The New York herald., 1922-06-13
Governing Committee Sends
QUESTIONABLE for Brokers
to Peruse.
MAY LEAD TO UPHEAVAL
Hundred Firms Said to Fear
Being Squeezed by New
Regulations.

New York Stock Exchange brokers
are to be required to furnish to the
Exchange explicit information about
their business, the balances due to
them, the securities they own or are
holding for others, the amount of
their assets and other information.
This data. to be required periodi-
cally. will place the Exchange and its
governing committee in position to
Judge instantly and accurately wheth-
er member firm is transacting busi-
ness as it should and whether it is in
sound financial position.
This significant move by the ex-
change, foretold some time ago by
Seymour L. Cromwell, it's president, in
speech in Philadelphia, has actually
been taken within the last few days. a
questionable of a rather extraordi-
nary character having been sent to all
member houses.
When the questionable has been
answered the exchange will be in a
should it appear that a housekeeping
is necessary.
If orders have been bucketed, the
exchange will know it. If any house,
by trading for itself. or by other means
has rendered its financial position un-
sound, the exchange will be cogniZant
of the facts and may act accordingly.
In his speech in Philadelphia Mr..
Cromwell ventured the assertion that
after the exchange had completed its
financial survey there would be one
hundred fewer members. 1t Is known,
too. that some OF the firms 'in the
Street" have expressed the belief that
they would not be able to continue In
business under the rigid enforcement Of
the new regulations. The opinion pre-
walls in well informed circles, however.
that the danger of firms going out of
business will be obviated in measure
at least by consultations.
While the QUESTIONABLE has been sent
cut the actual questions of which it is
composed have not been made public.
quired to file immediate answers. They
have been asked. first. to study the
questions and to familiarize themselves
with the queries and the reasons for
them. so that they may answer fully,
unreservedly and in a spirit OF cooper
alton later.
1t can be stated that the member
firms will be required to give specifi-
cally their bank balances of a certain
date; what the market value is of stocks
held by the firm; what the total is of
customers debit balances: what under
writing and syndicate participations the
firm is interested in; what the surplus
and undivided profits of the firm are
and consist of, and what are the fixed
assets Of the firm, including the value
OF the Stock Exchange seat, as carried
on the books of the firm.
With this information and a staff OF
accountants the Governing Committee
will have available instantly all the in
formation II can possibly require re-
garding any OF its member firms. In
the case of such firm as carpenter,
Caffry & Co., which recently failed, II
would for instance have been able to
foresee the condition which led to the
suspension OF the firm from the ex-
change. The exchange also will be in
a position to learn quickly whether
member firms are carrying on business
for bucket shops. such as that OF E.
Il. Dier e Co.
The QUESTIONABLE. II is understood. is
the result OF deep consideration Of the
recent trend OF affairs In the financial
district and of the disclosures that have
followed the failure OF bucket shop after
bucket shop which resulted from District
Attorney Banton's investigation along
wifi, the publication in TIE NEW YORK
HERALD of a series OF articles dealing
with the bucket shop evil.
The exchange began its own investi-
cation at about the same time and found
that some OF it's members had allowed
their capital to become impaired In one
way or another. so that in time OF stress
there might be serious danger Of a series
Of failures such as had occurred with
firms outside the exchange.