The Detroit times. [volume] (Detroit, Mich.) 1903-1920, 1908-12-15
QU|HES ASE TO
EXPOSE METHODS
OF BROKERS
ATTORNEY STEVENS EXPECTS
TO ACCOMPLISH NOTHING
MoRE-cURRiE & co.'s CLERKS
SPECULATED INTO THOUSANDS

IF We get no further good from
this examination than TO educate the
public In regard TO the manner In
which the brokerage business Is con-
Quoted. IL will be worth all II costs"
This was the declaration OF Fred
erick W. Stevens. attorney for Trus'
tee Austin, at the close OF the Tues
day morning examination In the Cam
eron Currie a. Co. bankruptcy case.
Stevens had had Louis II. Case. the
junior partner, on the stand all morn
ing and had dragged from him admis-
sions as to the manner In which the
brokerage Office was conducted which
astounded everyone but the princi-
pals in the investigation.
1t was shown that the members or
the firm had traded for themselves
under various names. that clerks
working for weekly wages had run ac-
counts under false names which total
ed up into tens of thousands OF dol
lars. that stocks purchased by Gus
toners had been sold to cover the
shortages OF other customers or OF the
firm, as a matter OF course.
1T is the custom of the brokerage
business all over the world. You
can't change it," was Cases reply to
each attack by Attorney Stevens.
Frederick G.. Austin. the trustee,
was present, but did not take an ac-
tive interest in the proceedings, which
were brought by request of the credit
ors and against his Judgment.
Creditors Insisted on Probing.
Il told the creditors that they
would not get a dollar as a result OF
this examination and that 1t would
cost Il lot of money but they insisted
and now we are going TO go to the
bottom of everything" said Austin
during a recess.
Fifty or sixty creditors and attor-
neys were present In court and the
revelations made by Case stirred
them The whole morning was spen:
in duel OF wits between Stevens and
Case, the attorney pitilessly insisting
on direct answers as to matters of
business custom, law and commercial
ethics, while Case was at times re-
luctant witness and at some times
even rebellious.
DO you think that you had a right
to do this?" and What became OF this
money or this stock?" were the ques-
tons that usually started skirmishes.
During the latter part of the morning
Stevens got into the troubles OF the
firm deeper than ever before and open
ed up shortages. fictitious entries and
discrepancies IN the stock accounts
that made his questions difficult to an
sWer.
A letter from Cameron Currie to a
Boston firm caused a litter. He had
said during the panic of last year:
"ln the absence of any further crazy
yappings from Washington, we should
be all right soon"
The correspondence between Cam
eron Currie & Co., and Hayden, Stone
a. Co. as far as 1t was read, showed
how the former firm had been forced
TO the wall through the demands OF
the latter for more money TO cover
margins. Stocks had been ordered
sold TO get the money and other
stocks had been sent on from Detroit
and pledged.
At the beginning OF Tuesdays hear
ing, Attorney Stevens inquired OF
Case with regard to alleged "kiting"
OF checks, particularly in the NJ. j..
Bourke account Case denied knowl-
edge of any check kiting, even though
Stevens inquired II he would be like.
ly to remember borrowing a mans
check so times. The investigation
then turned on the rights of custom
ers with regard To the stock they pur-
chased or sold through Cameron Cur
RE & Co, Stevens explaining that he
was going into this as bearing upon
the question OF good faith between
Cameron Currie & Co. and custom
ers.
do YOU claim you have the right.
as between you and your customer. TO
pledge the security for more than the
balance unpaid" inquired Stevens.
If the stock were in my possession.
no. morally; but legally. would"
answered Case. But you must re-
member this stock is Ia the hands of
eastern brokers'"
Suppose you have in your hand n
certificate for 100 shares OF local stock
and a customer comes In and pays so
per cent Could you legally take that
stock and pledge it for more than tie
80 per cent unpaid?'
Legally. | could. but morally, no"
Customers only Security.
Then the customer has no security
bNuNi Shoh yOui ptCuulhTg ItbpOnbl-
bility?"
Absolutely no."
Stevens then quoted law to chow
that a broker has no right to pledge
customers stock Tor any debt other
than his principals. He then asked
Case IL be had ever enlightened aLy
OF his customers as 10 his view OF the
law
No. they knew the law" replied
Case.
Case then went into an explanation
of how stocks are customarily held as
collateral
II knew my rights don't know
whether the customers knew theirs.
said Case later. He added that ht
had secured his idea OF the law from
court decision.
Did you ever hear any other stool
/ broker claim such a right"
YES"
Wv ho?"
Hayden. Stone & Co"
When"
since July IS; also before the fail
rrc, by F. w Lombard. ia charge 81
the MARGIN department OF HAYDEN
StCnc & Co. lie was here instalIin.
q margin system for us. lie said W,
should send stock put M with Us "A.
collateral 10 the eastern brokers a
once and take h out of the customers
name. ! said We kept the stock her.
SO that when the deal was completed