Evening star., 1933-02-17
$2O,0DO,0DO MADE
ON insult STOCK
HaISey-Stuart Paper Profits
Indicated in Senate
Probe Evidence.
BY the Associated Press.


Evidence that Halsey, Stuart g. Co.
a Chicago investment house, made pa
per profits Of nearly S20,000,000 from
its participation in organization of an
insult investment trust was presented
today to the Senate Banking Commit
tee
Ferdinand Pecora, committee coun-
sci, contended that nearly $4,000, ,00C
of it was in the nature of a bonus
for Halsey, Stuart's marketing of the
securities and aid in establishing a
price on them.
He presented evidence to show that
$6.000,00 Of preferred stock in the In
vestment trust. known as the insult
Utility Investments, Inc, was bought
at par value and sold Immediately te
another insult company under pre-
vious agreement.
Credit Is Enhanced,
Harold L. Stuart, president of Halsey
Stuart who testified for three hours
agreed this enhanced the credit of the
new company, but denied it was done
to deceive 'the suckers" who were ex-
pected to buy the stock.
He protested vigorously at sugges-
tions that all securities sold by his
company were worthless, and asserted
that the concern was proud" Of its
record.
Pecora produced q letter from Hal
sey, Stuart to a customer advising her
to buy number Of securities, including
bonds in an insult company in which
Halsey, Stuart was financially interested
in place Of United States Government
bonds. The insult bonds are now vir-
tually valueless.
The letter did not reveal Halsey,
Stuart'S interest in the insult company,
but Stuart contended this was com
mon knowledge"
Profits too High.
Stuart. relating the numerous trans
actions in which his company figured,
said the profits rolled up so high in one
deal that his company considered them
too large and returned third of S2,-
600 900 to the insult company involved
Questions by Banking Committee
members and its counsel brought out
that officials of Halsey, Stuart also were
officers in the insult company whose
securities they were handling.
Senator Reynolds, Democrat, of North
Carolina, put in this way in question
to Stuart:
"You just took the money from your
right hand pocket and put it back in
your left hand pocket, didn't you?"
Among witnesses waiting to be called
was Melvin A. Traylor, Chicago
banker.
Halsey. Stuart & Co., a Chicago
investment house. handled the market
ing OF many insult securities and
joined with the insult group in forma-
ton of Corporation Securities Co. of
Chicago, one of the investment trusts
under committee scrutiny.
Stuart, a grayhaired, tanned man
with gold-rimmed spectacles, was ques-
toned by Ferdinand Pecora, the COM
mittee counsel.
Stuart a Director.
Stuart said he was a director of insult
Utility Investments, Inc, and when the
trust was organized HalSey, Stuart &C
quired $6000,000 worth Of per cent
debentures and $6,000000 of prior pre-
ferred stock, each carrying warrants for
the purchase of common stock.
The preferred stock was purchased at
par value, he said and carried warrants
for the purchase Of five shares of COM
mon stock at SIS, emitting holders of
the debenture to buy 100000 shares of
the common stock.
The preferred stock was sold to the
Utility Securities Co., another insult
company, at 9514, Stuart said.
They distributed it to the public at
par" he added.
Then you took a loss" Senator
Brookhart. Republican. of Iowa said.
Yes" Stuart said, but we made 1t
up on the common stock"
Stuart said his company lost $270, 900
on the prior preferred.
Pecora asked what reason there was
for this purchase of the stock from one
insult company and sale to another.
I'VE thought 1t was better for this
kind of company to realize the full
face value of its debentures and securi-
ties" Stuart replied
1T was done to give the public an
exaggerated idea Of the financial con-
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