The New York herald., 1922-02-14
House Lost $4,000 After
Brisk Market for an
Issue Was Created.
ACTIVE FIRMS WATCHED
Two Complainants Say They
Cannot Get Certificates
From Traders Branch.

Twenty indictments charging grand
larceny, bucketing of stocks, wash
sales" or kindred offenses will be
found this week by the Grand Juries
that are to consider bucket shop cases
Il the expectations of Jerome Sim
mons, Assistant District Attorney,
re fulfilled.
The evidence on which the indict-
nents will be based in majority Of
Eases was obtained in raids made ten
lays ago but about which nothing
was known until yesterday. Mr..
Simmons said last night:
There are now. as is known, six
cases of this character before the
Grand Jury. 1 shall be disappointed
il we do not obtain at least twenty
indictments this week. At the same
time we will be presenting new cases
to the General Sessions February
Grand Jury and to the January Su-
preme Court Grand Jury. The pres
entation of the new cases will begin
tomorrow"
1t is expected that nearly all OF the
indictments to be found will be
against persons connected with
brokerage firms, so-called, which
have gone into bankruptcy. Other
Investigations by Mr.. Simmons relate
10 the activities of firms still in exist
ence and doing business. At least
four OF the cases regarded as serious
have to do with brokerage" houses
which have not been thrown into
bankruptcy.
Raids on six Firms.
The raids were made by Markey and
Cuniff. investigators for the District
Attorneys office. and resulted in the
seizing Of books of account, check
locks. customers records. letter files.
stacks of selling literature and a vast
collection of miscellaneous parapher-
MALTA of the bucket shop business. Six
raids were made and much of the data
obtained has been examined thorough
~. Mr.. Simmons admitted that the
percentage of disclosures, once the
cooks of a concern were examined,
was high. In every case where there
was reason to look for a proof of
wrongdoing that proof was found, and
It didn't take expert accountants to
find 1t.
Mr.. Simmons says he has before him
rs fine a case of washing" as the
financial district has known for many
= day. He and his assistants traced
certificates of stock from the hands OF
the washers through the selling
brokers. over to the buying brokers
and back TO the original owners, with
out the slightest difficulty. In each
transaction, however, the customary
check was exchanged, but commissions
were not paid, for the reason that the
firm had its own men on salary to
make purchases and sales.
when the washing of this stock
started" said Mr.. Simmons. "the price
on the curb was 2M. In about three
weeks it had risen to 81. The par
value was 81. While the interesting
process of selling with one hand and
buying with the other was going on in
New York agents of the firm were GO
ing through the country selling the
stock on the basis of the New York
quotations.
One group lost o,o00 on this stock.
Three days before the firm specializing
i'm the stock failed It gave an order to
another house to buy $4,000 of the
stock, which was an Industrial. The
stock was bought, but when time came
for delivery the specialists had no
money TO pay for 1t. In the meantime
the price had gone down to nothing
and the people who had bought the
$4,000 worth were left with the stock
on their hands and no way of disposing
of It,"
stock ms Colin tersI Seized.
Letters seized in the course of the
raids show that one method frequently
used by certain bucl<eting houses was
10 utilize country newspapers to "sell"
stock on the installment plan. The
stocks offered, in many cases, were Of
the highest character, such issues as U.
5. Steel, Standard OH and so on. The
country customers were required to
pay 20 per cent. down on their pur-
chases, and, OF course. the "broker" re-
tanned actual possession" of the stock,
promising delivery after certain per-
centage of the total purchase price had
been paid.
Before this time arrived, however,
customers were advised In glowing
terms OF pool about to be formed
Continued on Page Six.