Evening star., 1937-11-24
EXCHANGE DEALER
SUSPENDED AFTER
S. f. c. ULT|MATUM
Stock Chiefs Deny PheIan
Censuring Is Linked
to Warning.
FEDERAL ACTION SEEN
BITTERLY RESENTED
Market Leaders Proceed With Own
Reorganization Plan Despite
Douglas Message.
By the Associated Press.

By the Associated Press.
NEW YORK, Nov. 24.-The New
York Stock Exchange today took
disciplinary action against specialist
In stock of Nash-Kelvinato tor for fail
ing ito fulfill his duty" in that ca
pacity.
THE Governing Committee" an
announcement said, having found
John j. Phelar guilty of the charge
and specification, directed that he
should be prohibited from acting as
a specialist on the floor of the New
York Stock Exchange for a period
OF three months and that he should
be censured by the president of the
exchange"
This action followed by one dav a
warning by w. o. Douglas. chairman
OF the Securities and Exchange Com
mission, to stock exchanges and par
ticularly the New York Stock Ex-
change, to raise administrative and
functional techniques in the public
interest or face wider commission reg
ulRtions.
Was Not Willful.
The Governing Committee said it
did not believe Phelan's failure prop
erly to perform his duties as a spe-
cialist was willful. Exchange spokes-
men also said the S. E. c. warning
had nothing to do with the case.
The substance of the charge and
specification" the announcement said,
thof TnI,p .
IN Nash-Kelvinator Corp capital
stock, on October 49, 1887. having
purchased as principal 8,100 shares of
said stock at the opening, failed for
approximately % minutes thereafter
to make any of said stock available
to the market, although during that
interval the market price of the stock
advanced rapidly, and that John j.
Phelan thereby failed to fulfill his
duty as specialist, as prescribed by
the committee on odd-lots and spe-
cialists."
p The Governing Committee" the
statement said, having in mind the
-" .r.,.i Conditions prevailing a. the
time, does not believe John J. Phel-
ans failure properly to perform his
duties as specialist was willful. Con-
sequently the committee refrained
from imposing upon him a more Sc
we're penalty"
Wall Streeters were frankly agi-
tated by Chairman Douglas warn
ing.
Securities prices, however, were but
Slightly disturbed The market opened
quietly, and in early dealings some
leading shares dipped SO cents TO S2
only to recover partially in dull trad
ing
Leading bankers declined to COM
ment formally.
Has Own Recognizing Plan.
In the meantime it was said in au-
thorltative quarters the exchange was
proceeding with its own plan of re-
organization. Dissatisfaction with that
plan was said to have prompted Doug
las statement in Washington last
night, after weeks of negotiation be-
tween the exchange and the COM
mission.
Some important banking circles de-
plored the rupture between the eX-
change and the commission-after two
years Of apparently friendly co-opera-
tion-and expressed the hope that the
disagreements would be quickly COM
posed
Market analysts in several of the
leading stock exchange commission
houses expressed the opinion the
Douglas statement should not be con-
sidered as either a bullish or bearish
factor, SO far as the immediate trend
OF the market was concerned, since it
dealt with the technical or func-
tional structure Of the exchange.
Others, however, said it might have
q chilling" or "unsettling" effect
upon sentiment, and a number of
banking and brokerage circles felt
protracted controversy would be de-
cidedly adverse influence.
Although it was learned that the
disagreement over internal reorganiza-
tion Of the exchange had been in
progress for weeks, Douglas statement
came as complete surprise to most of
''AaA wv wv oAAu AildllS ChClldllBS lIleIn.
bers were almost inarticulate in their
ire.
Seen Effort to Shift Blame.
Their comment was typical:
"A desperate effort to pin this thing
(the recent slump on the exchange. !"
What particularly disturbed some
exchange members was the stress
which the S. E. c. chairman placed
upon the large percentage of the
trading done by the mel .bers them
selves, particularly short selling, with
the indication that member trading
tended to aggravate market fluctua-
ions.
1t has been the contention of the
exchange, as expressed in the annual
report of Charles R. Gay, its presi-
dent. that Federal restrictions had
made the market so thin it could not
absorb any large amount of selling.
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