The Washington times., 1933-11-09
W|GG|N LINKED
. BY CUTTEN To
STOCK SALE
Chicago Capitalist Reveals to
Senate SyndiCates Bid Up
Price to Sell to Public

BY International News Service
Arthur w. Cutten, Chicago
capitalist. today proffered to the
Senate Banking Committee an
explanation of the boom-time
syndicate that rolled up a $12,-
100000 profit from selling a L.
e0O,000-share issue of Sinclair
Consolidated Oil stock In 1928
and 1929.
Albert H. Wiggin, former head
Of the Chase National Bank Of
New York, and Harry F. Sinclair,
the oil magnate, shared the profits
with Cutten and others.
Sinclair Ill
Sinclair was to have appeared
but his attorney, G. T. Stanford,
reported him i'll at Excelsior
Springs. Mo. Sinclair may ap-
pear next week.
: Cutten revealed that Sinclair
approached him in the summer
Of 1928 with a proposal to buy
100000 shares of Sinclair Con-
Solidated common at $50 share.
Cutten related:
81 said the price was too
high. The stock then was
selling at $28. We talked the
matter over for an hour and a
half, but reached no final de-
cisiOn. told Sinclair / would
not personally buy that large
q block. He said We will form
a group to take part of it,"
Later negotiations were handled
through the New York brokerage
house of E. F. Hutton g. Co.
Fourth Interest Sinclair'S
Sinclair agreed to take a one.
fourth interest. according to the
witness.
Cutten read a long explanation
Of the whole deal. He told how
he agreed with Sinclair, the Chase
Securities Corporation, Blair &
Company and Virgins Sherman
Corporation to buy 100000
shares of the Sinclair stock at $50
q share. They paid the Sinclair
company $33,900,000.
Cutten then entered an agree
ment with Sinclair personally to
sell him 100000 shares at the
same price. He said Sinclair paid
$3,900000 for the lot.
He asserted two syndicates were
organized then to sell the stock to
the public. The second syndicate
was organized sometime after the
first to furnish new buying
power" 49,.
Syndicates Compete
It was apparent to the commit
tee that the two syndicates, operat-
ing at the same time, had bid
against each other to force the
price up to a point where the
stock could be unloaded at a profit
to the participants.
In the end, Cutten said, the par
Elephants divided a profit of $12,.
o02,1O9.41.
Cutten said:
under the original Syndi-
cate agreement A the pur-
chasing power of the syndicate
was limited to 100000 shares,
the amount which it had con-
tracted to purchase from the
Sinclair Company.
II realize that il the mar
ket did not advance, and we
were not able Immediately to
dispose Of some Of the shares
purchased, it would be neces-
Sary. if we hoped to have the
purchase carried out Satisfac-
tOrily without loss to the
parties in interest, to have buy
Ing power by means of a
trading account which could
make purchases of the stock
independently of the original
syndicate.
CUTTEN AS MANAGER
Accordingly, a second SYN
dictate, known as syndicate
agreement B, was formed.
There were 80 participants in
this second account of which
i was manager.
"In addition to the stock
purchased from the Sinclair
Oil Company, it purchased, in
the course of its operation.
7O2.76O shares at varying
prices, and sold 1,7O2,76O
shares. Its profit was $12,-
OO2,1O9.41."