The Washington times., 1933-02-17
RES Miami Woman Wounded by Assassin Battles for Her Life
$4,000 SHARES
ATONE FOR
Bic LOSS
Harold |. Stuart Tells Senate
/ of "Merry-Go- o-Round" Deal
| in Utilities Securities

A strange financial "merry-go-
round" deal of stocks in the fallen
utilities empire of Samuel insult,
Sr., which netted the Chicago in
VeStment house of Halsey Stuart &
Co. more than $13,000,000 in
'paper profits" was barred before
the Senate stock market investiga-
ton today.
With Harold L. Stuart, president
of the investment house, on the
stand, the committee developed
that the concern bought $12,000,-
900 Of debentures and preferred
stock in the insult companies and
were thereby given $1,000 shares
of common stock free and the
right to purchase other common
stock at SIS a share.
The $1,000 shares of common
stock, Stuart conceded, acquired
rs Of par value of $40 a share,
was later sold at 500 a share,
giving a gross of $5,700,000.
Concealed Interest
The remainder of the profit
was made through the sale Of
common stock bought at SIS as
allowed under the purchase agree
pnent of part of the debentures,
Rt 500 share.
"YOu were cOncealing your
secret interest when you of.
3ered these bonds to the pub
ic?"
I'VE didn't state it-that is
true. But it wasn't the cuStO-
mary thing to do"
Ferdinand, Pecora, the commit
tees counsel, drew from Stuart
how he had agreed that one issue
of insult stock should be valued
at $40 share. Stuart said his
company took $1,000 shares at
bhat par value.
Then Pecora showed the stock
was put on the market for sale
to the public at $50 a share. On
the second day of tracing the
value rose to $40 a share.
"YOu knew then the public
was paying three and four
times what you thought the
stock was wOrth?"
PRICE BOOSTED
1--WE didn't sell any of that
stock. We may have bought a
few shares for our customers"
"YOu knew $40 a share was
q fair and reasonable value
for that stOck?"
eyes"
Didn't you advise your Gus
toners that they were paying
three and four times what
you thought the stock was
worth?"
"NO, we simply bought on
order"
The $12,000,0OO debentures and
preferred was split evenly, $6,0OO,-
900 in debentures and $4,000, 1000
In preferred. The company,
Stuart said, took $27O,OO0 loss
on the preferred stock which it
bought at $10O and sold at
S95.50. Buying it from the
insult Utilities Investment Co.,
and selling it Immediately to the
Corporation Securities Co., an
other insult concern.
A Handsome Gift
It was in consideration of this,
he said, that the insult Company
gave. Halsey-Stuart the $1,000
shares of common stock.
Tho &c nm nm Iohoxot,,ro. 4Lo
E7alsey-Stuart Co. split into two
parts, selling $4,00O,00O at par,
along with the right to buy com
mon stock at SIS a share and
selling the remaining $4,000, 900
without the stock purchasing
rights.
1t was the rights to buy addi-
tlonal common stock at SIS that
made up the major portion of
the rest of the profits.
when you finally disposed of
the remaining $2,OOO,OOO of
debentures which you had re-
tanned when selling S4,OOO,OOO
with warrant attached at par,
did you keep the warrant rights
Of the $2,OOO,OOO or transfer
them?"
GAVE BACK $666,OOO
We kept the warrant rights"
'Then you exercised these
rights by the purchase of com.
mon stock. Did you sell that?"
Yes. The profit on the whole
thing was about $2,OOO,OOO of
(Contiued on Page 8, Col. y