Omaha daily bee., 1910-02-13

Ills place was taken by brokers TO whom
I had given buying orders. but they were
able TO get very little before the others
suspected collision and began lacking the
stock up again I went into the crowd
then and sold 1000 or 3.OoO shares as fast
as the others bid for it until the others
came to the conclusion that we had sim
ply been working for a short, quick turn
and the stock fell to the starting point.
The rest Of the business was OF the
same order, but with variations. IL took
some time. but we got the $4,000 shares
within a range OF two points. and this
was real stock that we took out of the
market, not stock carried speculativeiy for
a short time
Exchange Rules strict,
Similar tactics are frequently employed
in selling large blocks. The idea then is
to sell without breaking the market so
that the customer may get a good price
for his goods. Occasionally a broker man
ages his manipulation so cleverly that the
market advances while. alternately buying
and selling, he closes out thousands of
shares.
The essence Of the methods used in such
manipulation is the same as that I'm the
most expert manipulation. The man in
NiAu Sc must toittdA nl5 HullNts HiuSl ne
at once perfectly composed and exceed
ingly rapid and. above all, must know the
men with whom he is dealing.
All. these varieties of manipulation must
be conducted with regard to the stock ex-
change regulations prohibiting fictitious
transactions. So-called laundry work must
be avoided. for the exchange authorities
are as alert as the rules are strict and
detection in a wash sale means suspension
and perhaps ruin.
These wash sales, that is sale back and
forth between two or more brokers In the
same employ. break the rule that a broker
offering to buy or sell at u particular price
must accept the first tender at that price.
He must not hold back for "the man with
the red necktie.." 1t Is the general belief
that wash sales are now very infrequent.
1t is difficult for any one practising them
to escape detection, and few IL any brok-
ers care to take the risk Of suspension.
Manipulation by Inside Pools.
But 1t is by no means infrequent that
buying and selling orders are simultan-
eously sent to various brokers by the same
operator. The brokers with the buying
orders have no knowledge tina counter
vailing orders have been placed with 9TH
SAS' 0hSh hdhlpuidtlOH mus ullIeIS from
laundry work in that the operator takes
his chance that his orders won't match.
The buying orders may be executed at
prices above the selling orders and a
substantial loss result from the operation.
If 1t is the manipulator's object to mark
up, the price no must also stand ready to
buy all the stock that is offered as the
price advances and take his chances of
selling at a profit after the price has been
marked up.
Manipulation of this kind is practiced
very often by the so-called inside pools,
that Is, by a group of men having first
hand knowledge Of the earnings Of a COM
pany and expecting, for instance, an in
creased dividend. The pool, believing the
stock should sell higher on its real or al
legged merits, assumes the expense of a
campaign on the chance of selling when
the expected developments come out.
The expense of every variety of manipu-
lation is heavy. The commissions Of them
selves amount to a tidy sum in a pro-
tracted campaign in an active stock. But
the greatest expense is entailed by the nee
essity of paying profits to SPECTATORS who
are attracted to the movement In the be-
ginning and realize on their purchases
repeatedly as the campaign continues.
Experienced brokers think that more than
half of such movements end in a loss to
the pools. The profits in a successful
movement is, however. so great that the
temptation to manipulate prices is always
present.
A. o. Brown & Co. Mistake.
laundering manipulation may bring
speedy ruin. The best known instance in
recent years is that Of the big firm Of A.
o.. Brown & Co., which endeavored to put
Into practice the theory which formed the
motive for Thomas w. Lawson's novel,
Friday the Thirteenth" The Boston oper-
ator maintained that under the rules and
practices of the exchange a broker could
sell all that his mouth could utter" and
break the market wide open simply by Of
fering stock on a n scale.
The Brown firm was heavily short of a
market which obstinately continued to ad-
vance. AS a last resort the firm tried
the Lawson theory. 1t dealt in 1900, 900
shares of stock in a two-hour session,
hoping to sell enough stock to break the
market and intending to cover the short
contracts in the course of the break.
The firm found 1t easy enough to sell
the stock, but quite another matter to de-
liver the shares it had sold. 1t made an
assignment after yainly e~ndeavoring to
put off the delivery day. The test of the
theory produced confusion and made a
stock exchange scandal; otherwise it served
only to increase the liabilities of the totter-
ing firm.
Few Successful M-anIpuIatOrs.
The number of the successful manipu-
lators of the market can be counted on the
fingers OF the hands. Even Mr.. Keene
has not escaped heavy reverses. The W
great difficulties arc concealment Of the
operation from a community which always
suspects and generally discerns the sale
at a profit of stocks accumulated in the
course of the manipulation.
Usually In order to gather the profit the
adjunct Of publicity is necessary. for spec
~ulators and investors must be convinced
that the stocks are worth the high prices
to which they have been carried. All oper-
ator must have studied and had experience
in the ways OF Wall street for years, must
know the characteristics and interests of
all the men with whom he deals and must
have at his great resources be-
fore he is qualified even to start upon a
long campaign. r
II 4
POINTED Paragraph.
Most people act natural when asleep.
II NNnhW nnAaTWml 10 $50 - -