Evening star. [volume] (Washington, D.C.) 1854-1972, 1933-04-27
AIRS D0HERTY COUP
IN CITIES SERVICE
Mitchell Says He Made Big
Profit on Stock While Gain
ing Voting Power.
BY the Associated Press

Thomas w. Mitchell, examiner
economist, told the Federal Trade Com
mission today that high market prices
achieved by Cities Service Co. common
stock in the early part. of 1929 az
forded Henry L. Doherty, utilities mag
nate, an opportunity to put his per-
sonal affairs in order" and realize a
large profit on portion of his hold
ings in the company.
Mitchell made the statement during
testimony in continued investigation by
the commission of the Cities Service
Securities Co., wholly owned trading
subsidiary of the Cities Service Co.,
DOherty concern.
Doherty owned directly or indirectly,
Mitchell said, a block of 100000 shares
of Cities Service common, the cost OF
which had been approximately $l3.76
share. These were only part of
Doherty's total holdings of Cities Serv-
ice voting stock during 1929, he said,
as the total holdings consisted of 697,-
057 shares of common and 5,402 Of
preferred, representing l44,8l3 votes, or
6.19 per cent Of the total voting power
Chance for Large Profit.
The high market prices achieved by
Cities Service Co. common stock Of
fered Mr. Doherty an opportunity to
put his personal affairs In order and
at the same time to realize a large
profit by selling this tthe 100000
shares portion OF his holdings
Mitchell explained
The noayirnrrn range of the price of
the stock at the period was s121.50
per share.
Pesponding to questions bv Robert
E, Healy the commissions chief coun-
sci. Mitchell said the 100000 shares
represented 10000 votes and their sale
would have reduced Dohertys voting
power unless some means could be de-
vised whereby the voting power could
be retained.
1T is pertinent to point out in this
connection that lust 10 days prior to
that on which the purchase OF Mr..
Doherty's 100000 shares for the account
of the securities company was recorded,
the Doherty mana gement took the first
official step toward increasing Mr..
Doherty's voting power by 1000 900
votes at an investment of 81 per vote"
Mitchell said
Satisfied by Stockholders.
The action was taken through a
recommends ton of the board of d.
rectcrs to the stockholders that a
change be made in the classification OF
Cities Service Co. stock. One important
change was alteration Of the common
stock from par value to non-par.
Mitchell said, and another was creation
OF new class of on-cumulative stock
III Of Inc nf l
each, each share to confer upon its
holder a full vote The action recon-
mended the sale of these latter shares
to Henry L. Doherty & Co. at par.
1.-The stockholders ratified the recon-
mended action and 100000 votes were
sold to Henry L. Doherty & Co. at 81
per vote" Mitchell continued. MT
Doherty was sole proprietor OF Henry
l.. Doherty & Co., so that In that
capacity he obtained 1000, 900 votes in
place of the 10000 he sold"
Connection Denied.
Coincident with the introduction Of
the Mitchell testimony, Robert Burns,
counsel for the Cities Service Co., in a
statement said there was no connec-
ton" between the sale of the 200, 900
shares and the acquisition of the L.
600, 900 shares Of non-cumulative stock.
For some time" Burns said, there
had been several distinct attempts by
investment trusts and other banking in
terests to acquire large block of Cities
Service common stock for the purpose
of securing control Of the company,
thus changing the control from the
management which had founded and
built it up over long period Of years.
1t was deemed highly expedient to de-
feat any such attempts In order
to continue the management"
More than 80 per cent of the stock
holders of the Cities Service Co. were
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