Evening star., 1935-10-27
Sc. C.LEVELS GUNS
AT STOCK TRADER
Michael ]. Meehan Faces
Custer Threat Based on
Alleged Deals.
BY the Associated Press.

BY the Associated Press.
The Securities Commission yester-
day ordered Michael ]. Meehan, vet
eran stock market operator, to show
why he should not be expelled or sus-
pended from the New York Curb and
other exchanges on charges of manip-
ulating stock of Bellanca Aircraft
Corp.
Meehan, disclosed by the 1888 Sen
ate stock market investigation to
have been active in many big pools
in pre-depression days, was ordered to
appear November II to explain what
the commission said it had reason
to believe" were illegal activities de-
signed to raise the price of the stock.
The alleged manipulation. the COM
mission said, purportedly began on
the New York Curb Exchange on April
5, 1895, and has continued to the
present time.
At the same time, the commission
halted the f1otation by the company
of 197,500 new shares of the same
class as those being traded in on
the Curb in which the alleged manip-
ulation has been occurring.
S. Sale Price Planned.
Most of the new issue was to be
bought from the company by Meehan
and Hamons g. Co., underwriters, at
81, and sold to the public at s5.
The old stock has had range Of
81
this year. Two days ago it sold
around SIS, closing Friday at S3.75,
and yesterday at $2.75, the latter quo
tation appearing on the tape shortly
after the commissions announcement
Without giving details, the commits
sion said it has reason to believe"
Meehan used the mails and other in
strumentS of interstate commerce to
create "a false and misleading appear
ance of active trading" which had the
effect of raising its the company's
stock) price for the purpose of in
ducing its purchase by Others"
Act Held Violated.
This was done, the commission said,
buy with the knowledge that other
orders were outstanding to buy or sell
at substantially the same price. This
was called violation of the exchange
act under a section which forbids
transactions involving no change in
the actual ownership of the stock.
This process is described in stock
market parlance as matching orders,
whereby, in the simplest sort of case,
the same trader would enter an order
to buy and an order to sell the same
number of shares of stock at the
same price at the same time.
There would be no change in owner
ship. The same result might be OBJ
tained by several individuals agreeing
among themselves to buy and sell
without actually changing ownership,
thus creating unreal activity in stock
and raising or lowering, as desired, its
market price.
Untrue Statements" Alleged.
The registration statement for the
new stock would have become effect
i've today and the stock might have
been offered to the public tomorrow.
The commission said it found reason
able grounds for believing" the state
ment contained untrue statements, ,"
or omitted to state required material
facts"
The parts Of the statement objected
TO dealt with the stock holdings Of
officials. and with the agreement be-
tween the corporation and Meehan
and Hamons for selling the stock.
The other exchanges from which
Meehan might be expelled were the
New York Stock Exchange and Chi
cago Board of Trade.