New-York tribune., 1908-09-24
BROWN INQUIRY OVER
FIRM DENIES CHARGE.
Brokers Nay Be Erpelled from the
Stock Exchange.

The governing committee Of the New York Stock
Exchange, at its regular meeting. after the close
OF the exchange yesterday. heard and took action
the report OF the special committee OF five which
named month ago 10 invessgats the failure
of A. o. Brown & Co. following the sensational
trading Of Saturday. August r. The session
protracted one and at its close Secretary Ely
nounced that no, statement Of the result OF the
deliberations would be made public.
All the members Of A. o. Brown & Co. were pres
ent at the meeting and there also a full at
tendance Of the governors OF the exchange It was
unofficiaIly reported that one OF the firms two
board members would be expelled ard the other
suspended for a year. A o. Brown handed the
bulk Of the FIRMS business the floor OF the
change Of which he has been member for
number OF years L. G. Young. the other board
member. is comparatively newcomer on the board
Edward F. Buchanan. the FIRMS managing part
ner who was held largely responsible Tor tns SEN
sationaI stock market operations which eliminated
in the FIRMS suspension. was member OF the ex-
change up to last spring. when he sold his seat
The exchange therefore. has no power 70 olscipEns
Mr.. Buchanan.
Mr.. Buchanan gave out long statement last
night covering the charges made against the Arm
and the views OF the FIRMS members regarding
their treatment by the governing committee. After
enuuerating various actions Of A o. Brown & Co.
Secretary Ely charges:
on the short side Of the market far beyond their
ability to cover up purchases % IN ANY f 59n or
iessness Of their Condition formed the desperate
scheme Of creating Generalization and panic IN
the minds of Investors and others dealing on the
New York Stock Exchange. TO the end tnat tnere-
by they might be enabled 70 cover their snort IN
terest by purchases OF securities at the lower
prices which might be EXPECTED 20 S 0e r5 1as nat
Not only did the said firm undertake 70 lnpart
bol5eTs Se and dealers in securities, untrue and
fictitious evidence Of decentralization ana panic,
and Sg sale Of Securities ali Of which as matter
of fact. emanated and proceeded from Ieeselves s
hut Lrr1ou ring
critical in the highest degree. and that they might
fail and nd tSs f0 members OF the Stock E
change vast number of orders Tor tae purchase
and and thus involved themselves toward their fellow
members in Tespogst Pdg rb dn tSe bad snS
reason to believe they could fulnl, ana tnereoy
the exchange in imminent danger Of heavy Pc
euniary loss
Albert o. Brown and Lewis G. Young then
entered a long defence. saying:
We are not aware Of any hard and & fast rule Or ot
any rule practice Of the stock Exchange estao-
fishing any proportion OF capital necessary FOR its
members TO- transact 1.-The their ol3a 3sneSs pT9T m s
manifest that the value OF securities dealt IN on
day is far in excess Of the combined capital and
resources of all its members combined; we were
meet ali obligations that had entered into, and
still believe that hsd not our sqSpe9sc 4 fac T P s
officials. and had the bank upon which we relied,
sumnariIy and without notice, and we believe un-
iustiiabIv refused TO continue its certihcation.
which for FIVE years had been made without qUes-
tlon. that we would have been fully able to meet
We then believed and had Just cause to believe.
and that belief has been justified by the present
condition of the market. that the transactions
which are criticised in the charges and specifca-
tions were prudent. well founded and not in any
sense recklessly speculative
In no case did have we ever given q
matched order the Stock Exchange. but the in
orders at the market price. In fact. throughout
the whole course Of business We deny that
we have violated any OF the rules or regulations
of the Stock Exchange. or acted in any manner
inconsistent with the just and eQultaols princt-
pies OF trade
our intention in submitting this answer to the
charges and specifications formulated by your
secretary is to deny that any act has been COM
adverse criticism by your committee
Mr.. Buchanan was asked what the firm proposed
to do concerning it's two seats 'Changs
in case the firm was expelled. He replied; For
the benefit OF creditors OF the firm we expect to
exhaust every legal effort TO disprove the right
of the Stock Exchange members to claim the pro-
ceeds Of our two seats for the purpose Of re-
imbursing them for the losses which they them
selves incurred before and after our assignment
..At the time Of assignment there prsc-
tcalIy no loss in contract with these brokers'
AS matter OF fact at the opening Of the market
on Tuesday morning these brokers indebted
TO US 10 the amount OF some $4,000
ghe members OF the special committee which had
charge OF the investigation were Ernest Groesbeck
chairman;-R P. Doremus. g W. Maury, b. 4,
Ponroy and A. E. Goodhart-