New-York tribune., 1922-02-19
Drawing BY JEFFERSON MACHAMER =

MAAI1<AINEN y
the customers equity in the shares and
safety cushion to take care of any decline in
the market.
According to brokerage practice, the Gus
toner's margin is the first to suffer losses in
case Of an adverse movement of quotations in
the market. If Atchison, purchased at 100,
declines to 80, the customers margin is eff
faced, and he is confronted with the choice of
putting up additional funds as a new margin
or of relinquishng the shares, ordering the
broker to sell them, and of consequently losing
the original margin. The bucketeer calls for
more margin, even as the legitimate broker
does, but he in effect appropriates the new
margin unto himself. In accepting Interest
payments on debit balance the bucketeer,
according to Jerome Simmons, Assistant Dis
trict Attorney, who is in charge of these cases
for District Attorney Banton, is guilty Of
grand larceny, and subjects himself to the
possibility of jail sentence extending ten
years This whole machinery for failing to
retain securities that bucketeers pretend to
carry involves violations Of the state law, and
the District Attorneys Office plans to get con
viction under laws relating to bucketing taking
position opposite customers Intentionally
improper hypothecation of securities and con
version. .'Hef
There is an ebb and flow Of periods Of indig
nation against the bucket shops Never has
the public interest in wiping out the fungus
growth been more avid than at present. The
heightened activity Of the District Attorney,
buttressed by the Attorney Generals office
and that of the United States Attorney, is at
trbutabe to group of recent brokerage
failures, the legitimacy of which challenged
public attention Although some of the fail
ures reflected on nothing but the business
Judgment of the defunct firms, others suggest
ed bucket shop methods. Since bucketeers
gain what their customers lose. they thrive
during periods Of declining security prices.
such as the country passed through between
the fall Of 1919 and August, 1921, because the
average customer buys securities on the as
sumption that prices will rise. In time of
n upward surging quotations, such has pre-
vailed during the last six months. bucket
shops are beset with difficulties, and are often
forced to discontinue rather than pay out
profits to successful customers. And since it
is common for bucketeers to operate under
assumed names they close down one establish
mcnt that has guessed the market trend IN
correctly and start another under new name.
The evils that the bucketeers do would be
serious if they merely swindled those who want
to take high fiers in the stock market but they
become an active, social menace when they
hoodwnk those intending not to speculate, but
TO purchase high grade investment bonds. And
in recent revelations there has been ample
proof that the investor as well as the specula
tor has suffered. Questionable houses have cX-
plotted the partial payment plan. urging Gus
toners to purchase more securities than they
could hope to pay for, on the assumption that
after few payments werc made the customer
would become discouraged, stop payments and
lose what had been paid i'll. And in the cases
where purchasers completed their payments,