New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1897-03-26
w. +. ALLEN EXPELLED.
ACTION BY CONSOLIDATED EXCHANGE
DIRECTORS.
THE RESULT OF CHARGES MADE AGAINST THE
BROKER BY WEALTHY WOMAN
OF BRIDGEPORT.

OF BRIDGEPORT
The Board Of Directors Of the Consolidated
Stock ard Petroleum Exchange. at the close OF
a session lasting from O'Clock yesaerday after
noon until $50 in the evening. voted to expel
William f. Allen for obvious fraud"
1T Is the worst case OF fraud that has ever
come before the directors" said Charles G. Will
son president Of the Exchange
Mr.. Allen is the head of the firm Of Alien &
Fosdck, stock brokers' at No. - Broadway.
The firm has been in existence since May Ia.
1S95 Mr. Allen had belonged to the Consoh-
dated Exchange since February J. 1881. HIS
partner Samuel F. Fosdick. does not belong to
the Exchange. and therefore was not amenable
to discipline by It Mr.. Allen lives at Bridgeport,
Conn. and Mr.. Fosdcl at Stamford. Conn.
The complaint upon which Mr.. Allen was ex-
PEELED grew out Of the dealings of Mrs. J. ID. F.
Nash. OF Bridgeport. with the firm. Mrs. Nash
is a woman Of wealth and Of much social promi-
nence in Bridgeport AS the story was told by
President Wilson. she opened an account with
Allen & Foadck September 21 last. She de-
posted with them altogether at different times
as margin for speculative operations. securities
Of the market value of $1,000. The firm pledged
the securities with the Seaboard National Bank
for loans agsregating $4,000
Finally unable to obtain accounting from
Allen & Fosdick Mrs. Nash wrote to President
Wilson. and he Instituted an investigation. The
Clearing House sheets showed many CROSSED
orders placed by the firm with other brokers,
and these were presumptive evidence Of rregu-
laritles. It turned out that Mrs Nash's orders
had been "buclleted." but by a new process.
There Is a rule of the Exchange that every or
de- received by broker belonging to the Ex-
change must be executed in good faith and that
the customer must be supplied with the name Of
the other broker from whom stock Is bought or
TO whom stock is sold for the customers account.
President Wilson found that Allen & Fosdck
complied with the rule technically. but at the
same time did not make bona-hde transactions.
Mr. Allen would go to a broker on the floor Of the
Exchange and say he had an order from one GUS
toner To ''T -toch and from another customer
to sell IT, ... stock. lie would tell the broker
20 clear" those crossed orders" and would pay
the regular commission for doing Thus there
were no actual dealings. although the Clearing
House sheets indicated the execution of orders.
The cost to Allen {; Fosdick was 50 for each 100
shares.
President Wilson said it was found that Allen
& Fosdicll calculated that Mrs. Nash's lack of
knowledge Of Wall Street affairs would result in
losses to her on Ler operations in stocks. They
thought that by Ncopperlng' her trades. which in
regular transactions would mean selling when
she bought and buying when she sold, they
would make money. They thought they could
afford in order to evade the Exchange rule
against bucketing. TO pay the commissions on
crossed trades" 1t turned out that Mrs. Nash
was successful in her speculations Mr. Wilson
said
When .hc cas- ~as '51~'Tght before the FIX
change Mr. Allen said Mrs. Nash owed his firm
$4,000. and when that was conceded and paid
her securities would be returned TO her. This
claim vas Of course. disputed by Mrs. Nash. and
IT was believed that even if IL were allowed and
paid Alien & Fosdick were not I'm a position 10
pay off the loans and restore the securities. III
the securities were sold they would probably
bring $1,000 more than they were hypothecated
for That would be the equity for Mrs Nash In
the loan.
Ex-Assistant District-Attorney Barlow s.
Weeks has the interests of Mrs. Nash In hand,
and may institute legal proceedings against Allen
/ & Fosdck.
When informed Of the expulsion Of Mr.. Allen,
Ar Weeks said last night: THE charge against
NJ Allen in brief that he had some
Sh000 odd securities Of Mrs. Nash. wht-h she
hai deposited as collateral for margins with
hin as n member of the firm He reported to
her At various times that he lad made pur-
chGss or sales in accordance with her nstruc-
iions. In many. If not all, of the reported pur-
chases Of securities IL appeared that there had
been Merely "A ciearance-a sale and purchase
made b., him simultaneously through another
broker When she ordered that her accounts be
closed, he showed that she was indebted To nm
for about $1,000 This Indebtedness she Of
!ered 10 pay with the securities she had de-
posted with him as collateral. These securi-
ties he had placed in bank and had borrowed
upon them To the amour of $4,000. We con-
tend that Nv Allen had no right to hypothecatc
the securities except for obtaining n sufficient
margin To carry her account