The sun. [volume] (New York [N.Y.]) 1833-1916, 1899-07-14
TO TAX BUCkETED ORDERS.
WASH SAFES or STOCKS ALSO MUST
PAY TIE STAMP TAX.

Thompson Says All Such Transactions
Must 30 Reported and Must Be Taxed.
Evasions Of stamp tax by brokers OF various
exchanges have occupied a large staff OF clerks
and accountants under Revenue Agent Frank
G.. Thompson in tho past two months. and he
has accumulated great mass Of evidence. A
contention OF his which will be as interesting
to customers.as.to brokers liz: that bucketed
orders and wash sales are subject to tax. and
that memorandums OF them must be made
for the purpose Of taxation. AS buciotng and
making fictitious quotations are offences that
II discovered qualify the offender for suspen-
sion expulsion from his exchange. tho OK
changes may find In the Govern ment an ally in
putting down tho practices.
The investigation Of the revenue agent and
his deputies have borne the greatest fruit in
the Consolidated Stock Exchange. although
individual brokers on all of tho exchanges, IN
cluding the Hay Exchange have been found
at fault.
'Bucketing" on the part of Il broker is fail
ing to execute an order to buy sell stocks
grain other commodity il in the private
opinion Of the broker the customer - likely to
lose his money. When the broker feels sure
that the customer will lose he decides that the
customers may in well lose to his broker as to
! some other Spectator who is suII, sed TO be
| ready to accept the customer 8 offer to buy or
! sell If il ia legitimatcY put. SO the broker
| simply holds VI the order. reports to the GUS
| toner that lie has executed it and. i: the rules
| OF his Exchange require it, gives ~ t. he rus-
! toner the Eemc of the bruker who took the
other end OF tho trade In that case the other
| broker is his urcDmpiIte.
| Mr.. ThonisOn -ayS that lie intends to on
force the payment OF the STAMP aN on trans
| actions thus reported to have nceu made. He
! SAYS hat the IHy'nE 81 money To Il broker with
an orda; to buy,o sell and the re "ntiun Of The
! money by the hruksr win the idea of paving
| thc.custumer s.wmnini- If.anv, out OF his own
| pocket. and;ot rlotlpG by the customers loss.
tr.t, ia, ~ iri,, taN
+ II no memorandum OF sale il lHsscd upon
which to atIlX STAMPS. that itself is violation
. memorandum.
Wash SUES, he SAYS. ar" also taxable trans
d fictitious quotation. whether 20 the disadvan-
taGe Of hi customer or NOT, he arranEcS with
/ first broker want, recorded Hs having moved
IN Il certain direction. ihIs hid is matter
. between the two brokers. and II tho price COTS
on the tape that may be all that IS needed to
| Wire OUT a ruotwmcr margin or to make some
Of such transactions, mus, be passed. and that
! TIA" tax must he rald on them: ~
actions which have moi raid the full tux in all
cases is nrhitraEe. or taking ADVANTAGE OF the
krts II is ge e beiieyed tHat Iecitlmao
arbitrage LrUherag" hetwsen. say. NeW York
nd Ghrnro TrH nrofss r 3,I. ea the h Dropss
! always; 1t is sad IA arhltralr business be-
, Consolidated. whirh. az transacted 10y grape
| vine telegraph Is forbidden to members OF
the former exchange. firm OF grapevine"
arhirrare brokers IN this, city has not been
Is "' roins "a" or o it. A the New '1' YORK Stock
, Exchange here does not allow its members to
belong 10 me ConsodatsI. d grapevine tele-
graph, conmuniration has bssn set up. II
Consolidated ENrhauge broker. wants to buy q
! certain stock listed upon the New York Stock
ESchnngs he ,nsnks 10 an 2rbira.g tf. broker
! the grapevine. The latter buys the stock and
tho tax is paid on the transaction. Then tho
stock is delivered 10 the arbtraxe man who
!
| place. The arhtraEe men, some Of them.
have not been laying tau on the second trans-
tied. and tho strict enforcement of III" law will
mean but II comparatively slight increase in
! .eVonue The huckctlnG and wash sa"s trans
actions. however, are expected to yield big rev.
enMe
The Investigation Of the revenue agent and
his deputies has pUt them in possession OF
such mass of Information that the dereict
| brokers are labOTng under great stress Of
mind. one broker Win many out. of-town
hranch Offices las admitted that all his out Of
town orders are 'hurFet"d' and declared that
II he were controlled to Ray taxes from July |.
1898. on these transactions he would go
broke | nIcr the law the revenue agent can
call COR statements If Ill business done since
the enactment u the War Revenue bill.
The strcss II mind On the part of brokers 10
sad ~ hc Responsible or the discharge OF ~
teen clerks emriuyrd.u tn" Consolidated FX-
chang" clearing house lately. These Jerks
wcge uisluisssi ON he "-leuSihlc ground that
the rush was over and thar their services were
no longer te"es"arI. IT. Is sah, however,. that
they were suerr' ed ~ giving away news OF
brokers secret tran Iartt4n7 I" the Govern
mcni UNlrdls President VI II. Wager OF tho
exchange clearing uulF" denied Yesterday
tnat the clerks were 90 -uArcrtcd by the eX-
The los to he Government through un-
! STAMPED sH'c1 ir sald 10 bay, been n h'Eh AZ
SJ,u'u a wee uLti ia'-iy Sow brokers are
l'n"lc sauna aw-, They oud = les exon.
SIyS in IT, G.% y Y,n'r II a., "a.e," "y va
Cau""ilailru Z. stan. - NE" Hui cure Illegal
transactions have Icon enforced.