New-York tribune., 1902-06-24
BOND CORNER TO BE PROBED.
GOVERNING COMMITTEE TO PASS ON
PURCHASES WHEN. IF AND
AS ISSUED"

The governing committee of the Stock EN-
change, which will meet tomorrow. has been
asked to pass the merits of controversy
among Stock Exchange houses growing out 'l
transa ctions in the curb market in Unlteo
Railroad of San Francisco per cent nofdS'
These transactions have given rise to Sltua-
ton resembling a corner, and rur1ors Oh alie
cations of sharp practice are current IN 'le
Street. The banking house of Brown broIleiS
& Co. some time ago formed syndicate "hiCh
underworld the entire issue of S20,O0o,ouo per
cent bonds of the United Railroad Of san FRAN
cisco, consolidation of street railway companies
in San Francisco. The subscription agreement
which runs to February l. 1908 contained
reservation permitting Brown Brothers & Co. to
sell the entire S2OOOOO0O of bonds to others
than the subscribers If they could do so more
advantageously, and giving the subscription
participants in lieu of their allotments the cash
equivalent of their percentage of bonds at d
figure not less than 80 per cent. less i per cent
commission.
Brown Brothers & Co, under this clause, sold
S5.Oo0.G00 Of the bonds at private sale to a san
Francisco syndicate which it is said resold the
bonds TO the public at 924. about four weeks
ago. One or two NeW-York brokerage hrhls'
learning of the sale to the San Francisco syn
dicate. secured few of the bonds thus dlsposeo
Of which. of course. had been actually issued
and thereupon entered the market here as pur-
chasers of United Railroad of San Francisco
bonds when if and as issued" Among the sell
ers, at prices ranging from Sc to 81, were some
of the underwriters. and some holders of SUB
scription receipts When the brokers had
bought as many bonds they wanted. II IS
alleged. they demanded delivery. insisting that
the bonds had been issued. and that the when
If and as issued contract had therefore ma
tured. This contention the sellers resisted ue-
claring that the issue of - per cent OF the
bonds was not the issue contemplated in the
subscription agreement. One of the firms tech
nically short of these bonds is the STOCK hA-
change house Of Talbot J. Taylor Co "A
member of that firm said Yesterday thal oiio
of its customers had bought about 100000 Of
the bonds at from ST to 91 and had sold most or
his holdings at about the latter figure to zim-
norman & Forshay Zimmerman & Forshay
now demand delivery said the speaker, but
fall to see now the issue Of part of the bonds
can be held to be an issue such as was con-
templated when the sale was made. 1 think the
Stock Exchange committee will support our
contention"
Acting on this view, Talbot J. Taylor & CO.
not only declined to make delivery to thinner
man & Forshay. but have also refrained from
demanding delivery from the person from Whom
bought the bOndS Tor account VI tiAciA N]'
TONER Brown Bros & Co, when asked to say
whether or not in their opinion the bonds couId
be regarded as issued. declined TO give an an
swer They had nothing to do with the tradlhg
in the securities on the curb. 1t was aoded'
and syndicate members certificate holders
who had sold the bonds short acted WIN luii
knowledge of the agreement.
Zimmerman & Torshay denied that they had
had any intention of causing a corner here. and
declared that other houses also had bought some
of the bonds and were asking for delivery. They
took the position that the bonds had clearly
been issued and declined TO admit that the
Stock Exchange Governing Committee had any
jurisdiction in the transaction. The bonds
closed on Saturday at 91%. Yesterday they
opened at 91a.. and advanced to 9Si2, on sales
of S95 600 for the day. the closing quotation
being 91Ia bid, 9Si2 asked.
4 ca resembling the present San francisco
Railroad bond situation occurred several years
ago when the Chicago and Alton road author
lied bond issue of S1OOoo,0oO. but actually is
sued only 81 100000 Sellers OF these bonds
''when issued" although in some cases sub
scribers found themselves in the position OF
short sellers and had to make good their obll-
cations at from to 10 points oss.