New-York tribune., 1910-01-07
TO PUNISH BROKERS
EXCHANGE WILL ACT
NEXT WEEK.
Vel Knorn Firm Likely to
Suffer for Rock Island
Common FURRY.

The governing committee of the New
York Stock Exchange, it is understood,
viii at its next meeting, on Wednesday.
take disciplinary action as a result of
the investigation of the wild movement
III ROCK Island common stock on Decem-
Der ~ when that issue shot up thirty
one points and fell to it's starting level
IL the first quarter hour of trading
That movement. according to all ac-
counts. followed the placing of buying
orders for 1000 shares each with twenty
houses, the simultaneous execution of
which had its natural outcome in the
swift advance in price, resembling the
working of a corner"
The man who gave the original buying
instructions is commonly believed to be
a member of the so-called Rock Island
party" AS he is not a member of the
Stock Exchange. it is without authority
to punish him. His instructions. how
ever, were carried out by one of the
best known Stock Exchange firms
which, there are excellent reasons for
believing, is to be disciplined for its part
in the transaction.
Pressure has been brought to bear
upon the governing committee it is un-
derstoCd. to take lenient course, the
argument used being that the dropping
of the matter would be advisable, as the
prominent house affected had technical
right to place orders with other firms
for execution on the floor and as the in
Fiction of a penalty would serve to re-
vive discussion of the scandal and so
would work harm to the interests of the
exchange.
The view held by the governing com
mittee, however, is that the offending
house should have. known that the exc
cution of a series of buying orders under
the circumstances would have the effect
which actually resulted. and that its act
would produce consequences detrimental
to the interest or welfare of the ex-
change. Under Article II, Section s, of
the constitution Of the exchange, an act
detrimental to the interest or welfare
of the exchange" is punishable by sus-
pension of the offending member for a
period not exceeding one year by vote
of a majority of the governing COM
mittee.
1t has been generally believed that the
thirty point up and down movement in.
Rock Island common was caused by the
accidental omission by the operator who
put in the buying orders for the 10000
shares to give instructions to some other
house to distribute counterbalancing
selling orders.
that this was incorrect and that the
buying order was not part of a calcu-
lated plan which went wrong through
forgetfulness, but the outcome of an i'm
pulsive decision. When the operator
saw the panicky situation created by his
act it is said he Immediately sent to
the office of the house to which he had
given the distributing orders 81, 600 600
in New York City bonds. for use if nee
essary, and he made no complaint re-
gardng the execution of any of his or
ders, although some of them cost him
very dear, as the brokers buying the
stock in the eventful few minutes were
bidding against one another, the move
ment being over before the shorts had
time to become genuinely alarmed
But there were heavy losses sustained
by others than the big operator respon-
sible for the furry, some by men who
had left with their brokers over Christ
mas orders to buy the stock "at the mar
ket' on Monday morning, and many by
holders of stocks which declined from
two to five points on the general uneasi-
ness caused by the wild whirl in Rock
Island common.