who represents the Wilkes- Barre district, presented to the hearing the letter he had received from Joseph I. Goldstein, SEC associate director, in response to the subcommittee's request for a status report on the probe.

The investigation began in the wake of disclosures of fraudulent accounting, which pushed Leslie Fay into Chapter 11 in April 1993.

"Due to the kinds of concerns you raise in your letter, the commission is sensitive that its investigation can impact the lives of many individuals and communities," Goldstein wrote in a letter dated June 3. "Thus, we understand the need for the commission to conclude its investigation involving the Leslie Fay companies as expeditiously as possible.

"It is our intent to do so because of our mutual interest in maintaining the independence of the commission's investigative and enforcement processes. However, I am not in a position to comment or to provide any further information on the status of this matter."

At the hearing, government officials, union leaders and industry experts said Leslie Fay's decision to close its factories is a classic example of the pitfalls of free trade, where companies move production to low-wage countries, displacing workers at home.

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