The Washington times., 1924-05-05
j. S. Steel HEAD.
SCORES WALL
Street
Judge Gary critioizes Methods
Of Pool Operators In !
Stock Market
BY w. s. COUSINS.
tcppyriEht 1874 BY Cosmopolitan

by w. 3. COUSINS.
kCppyriEht 1874 by Cosmopolitan
News seFvlce,)
NEW YORK, May 5.---Sperula.
tive conditions In Wall street exert
too much influence ON the country
a. a whole, In the opinion OF JUDGE
hilbert II. Gary, chairman 81 tha
United States Steel Corporation.
who in an exclusive interview FOR
Cosinop News Service TODAY
sharply criticized the methods 81
professional and pool operators IA
the stock market. Judge Gary said
that fraud and misrepresentation
were some times resorted to In
order TO Influence the outside pub
nc and that the reported sales on
the stock exchanges are often dc,
tltiOus.
Describes Methods.
! Describing the methods Of pool
operation in the stock market,
Judge Gary said:
A number Of brokers or pro.
fessional Spectators or both, from
q pool with cash subscriptions in
the amount agreed upon. Then
the pool determines to buy at its
leisure a certain number of shares
Of stock decided upon. The next
step In the process il TO influence,
II possible, decrease In the mar
ket selling price Of the stocks In
which 1t operates. In doing this,
very frequently Misrepresentation
are circulated sometimes partly
based on facts, and at other times
manufactured, but emitting to state
at the time facts and figures which
would be favorable.
When prices of securities in
question are considered low enough
either by reason of misrepresenta-
ton or otherwise, the pool is filled,
and subsequently efforts of pool
managers are pointed in a different
direction. Then the same tactics
are used to 'bull' or increase the
market prices of stocks possessed
by the pool. General conditions
may have changed, or, what is gen
orally the case. bullish sentiment
is created by exaggerated or false
reports. Not infrequently the pub.
lie, or a portion Of 1t, concludes
the time has arrived for buying
0CS&AAkAOGg oA4N Dlk9 0([OA uAABAys
''Inside Information"
'It has been alleged that writer's
for some Of the newspapers have
been influenced to write prejudiced
accounts, by giving them an in
terest in the pool. OF course this
does not apply to high grade men.
Occasionally the head Of an indus.
try becomes q member Of a stock
pool, in which case he privately
gives information to jobbers, to be
reported only as the observations of
high officials or managers or
someone closely connected with the
industry whose stock IL involved,
and these have considerable influ-
ence,"
There IL a wide difference"
Judge Gary declared, between the
speculator who sells short or buys
long entirely on Margin, with no
intention or ability to pay for the
stock If It should be rendered by the
seller and the individual who actu.
ally sells securities he owns or has
in his possession, or who buys out
right for investment. In the first
case there Is a temptation to in
dulge in Misrepresentation or ok.
aggeration or unjustified conClu-
sions, while in the other, transac-
tons and governing motives are alb
solutely honest, ana do not affect
market values, except on the merits
on which they ought to be affected"
II believe there is and has always
BEEN" Judge Gary declared. ian
honest endeavor on the part of the
New York stock exchange and other
exchanges to eliminate pool opera
tons, or cornering OF the market,
so-called, or any other conduct by
exchange members which IL con.
trary to law or good morals; but. in
my opinion, these efforts have not
fully succeeded.
Fictitious Sales.
I'm my opinion there are times
when the reported sales on the stock
market include large amounts, some
times even a major part, which are
fictitious and are purely wash sales
which means that the same inter.
ests control both sale and purchase,
and complete the Transactions simply
for the purpose Of inducing the
public to suppose the market Is ma,
terially different from what IL would
be IL the course of trade was natural
and uninfluenced by fraud and mis-.
representation. Thus II will be seen
that those who examine the pub
lished reports Of stock sales are
frequently misled in regard to real
selling value Of securities.
Sometimes 1t is reported that the
high selling price of certain Sc
curity during the day was at such
a figure, the low at another figure
and the close at still another. The
fact may be that neither ono OF
these three reported prices repre-
sents bona fide transaction.
I'm making this statement" Judge
Gary concluded. II should say that
l believe the large majority of
brokers are honest and dependable
that the members of the stock ex.
change are high toned and reliable,
and that the stock exchange itself,
in Its management, ID intended To
be above reproach."
The general effect of pool opera.
ton in the stock market, Judge
Gary said, was apt to be both injuri
GUS and dangerous, and the small
margin traders are always al q
great disadvantage in making com.
mitments in stocks dominated by
pool operations"