Evening star., 1933-11-14
BIG SHORT SALES
BYPOOL DISCLOSED
RuIoff Cutten TestifieS on 0p-
erations in Sinclair Oil
Stock.
BY the Associated Press.

for his cousin, Arthur Cutten, manager
of the pool, testified the participants
made large short sales OF the stock in
the Fall of 1928 before it acquired the
securities from the oil corporation.
Earlier, Cutten testified the pool took
over the l,l3o,000 snares at GO when
it was listed on the market at more
than SS5, representing an immediate
paper profit of nearly S6,o0o,ooo.
Previous testimony has shown the
pool eventually made 100000 with
out any cash investment by its partic-
ipants.
Sinclair Scheduled to Testify.
The broker testified the pool made
100000 through short selling before
1t received the first allotment Of the
Sinclair stock.
Sinclair also was scheduled to TESTIFY
today about the pool.
HIS attorney said he was in the Capt.
tai. but asked that his appearance be
delayed until noon because OF his
health.
Sinclair was to be asked particularly
about a payment of 100000 from the
pools profits to William S. Fitzpatrick,
an official of the Prairie Oil Co, then
a competitor Of Sinclair's oil company
The syndicate operated in stock Of the
Sinclair Consolidated OIL Corporation.
Ferdinand Pecora, committee coun-
sci. also wanted to ask Sinclair about
the sale to him by the pool OF 10000
shares Of the oil stock at the $50 price
for which 1t was obtained from the cor
poration.
Investigation Prolonged.
The committee today abandoned all
hope of winding up its investigation by
the end of this month.
E Entering their seventh successive week
of hearings, the investigators prepared
to sit through December with a view
TO concluding the long investigation
about the first Of the year.
They believe 1t will take them two
more weeks to complete the inquiry into
thk Chase National Bank. Then they
plan 10 go into the Associated Gas q
Electric Co., Detroit and Cleveland
banking and stock exchange practices.
Chairman Fletcher had been trying
No finish hearings this month. but today
he agreed it would be impossible.
Cutten Tells About Pool.
Cutten began his testimony today by
saving he extended the invitations 10
participants In the pool.
There were four original participants,
he said. Cutten, Blair & Co., Sinclair
The witness did not mention Sherman
Corporation, the personal company OF
Albert H. Wiggin, former chairman OF
the Chase National Bank, which also
was given an original parucipauon, ac-
cordfng to previous testimony
Cutten described negotiations leading
uu to formation of the pool, saying SIM
clair wanted to sell the stock at $50
share to raise additional working cap
ital for the oil company.
There was no discussion at the meet
ing he attended, he said, OF offering
the stock 70 stockholders.
The witness said the stockholder,
might not have taken the stock at thai
price because it was selling on the mar
ket at S28.
Questioned by Senator Couzens, Re-
publican, of Michigan, Cutten said
however. that the stock had book
value of more than $50 at the end OF
the previous year.
Companion Account Organized.
After telling of short selling by the
pool before 1t acquired the stock, Cut
ten said a companion trading account
was organized to help maintain mar
ket."
He explained the original syndicate
which purchased the 100000 shares
had no purchasing power. and SO, II the
market fell, 1t could do nothing to sup
port the price.
Pecora asked If one purpose of the
trading account was not to maintain
the market SO the pool could dispose Of
its stock at profit.
mo, sir" Cutten replied. "It was to
maintain an orderly market"
Cutten said the pool had never sold
TO the trading account or vice versa.
Senator Couzens said 1t was per
fsctly apparent" however, from the
previous testimony there had beer
wash sales"
There never was a wash sale In
either one of these accounts" Cutten
replied sharply.
There has never been a wash sale In
any transaction of my firm"
Forbidden by Exchange.
Wash sales. or fictitious transactions
to establish a price, are forbidden by
the New York Stock Exchange.
Senator Gore, Democrat, Of Okla
homa, asked why pools were formed.
ITO make some money" replied Cut
ten, smiling.
The Oklahoma Senator suggested
pools were designed for rigging the
market" but Cutten replied, THE mar.
Lat ho y~icoad uhoYz iftc hrnad
THE broader 1t is the more impos'
sible it Is to manipulate" Cutter
added.
The broker said he had been on the
market eight years and had seen only
two real manipulations.
They were the Stutz corner and the
Piggly-Wiggly corner" he said, "anc
both ended disastrously."
Cutten said the pools in Sinclair hac
not attempted to peg the price" add
ing 'it is financial suicide to peg {
stock"
Returning to the operation of tht
pool, Cutten said the public had no
been told Of the sale to the syndicat,
of 100000 shares for $50.
Called Ordinary Practice.
Dozens of other brokers were givel
orders by E. F. Hutton 81 Co. to ex
ecute orders for the pool, Cutten said
Pecora went through the record o
transactions by the two accounts, show
ing they were both buying and sellin
on the same days.
Cutten described the pools opera
ton of buying and selling on the sam
day as ordinary practice" designed
support the market"
Interrupting again, Senator Gore sal
the public was buying in the dar
without knowing the market was bein
supported artihcially.'
Probe to Be Extended.
The Banking Committee, which ir
cludes the same Senators who hay
been investigating the Stock Exchang
had announced yesterday its inquiry
to be extended to study complaints ths
companies in which Jesse H. Jone
chairman of the Reconstruction FinanC
Corporation, is interested have been II
cipients Of large r. F. c. loans.
feTJtu 4tntF ~