New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1910-04-19
STRANGE DEALS IN
HIGH FINANCE HERE
Clark. PerSCh Witness, Tells of
Double Loans on Canadian
Mines Stock.
SHARES COULD NOT BE SOLD
Selling Agents of Company Here,
Borrowing First, Stopped
Transfer of Rehypothe-
Gated Securities.

While on the stand in the Persch trial.
been unable to pay a loan of $1,000
/ from his counsel, Gordon s. r. Kleeberg,
/ because the stock for which he paid
! the borrowed money had been stolen
I from him. Mr.. Kleeberg has applied to
/ the Supreme Court for an attachment
against Clark. Walter Althause and
John +. Sherwood. who. il developed.
borrowed the money jointly, and in his
application has incorporated a sworn
statement from Clark of the transac-
ton
Clark's statement, thus given, in brief,
is that he took up 1000 shares of the
stock OF the Canadian Mines Company
with the money, expecting TO dispose of
il to one Draper. in Boston: that failing
20 do this he ordered a broker to sell
the stock In the open market. which
was done. and that then the Canadian
Mines Company refused to transfer it,
thus blocking delivery.
The Windsor Trust Company. trans
fer agent for the mining company. act
ing under instructions from Walter Il.
Raymond and the Mack brothers. re-
spectively president and selling agents
of the latter company. has refused TO
transfer large blocks Of the Canadian
Mines Company stock when that stock
was sold i'm open market. after il had
been put up as collateral security for
loans which were not paid when they
matured. This action was based on
IL .,H1. s,,, 81, l..
lost or stolen or previously hypothecated
on condition that it should not be sold.
This resulted in So much litigation and
complaint that the curb market authori-
ties took action. prohibited on February
1o the listing OF the stock on the curb
and sent the following notice to the
mines company:
To prevent further complications in
delivery to or from subscribers in this
agency il is deemed wise that the stock
Of the Canadian Mines Company he not
quoted until further notice. and Intii
such time only that all pending disagree
ments in relation thereto he settled in
regard 10 the delivery Of certificates"
In response to this notice Mack
letter giving the number Of the certifi..
Gates on which transfer had been
stopped. and after that the stock was
again quoted on the curb.
Mack Brothers hypothecated nearly
fifteen thousand shares of the stock as
collateral security on six months notes
According to the terms of these notes
they borrowed 81 20 a share on the
stock, with the right to rehypothecate
OF borrow against. or otherwise use, but
not To sell the same"
Lenders Become Borrowers.
The person or persons into whose
hands this stock went under such condi-
tions rehypothecated about two-thirds of
il as collateral security for loans of
longer or shorter duration. generally
shorter borrowing on it at least twice
as much as the Mack Brothers had
These notes were not paid when they fell
due. and consequently the holders Of the
security ordered the stock sold in open
market.
Then the trouble began. Mack Brothers
had had transfer on the certificates
stopped from time 10 tlIne as tney plaCeQ
their six months notes. and this made
delivery impossible. In addition to this.
in some instances at least, Mack
Brothers. through their brokers. bought
up the twice hypothecated stock as il
was sold. and the holders OF it as col
lateral security for the second loan found
themselves facing the position Of having
to cover their short sales and bear any
loss that this might involve. Moreover
Mack Brothers have already brought
two suits against these holders to re-
cover the certificates on the ground that
they were stolen. or. failing that, TO re-
cover damages.
The following is a partial list Of the
persons who lent money on Canadian
Mines Company stock. which the Mack
Brothers had originally hyT thecated on
the condition that in taking it up the
Identical shares must be returned TO
them. None Of these loans was paid,
and the stock was sold