The sun. [volume] (New York [N.Y.]) 1833-1916, 1903-10-16
BANKERS UNDER DISCIPLINE.
ACKNOWLEDGEMENTS BOARD
MEMBERS 81 SPENDED.
sec,er far . Near--t esirts Nave stiM u
Pass on the Dtsp'ned Legality or the
transactions In Bonds when Jssued''
That Governors Had beeere them.

Seotor for Q Neoe-N OeofM nave oeWl ~
Pass on the Dtsplsed Legality Of the
transactions In Bonds when JssueS''
That Governors HAD bee0re Them.
A. a result Of certain bond transactions
more than a year old the three board men,
hars Of the banking firm Of Zimmerman
4 Forshav were suspended yesterday by
m. authorities Of the New York Stock
Exchange Leopold Zimmerman for one
year and Sigmond II. Rosenblatt and Leon
ard Schafer for ninety days each. The
This action late Wednesday evening after q
session lasting Ave hours. For the first
time in the history Of the institution official
cosp,zsnce is now taken of transactions
occurring on the curb, i" or outside. market
Zimmerman &Forshay made the follow
ing statement:
rher~ II a difference Of opinion between US
and certain parties with whom we had con-
These differences are the subject Of lawsuits.
s .Sen ons 81 Y'h The Stock H.chanss on The
complaint Of the same parties with whom We
arc in litigation, yesterday took action in
appeal from the action Of the governors. the
ensl determination of the controversy will
have to he deoided between the parties by
the courts in which the litisations are nov
pending
The transactions out Of which the con-
rroversy grew occurred in June, 1902
Brown Bros 4 Co. Of this city we're man
ayers Of syndicate which underworld
1000. 900 bonds for the United Railroads
Company Of San Francisco. The syndicate
agreement provided that Brown Bros.
4 Co. as managers, should have absolute
control of the bonds until Feb. /. 1903.
The bonds were put on the curb market
to be- traded in when. if and as issued
They became very active, a number of
FIRMS, including Zimmerman d Forshay.
distributing both buying and SELLING orders.
The price ruled around 81.
Brown Bros 4 Co.. managers OF the under
writing syndicate. shipped 5000 600 OF the
bonds to San Francisco 10 subscribers
who wanted them, ard presently small
amounts Of bonds began to appear on tho
New York market. They came presum-
ABLY from San Francisco. Up to that time
all transactions in the bonds had been of
the anticipatory character described. the
selling contracts reading that deliveries
were 10 Dt Iild = WlNrI, IL dIlN Us lSbueu.
Zimmerman 4 Forshay. who had been
large buyers on these terms, suddenly
demanded that deliveries he made forth
With, insisting that the 35OOO,0O bonds
shipped to San Francisco constituted an
issue" The sellers, of course, were un-
able to deliver. They were prohibited
from so doing by the terms Of the syndicate
agreement. and the managers Of the syndi-
cate insisted that the, bonds had not been
issued
Zimmerman i Forshay thereupon began
10 buy the bonds "for the account Of whom
il may concern as is done on the Stock
Exchange when one party to contract
fails to make good; and on this buying the
price of the bonds advanced abruptly nearly
10 points After having bought in this man
ner the amount OF bonds involved in the
when. il and as issued contracts they
held. Zimmerman Forshay sued for the
difference between the prices at which
those contracts were made and the cost of
the bonds bought "for the account Of whom
IL may cenesFA."
Several firms were involved, among others
that Of E. & G.. Randolph. The suits are
M pending The he f ps V was Ya1 h s1S
Exchange and their decision was rendered
Yesterday The principal compliments were
E. Il c. Randolph. They issued Yesterday
The following statement. giving the sub
stance Of their representations to the
governors Of the Stock Exchange:
zimmerman Il Forshay claim that they
had to make the demand on d c. Ran
them to do So A Stock Exchange house
cannot set up as an excuse for unjustifable
conduct demands made by It's customsrs
the issue OF these bonds. They were familiar
with the private sale made In San Fran cisco
aware that the only way any bonds could be
Obtained for delivery in New York was by the
violation on the part Of some Of the buyers
Of hem ' dsos
St1ts Of California. They stated that they
we're ready to answer all inquiries regarding
Their plans had been carefully laid and well
Manfred They figured that IL would be
simple to demand delivery OF these bonds at
a time when they knew they were mnohtain,;
then Bring suit for the difference. n they
should lose the suit they would be none the
worse of: should they win 1t. there was a
transaction. Our interest in this matter, Is
Identical with the interest Of every honorable
Stock Exchange house. The action Of Tim
Dss veil f densa eor ns MAKE 1 pTo
10 which they are not entitled at the expen So
OF ten other houses with whom they had
dealings.
The case has aroused great deal OF
interest in the Wall Street community
The action of the Stock Exchange authori-
ties settles points that have long been in
controversy II is unusual for the exchange
authorities to take action in case that is
pending before the courts. The suspension
SENTENCE means that the firm as it now
exists will he debarred from the privileges
Of The Stock Exchange for one year. The
members who are suspended for only ninety
days each cannot represent the firm on
the exchange until the longer sentence OF
Leopold Zimmerman is satisfied