The New York herald., 1922-08-16
CHANDLER BROTHERS
CHARGES ARE DENIED
n. Y. Stock Exchange and
Clark. Childs & Co. File
Answers.
AID GIVEN BANKRUPTS
Attempted to Help Firm
Out Of Difficulties,
1t Is Said.
AID GIVEN BANKRUPTS
ACCOUNT 5O2' A SURPRISE
Chandler & Co., Inc, 12O
Broadway, Had Nothing to
Do With Failed Brokers.

The New York Stock Exchange and
members of the Stock Exchange house
of Clark. Childs & Co. of 165 Broad
way, through their counsel filed formal
answers yesterday in the Supreme
Court suit that Willard p. Barrows
of Philadelphia, as trustee in bank
ruptcy for the estate of Chandler
Bros & Co., has brought to recover
the proceeds from the sale of seat on
the New York Stock Exchange.
The answers contain general denials
of Irregularities in stock transactions
in which they were concerned and
also of a conspiracy, as alleged by the
trustees in bankruptcy, to defraud the
public and customers of the bankrupt
firm of Chandler Bros. & Co.
District Attorney Joab II. Banton said
that he had written to Ewing. Alley &
vorhees of Ill Broadway. attorneys for
Mr. Barrows. asking for a copy of the
complaint filed in the County Clerks
office Monday. He Indicated that he
wished to delve into the matter to see If
there are traces of any criminal
liability.
Exchange to watch Case.
1t was intimated at the New York
Stock Exchange that the committee on
business conduct would watch develop
ments and take such action as requires
its attention.
Stories published In two early edi-
tions of THE NEW YORK HERALD yester-
day bore a heading with single err
erroneous line in which the firm of
Chandler g. Co. was mentioned. The
story. throughout referred solely to
the bankrupt firm of Chandler Bros
& Co, which formerly had New York
offices at "a Pine street: and there was
no intention to implicate Chandler &
Co, Inc. of 100 Broadway. since that
Is going concern and not known TO be
in any way concerned in the litigation
started by Mr.. Barrows.
The answer of members or Clark
Childs & Co, which was filed by Gug'
senheimer Untermyer q Marshall oi
120 Broadway, denies the allegation OF
bucketing and conspiracy and states
that the firm dealt for several years
with Chandler Bros. g. Co. before
the latter's bankruptcy The s1,00000C
error. or shortage of collateral of
Chandler Bros. g. Co. deposited with
them appeared December 10, 1920
when ii was discovered that securities
carried for the account of the firm
later bankrupt, had not been marked
down to the market value at that time
and was less by S1.000,oo0 than the
amount required for proper margin on
the account
The firm continued to carry the ac-
count and held large amounts of stocks
and bonds to the account of Chandler
Bros. & Co, and from time to time
bought and sold for the latter at their
direction, debiting or creditng their ac-
count according 20 the nature of the
transaction they ordered
FIRMS Difficulties Develop.
Prior to May 10, 1921, they state they
had difficulty in getting response tc
their calls for additional margin on the
account Of Chandler Bros. & Co. and
learned that the firm was in difficulty
The answer of Clark, Childs & Co. says
that the plan OF refinancing was sug-
gested by Chandler Bros. & Co. in ac-
cordance with which certain large credi-
tors made contributions and assignments
of claims.
BY this plan, they assert. 1t was In
tended to establish TIE solvency of Chan
dler Bros. & Co. and to satisfy the de.
mands of the Business Conditions Com
mittee OF the New York Stock Exchange
The agreement. according to Clark
Childs & Co, was entered May 10, 1921
at the request of the Chandler Bros
firm
Both Clark. Childs & Co. and the STOCK
It's president, who filed an answer through
Carter, Ledyard & Milburn. state that
the existence OF account 502" was un-
known to them until shortly before May
10. 1921. This Is the account carried
on the books of Chandler Bros. & Co
through which Mr.. Barrows alleged
passed irregular transactions which were
"many and manifold and went into mill
ions OF dollars"
Claim Against Bankrupfs.
After Chandler Bros. & Co went into
bankruptcy, Clark, Childs & Co. say tina,
they filed a claim OF sf23,404 through
the stock Exchange for an alleged un.
paid balance on the 100000 credit
which had been extended to Chandler
Bros. & Co. To them was awarded a
pro rata share of the proceeds Of tho
sale of the seat once held by Frederick
T. Chandler. Jr., after the Stock Ex-
change authorities had conducted a
hearing and permitted Mr.. Chandler to
testify.
Mr. Cromwell's answer follows the
general lines OF that which members
OF Clark, Childs & Co. made. on infor-
nation and belief he explains the
81 .O00, 900 error In the same way. and
also points out that the amount OF
Chandler Bros collateral held by Clark,
Chids & Co. was only a few thousand
dollars less than their debit balance
The deficiency. he adds. was soon made
good and thereafter Clark. Childs 4
10. continued to carry accounts for the
other firm. and endeavorcd later to rei,-
der assistance In reflnancing
Mr.. Cromwell states that Chandler
Bros. & Co. were in fact insolvent long
before May 10. 1921" and prior to this
time they carried on their books an nc-
count denominated mo. 502" In which
were entered sales of securitie- After
May 10. 1921, he asserts that Clark.
Childs & Co. ascertained that the other
brokerage Arm had been selling stocks
belonging to their customers and enter
Ing these sales In their books as made
for the 500 account"
He denies any knowledge or NORMA
tion sufficient 10 form a belief concern
atfo aaIr - l.w - ~