Evening star., 1933-02-17
$20,OOO,OO0 PROFIT
INDICATED IN DEAL
IN INSULL STOCKS
Continued From First Page.)

"It was favorable to the company
| wasn't it?"
Yes"
And unfavorable to the purchaser"
"Yes."
"It tended to make the company's
credit better than 1t was" Brookhart
commented.
Stuart then went into q long and
complicated explanation of the trans
actions.
Stuart finally said that when Halsey,
Stuart bought the stock 1t had already
arranged to sell it back to the other
insult companies.
AS consideration for the deal, he
said, the insult family turned over to
Halsey, Stuart 27,000 shares of common
stock in insult Utility Investments, Inc
Your company didn't actually risk
any Of the money it paid out?" Pecora
asked.
NO." Stuart replied eve knew we
were going to sell 1t Immediately to the
Utilities Securities Co."
You lent yourselves as an accom-
modation?"
yes"
Doubts s270,o0o Loss.
Senator Reynolds, Democrat, of North
B.
"In view of the fact that the insult
company is broke you are out $270, ,00o?"
Il think we got it back in the Or
ganization of the Corporation Securi-
ties Co."
why did you pay $4,000 900 for the
debentures to one insult company and
then turn around and sell them at a
| $270,000 loss to another insult COM
pany?" Reynolds asked.
Stuart repeated that the insult law
yers thought that was the thing to do.
Stuart said Samuel insult told hun
he was organizing the insult Utility IN
vestments, Inc, to consolidate his per-
| sonal holdings.
he said 1t being personal one, If it
were worked out SO that he received
par, it would please him very much"
Didn't you know it was for the pur-
pose of making the securities look
better to the public?" Reynolds asked
YES" Stuart replied.
Increase in Transfer.
Questioned by Pecora, the witness
said the $1,000 shares of common stock
had been received from insult at $40
a share and transferred to the Corpora
ton Securities Co. Of Chicago for stock
valued at 500.
Stuart said in response to questions
that officers of Halsey-Stuart were
officers of Corporation Securities and
that their offices were in the same
building.
Stuart said the 100000 Of deben-
lures purchased by his company also
carried warrants for common stock
at Sis.
They sold $4,000, 900 of these to the
public, along with the warrants, at
par, he said.
The other $4,000, 900 were turned over
to another insult company, but the
warrants were retained, netting a profit
of $2,000,000.
Stuart said 10000 shares of common
stock in addition to the former $1,000
were turned over to Halsey, Stuart by
insult for the debenture transaction.
Transferred at $100.
They were bought at $40 as the
others were, Stuart said, and trans
ferred at value Of 500.
That was bonus your company
got from insult Co.'S for two or three
day participation in the financial set
up Of the insult Utility Investments,
Inc.?" Pecora asked.
| Our total compensation was the
$1,000 shares allocated to us at 10,
which was all We were willing to pay
for it." Stuart said.
Telling of profit Of $4,000, 900 on
the warrants retained on the deben-
lures, Stuart said:
I'VE voluntarily gave y, of that to
the insult Utility Investments, Inc"
Voluntarily as a gift?" Pecora asked.
Yes"
standing on the street corner with a
tin cup?"
mo but it went up so fast we de-
cided 1t was only fair to give some
back"
"Your conscience was stricken, at
such tremendous profits"
I'VE felt the company should have
some of it back?"
$4,000 Shares Taken.
Stuart said he subscribed to $4,000
shares of insult utilities stock at Sl2 a
share which was transferred to Corpo-
ration Securities for stock with a par
| value Of 500.
Were you under any agreement not
to dispose of these shares for any sub
stantial period of time?" Pecora asked.
Il think there was" he replied.
This made an additional paper profit
of about $500 900, bringing the total
up to about $12,000,000
| Questioned about a circular Halsey,
Stuart had gotten out on some insult
company debentures the witness was
asked If the company had an interest
Of $1,000 shares Of common stock on
its sale.
mo, there would be nothing like
that" he replied
He added 1t wasn't the practice at
that time but 1t ough to be followed
in the future.
Senator Reynolds then asked about
employment Of radio broadcaster,
who worked under the name of "Old
Counsellor"
Stuart said M. H. Aylesworth, pres
ident Of the National Broadcasting Co..
worked out the investment program
and Halsey, Stuart sponsored it.
McFadden Is Mentioned.
The first program. he added, was
introduced by Representative McFad-
den, Republican, Of Pennsylvania, then
chairman Of the House Banking Com
mittee.
You sponsored the program to sell
insult stock?" Reynolds asked.
"Oh, no."
He exDlained thu rNlrpCSe of fhe