Evening star., 1934-02-15
PROFITS OF POOL
Barred BY PROBE
Witness Says officers Par
ticipated in Alcohol
Operations.
BY the Associated Press.

VeStigat0rS today ne and other Ofti-
GERS of the company participated in
profits from the sale of its stock in
May, 1888, at below market prices.
Brown realized profit of $40 1000,
but contended he had sacrificed
more than that" in an effort to pro-
tect the stockholders of the company.
Questioned by Ferdinand Pecora,
committee counsel, he testified the
company's board had approved the
sale Of $4,000 shares of the stock at
$18 on May 81, when it was selling
on. the exchange at from $50 to $33. so.
Bragg Directed Pool.
The stock was sold to Thomas E.
Bragg, noted market operator, who
conducted a pool In the stock from
which the officers profited.
Brown told the committee the
beard had approved the transaction
because of verbal commitments he
previously had made in raising $780,
600 for the company.
Pecora, pointing out Browns COM
mitments, said: You were dealing
with yourself because you we're deal
ing with your dummies"
NO" Brown replied.
Pecora developed that at the same
time the board approved the Brown
transaction, it authorized the issu-
ance Of about 10000 shares to the
company's stockholders, all of which
were bought
The committee counsel contended
the $4,000 additional shares could
have been sold in the same way. Civ
ing the profit to the stockholders in
stead of the group of officers.
Names Those Who Prolited.
Brown testified those who shared in
the profits with him were: Richard H
Grimm. president; w. S. Ries, chair
man Of the Executive Committee; +;
Philip Publicker and H. w. Chad
bourne, directors
At the end of the session, Chairman
Fletcher placed a number of letters in
the record commencing the Fletcher
Rayburn stock exchange control bill.
He said he also had received MANY
communications objecting to the pro-
posed marginal requirements.
One of the letters, from Grover C.
Dahlbender of New York. who said
he earned his living on Wall Street.
said honest brokers certainly have
nothing to fear from the anticipated
stock market bill"
More power to you" Dahlbender
said
Arthur M. Wickwire, New York at
torney and author. praised Fletcher
for courage and constructive states
manship of the highest order" in
proposing the bill.
Skyrocketing of alcohol stocks. with
huge profits to insiders" was cited
by Pecora to show the Stock Ex-
change cannot regulate itself and
must be curbed by the Federal Gov
ernment.
The Senate Banking Committee
previously was told by a New York
exchange representative that the
transaction had involved mo material.
deliberate improprieties.
With the Stock Market Investigat-
ing Committee as a sounding board.
Pecora indicated he hoped to build
up the case to prove that the ex-
change Is incapable of self regula-
ton because it failed to act even after
the pools had been called to its at
tention.
Pecora has been using the alcohol
case to lay the foundation for en-
actment OF the Fletcher -Rayburn
bill, which he helped to draft.
A recommendation that CORPORA
tons be required to report quarterly
their sales and profits for the inform
alton Of small investors was made to-
day by Fred Y. Presley. president of
the National Investors Corporation of
New York.
All the investors want is an honest
ana true statement of sales and
profits quarterly" Presley said.
Says They Want History.
In other words, the investor wants
a chronological, accurate history of
the business. He does not want in
formation about future business plans
that might interfere with the business.
The small investor is as entitled TO
information as the big investor. If
such information is made available,
l believe it will place a curb on ex-
cesSive credit expansion"
Presley said he favored "legislatine
short selling out of existence"
1 don't believe proponents of short
selling can prove that it is a stabiliz-
ing influence" he said, adding he
thought short selling a destructive
rather than constructive operation"
Commenting on margin REQUIRE
ments as provided. in the Rayburn
bill. Presley said:
Personally, I believe 40 per cent
margin on common stock is altogether
adequate, if this bill is intended to
protect the individual who is not able
to protect himself"
He also favored outlawing manipu-
lated pool operations.
Presley said most of the big corpo-
ratlons actually we're owned by the
American public through common
stock
Points to Investments.
Woodlief Thomas of New York, re-
search expert with the Federal Re-
serve Board. said all speculative ou-
financed by credit"
He added that If buyers of stock
paid cash, there would be little specu-
lation.
Cash dealings are relatively small"
he said.
Popular belief several years ago
that New York banks would support
the stock market was credited bv
BENJAMIN Anderson, Chase National
Bank economist, to Cheap adver-
tising" by Charles H. Mitchell. for
merly Of the National City Bank. in
testimony before the House Com
mittee
He said he had never believed in
Mitchell and that bankers generally
were troubled" about his policies.