The sun. [volume] (New York [N.Y.]) 1833-1916, 1914-05-29
BROKERS FOGGY ON
MISSING S26O,OOO
Members Of StOppani & Hotch-
kin Firm Admit Unusual
Methods.
CUSTOMERS STOCKS GONE
Partners Testify That They
Knew Little About the Con-
GERMS Affairs.
CUSTOMERS STOCKS GONE

The examination made yesterday into
the Affairs OF the suspended Consolidated
Stock Exchange Arm of Stoppani
Hotchl1n. which assigned last week, re-
vealed a most surprising state OF AFFAIRS
In that the partners admitted that they
knew almost nothing OF the condition Of
the firms finances UP to the time of the
assignment. that loans were obtained on
customers stock without their knowledge.
that there was no limit to the partners
drawing accounts and that they never
took the trouble TO check up their books
1t was also brought out that the liabil-
tiles OF the firm would aggregate about
$250,0o0. with the assets totslling between
$1,000 and $1,000. r. Maloney. the firms
cashier. admitted that the liabilities were
on stocks carried for customers on mar
gins and profits which customers had
made on their transactions.
The firm kept three accounts, numbered
TO- 20 and 80. The account numbered
20 was the firms own speculative account
1t appeared, but the cashier testified that
he was not aware OF the fact until yes
terdsy.
senior Partner q witness.
sOStpn IL ClpIpdult INC btIlloT partner,
was the first witness. He said that he
did not know that securities for which
customers had paid had been hypothe-
Gated for loans without the customers
consent He admitted however, that such
thing might have been possible. 1t
was brought out in Stoppanis testimony
that the customers OF the Arm were long
Of 220 shares OF American Beet Sugar
stock and short OF 20 shares OF the
balance Of 200 shares, l4O shares had
been loaned on the Consolidated Exchange,
but he was unable to account for the
. missing shares.
At this point a customer asked what
had become OF the 500 shares of AmerI-
can Smelling and Refining stock which
he had obtained on a margin OF $1,000
Irving l.. Ernst, counsel for the firm, pro.
tested against the witness answering this
question and II was stricken from the
records Stoppani admitted that the Bust
ness OF the firm became so small that he
did not take any interest In II and did
not check up the daily balances He saiu
that the firm found II difficult to geI
loans and added that whether they had
a customers stocks on hand or not de-
pended on whether the financial status
of the Arm was good at that time.
Walter Il. Hotchkn. the other member
Of the Arm. who Is a brevet Brlgader-
General OF the Twenty second Regiment
OF Engineers. said that he had "A third In
terest in the Arm. He testified that there
was no limit to the drawing accounts OF
. himself or his partner and that he never
went over the books OF the firm.
Can't Account for S25O,OOO.
Moloney, the cashier. said that he was
a brother-in-law OF Stoppani and that he
had been cashier and general manager OF
the main Office for several years.
He testified that although he was the
cashier another employee looked after
the books He was unable to tell what
!, had become of the $3.50. 600 which he said
= represented margins and profits OF the
FIRMS 1900 customers
When asked whether orders were
promptly executed when received he said
that he believed they were but IL so he
couldn't see why the liabilities were 50
greatly In excess OF the assets. Moloney
added that he did not believe any one
owed the firm any money. The witness
also admitted that n committee from the
d Consolidated Stock Exchange investlga ted
the firm for alleged discrepancies a year
ago but he did not know whether the frn
ever received report OF the investiga
ton.
When asked whether stocks paid for ,r
full by n customer were reserved for hi
account or put with the firm's accounts Of
n with the margin accounts. Mooney SAT-
that he believed all securities OF all Gus
toners were loaned and put up as collat
erai for loans promlscuously. He salt
that no real records OF these transac
lions were kept. and that the only memo
randa of them made were on slips for
= warded to the banks which loaned TN
Arm money and which the banks probabl,
destroyed.