New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1910-04-02
EXCHANGE TO PROBE
Governing Committee Begins
Investigation of Pool.

-rra so1-.rniop committee of the New
York Stock Exchange it was learned yes
terdav has begun an investigation OF tiie
transactions in Columbus and Hochlhs
Coal and Iron stock. concerning winch
James r Keene testified on March TO- ana
Edward Pepper. of Pepper q SterIi"a0'i'
his brokers testified on March ~
Mr.. Keene. examined in the PROCEEDINGS
instituted by the receiver OF d. Nj. iSh'
e. Co, one of the three firms carried doWii
Z, .be coIlapse of the Columbus and Hook
ing pool on January 10, testified that ne
had learned only on February - that ti'e
brokers had on January IS and ~ useo ioi
deliveries on short sales By themselves
about four thousand shares or the sIocA
held bv him IN the pools, ana suppoS0"
that thew had done him an INJURY ui'''
they recalled TO him a verbal agreement
made five years previously. whlch Sa.e -
brokers the right at any time to sell any
stock which he might be carrying WIN
them and on which they had made MN
money advances. provided the stock shouin
bt. returned within twenty-four hours a1'eT
nev1nent of the money by him. Mt heehe
admitted that there might have been All
inconsistency between his pool agreement
and the verbal agreement with the brokers'
but said that ne had probably forgoioe"
about the latter. or otherwise Wouid nave
made an arrangement for excepting IIic
pool stock from the brokers' agreement.
Mr.. Pepper. testifying a fortnight later
corroborated Mr.. Keene's testimony as 10
the short selling for the firms account ol
which he said Mr. Keene was IN ignorance
and confirmed also the story OF the lNe-
year-old verbal agreement On January Il
two DAYS after the stock market oreah' ne
went on Francis L. EameS, VINO was
few days later appointed with Tour assn
GATES as special committee to inquire
into the Columbus and Hooking scandal
asked him for whom the short sales hau
been made. and Mr.. Pepper answered that
they were for his firms account and not
for the account of Mr.. Keene. directly or
indirectly, adding that Mr. Eames could
see the books if he would come to the
firms office.
Mr. Keene's account, the witness con-
tinued. was known as NO. l." and II was
on that account that the firms short sales
of Columbus & Hooking on January is and
also on the following day, when the stock
smashed from SS12 to %. were entered. On
January q or % he testified. January q
being the day on which Mr. Games had
made inquiry of him. these entries were
transferred TO Account p. No. !. when
was the private account of the hrm.
loose leaf ledger was produced al the hear
ing and Mr.. Pepper said that the original
sheets from which the Account p. No
entries had been copied had been destroyed
p4e also said thai the firm was still short
of tho stock which is now quoted at around
IL showing a very handsome profit. Mr..
Pepper further testified that he did not
know that Mr. Keene was managing
Columbus & Hooking pool. or that there
was any pool.
As the case now stands. Mr. keene mas
admitted the authority of his brokers TO
use his stock in making deliveries, nut mas
not vet had opportunity 10 answer
questions concerning the action OF the
brokers in entering their own short safes
on his account. without his knowledge. ana
as Mr.. Pepper testified with the object of
misleading the clerks of the firm as to the
source of the selling of this closely held
stock in which. however. Mr.. Pepper SAID
he did not know that a pool was operating,
with Mr. Keene as it's head. Mr.. Keene
has also testified that this selling was
without his knowledge while saying at the
same hearing that THE participants in the
nooI were selling right and left
Three of the partners in Pepper Stern
bach Edward Pepper. Arthur w. Pepper
and Sidney NJ SternbaCh. are members OF
the Stock Exchange; the fourth partner
being Joseph Ioewi-
The governing committee on February 10
declared Henry s. Haskins, of Lathrop'
usskins e. Co. one Of the firms which
failed as a result of the Columbus & Hook
ing break and which had been prominent
I'm the pool ineligible for reinstatement 10
membership in the exchange. and week
later took the same action In the case OF
Clifford NJ. Washburn. of ]. NJ. Fiske 81
Co.
Under Section of Article XVII of the ex-
change constitution. member found guilty
of anv act which may be deemed by the gov
arnIne committee 10 be detrimental 10 the
interest or welfare of the exchange, may
he suspended for not longer than one
wear" Section . of the same article pro-
vides expulsion for a member who shaIl be
sdiudged by a two-thirds vote of the whole
governing committee to be guilty OF fraud
or of fraudulent acts"