Evening star., 1932-06-18
|PR0BERS TOLD FOX
HID STOCK DEALS
Witness Says Check Was
Made to Another-May
Visit Sick Man.
Continued From First Page)

Continued From First Page)
said 1t would endanger Foxs life to
testify at this time.
For two days Gray has outlined to
the committee charges that Fox has
made large sums short selling securities
OF his own companies.
Read Doctors Reports.
The hearing opened with Gray read
ing to the Senators reports from doc
tors who have examined Fox.
DR.. F. A. Hornaday, Mayflower Hotel
physician, wrote that ANY severe nerv-
GUS or mental strain" would cause
danger to his health or life"
DR.. William j. Mallory advised that
Fox remain in bed and have the care
of nurse.
The first witness today was Ellis
worth. who has been frequently men
toned in connection with various pools
described to the committee
Gray asked how many pools he had
operated through M. j. Meehan & Co.,
brokers. but Ellsworth said there we're
too many to remember. He added there
were live VI SlA ullpOl
Questioned by Gray, Ellsworth said
he was manager of big pool in Radio
in 1929, which has been called to the
attention of the committee.
Ellsworth said he was in Europe
throughout the existence of the pool,
but drew his commission of manager,
though he did no managing.
Participants in Pool.
He agreed that he might have been
engaged as manager to attract certain
participants to the pool.
Ellsworth told of the operation of a
pool in Fox Theater stock. Partici-
pators, he said. together with their in
terest. were: william Fox. 26 per cent:
Elizabeth Meehan twife of M. j. Nee
han), 1872 per cent: Ellsworth. 1872
per cent; ]. H. Higgins independent
operator and member of the Curb Ex-
change. 1872 per cent, and Earl Rod
ney Through member OF Burnham-
Hermann. 1872 per cent.
Gray said his records showed the
pool operated from August % to Oc-
tober 7, 1928. He added that this was
the same period covered by transac-
tions referred to yesterday in which
he sought to show Fox stock was being
kept up in price by Taylor-Thorne e.
Co. syndicate. while more stock was
being sold through Hayden, Stone e.
Co.
The profit from the pool. Gray said.
was S4334O8 Ellsworth agreed it was
over S400, 000"
Denies Wash Selling.
Where did the pool get its stcck?"
asked GRAY.
From William Fox" was Ellsworth's
reply.
He testified Fox had l25 900 shares.
which he understood was Fox The
aters stock that had not been sold"
Did you start selling the stock short
before you exercised your option?"
Gray inquired.
Ellsworth replied it was done against
the option"
In this particular pool and all 9TH
er pools you managed, a great deal Of
stock was bought and sold at approx
mately the same price" said Gray, in
quiring the purpose.
Ellsworth denied this was done "to
create unnatural activity in the stock" ="
Gray said that by tracing a trans
action through five brokerage houses,
his investigators had found "a pure
wash sale" involving the syndicate
Ellsworth denied it was wash selling.
Changed Hands Often.
Fox would put in an order to buy
and you would put in an order to sell?"
Gray asked
Yes" the witness replied.
The next day or so Fox would sell
it ard you would buy it?" Gray asked
L have no knowledge of that" Els
worth replied
"A wash sale is a fraud on the public.
This is not, because it was not designed
to defraud the public"
The witness added that in these cases
the stock changed from the synoicate's
hands to Fox.
And then back again?" Senator
Brookhart, Republican. of Iowa asked
Il don't know that" Ellsworth said
Gray said during the pools opera
tionS $4,000 shares were bought and
sold by the syndicate on the same day
and at the same price. He asked Ellis
worth for an explanation.
In no case were they wash sales"
Ellsworth said.
What were they?"
Traders on the floor created the ac-
tivity,' Ellsworth replied.
What was the purpose of the syndi-
cate in buying and selling? Was it to
keep the activity in the stock up?"
No"
Senator Couzens, Republican, of
Michigan. described the operation as
"a phoney transaction"
Turning to another operation, Gray
asked Ellsworth about an option to buy
100000 shares which he said was given
Fox by Fox Theaters on December 6,
1928.
The option was at 26, 27 and %,
Gray said
Ellsworth agreed that Fox had i'm
medlately turned the option over to
Meehan g. Co. as Ellsworth's agent.
I will establish" said Gray, that
Fox agreed to loan 100000 shares of
Fox Theater stock when he only owned
4,3OO."
rs this the same pool whose mem
bers were mentioned yesterday" asked
Senator CouzenS.
1t yesterday as Short-selling pool and
named John j. Raskob, w. F. Kenny
and Walter P. Chrysler as participants.
Public Not Informed.
Did you inform the public that you
were taking this short position?" asked
Senator Brookhart, Republican, of Iowa.
The public was not informed there
was short position on the stock" Ellis
worth replied.
Then it's fraud on the public every
time" asserted Brookhart.
Ellsworth replied he wouldn't say
that"
Gray said the pool operated from De-
cember 4. 1928. to April 1929, and made
S1,937,762 profit.
1T was not a short operation" Ellis
worth reiterated.
He said a very dear friend" Of his,
now dead, was in the syndicate and had
never engaged in short operation IN
his life"
"Mr. Raskob," he said, "has testified
here that he never engaged in short
operation"