Evening star., 1932-06-03

JOHN j
As he took the oath today before a Sc
stock market inquiry.
price ranged from 1856 to 1879 and sc
that he must have lost.
why did you sell that stock in 1922
Gray asked
Senator Couzens interjected that:
Il confess l don't see what this has
to do with the stock market. l don't
know where We are drifting"
Il don't either" Raskob said.
Gray Reiterates Question.
Gray asked his question again, how
ever
Some personal reason, suppose,
Raskob replied For income tax pur-
poses to establish profit or loss"
Gray pointed out that the sales were
not covered for several months. Ras-
kob told of the organization of the
Managers Security Co.
He said it was owned by 80 of the
principal men" in General Motors. who
invested s5.0O0,000 and borrowed $685.
900 900 from the Du Pont Co.
All the money was invested in Gen.
eral Motors stock and the loan was
paid back in seven years, Raskob said
General Motors had contract with
Managers Security Co.. under which
per cent of the profits of General Mo-
tors over 7 per cent OF the capital en-
ployed would go to these 80 men
through the Managers Security Co.
If General Motors made s55 5000, ,00C
the security company got nothing II
it made $4,000 600 the Managers Sc
curity Co. got 5 per cent of the extra
IS 000 90 or s25o,0o0"
Lion was first called to the stand.
Gray. a little earlier had said Lion
was reputed to have made million
dollars in pool operations.
Asked about it by newspaper men just
before he started to testify, Lion said
Il never heard that was a crime, did
you?"
Before questioning Lion. Gray read
numerous extracts ron the constitu-
tion and rules of the New York Stock
Exchange.
Among them we're regulations speci-
flying that employment Of members OF
the press by Stock Exchange members
is forbidden and that circulation OF
rumors Of a sensational character" is
detrimental to the interests or vel
fare Of the Exchange"
Another rule which he read with
emphasis forbade purchases or sales oi
securities made for the purpose of up
setting the equilibrium of the market
and bringing about condition Of de-
moralization'
Publicity Held Provided.
GRAY said he would show that dur
ing three years Lion provided pubucit.
for brokers and received stock fol
which he was not required to put ur
money.
At one time. Lion said, he operated
a paper known Is the Stock and Bono
Reporter, which suspended publication
in 1928
When you say you are a publicity
man, won't you say to the committee
what you do?" questioned Gray.
Il receive calls on various stocks" the
witness said.
When he showed some hesitation in
continuing. Senator Cou5ens. Repuo-
lican. of Michigan, asked him what he
meant by calls"
Gray undertook to answer for Lion.
What actually happened. was It not,
he oueried, that when some broker or
operator was interested in the man.
sgement Of pool through which he
anticipated trading in certain stocks
and was destrous of boosting the price
of the stock, he indicated to you that
he wanted publicity boosting the stock
and would give you call. which meant
that he put aside $4,000 shares OF stock
for you which you could call upon at
any time. thus making 1t possible for
you to sell that stock at any time II the
market went up and make the differ
ence in cash.
e Maybe Charity"
Lion replied that sometimes he
didn't have to do anything
Sometimes the publicity was in pools
and sometimes not" Lion said.
IF you had $4,000 shares OF Radio
and gave me an option on 10000 II
wouldn't have to be a pool, Lion said
why give you the option?' Senator
Glass. Democrat, of Virginia. asked.
Maybe charity" Lion replied.
What did you do?" Couzens asked.
Sometimes 1 got publicity"
Lion volunteered no information and
replied to the questions as orleny as
possible
what you did. it being to your in
terest as we'll as tbs operators, was to
convince the public f.e stock had more
value?" Gray asked
Yes"
Lion said he began to use the radio
for dissemination of information on
stocks in 1928 and continued until the
Fall of 1929
He testified he employed William c.
McMahon to do the talking over the
radio.
Institute Was Incorporated.
He was introduced as president OF
the Mcmahon Institute OF Financial
Research?"
Yes"
He was the institute. wasn't hep
He was the pesident. 1t was lncor-
porated''
Mcmahon also wrote newspaper ar
ticles, Lion said.
The witness said he also obtained
publicity through newspaper writers 10
whom he gave information.
What else did you give them?'
CouZens asked.
Calls"
OlQ you give tnem CdSu3
Sometimes"
Who employed you?" Gray asked.
Pool operators"
Lion said he sometimes was employed
on 80 different stocks at once.
Lion said he was employed by pool
operators, including Rulon Cutten OF z.
F. Hutton and George F. Breen, an in
dependent operator.
Documents Are Shown.
Breen employed him in holster Radio
stock. he said, and gave him a call on
$4,000 shares. of which he used $4,000.
Gray questioned Lion as to when he
exercised the call, the witness replying
that he could not recall the exact dates,
as he had lots of these calls over q
period of four or five years"
You ought to know the dates, you've
got the statements Of the accounts" he
said.
Gray then showed Lion documents
giving the dates as in November. 1928.