Evening star. [volume] (Washington, D.C.) 1854-1972, 1938-03-10

ates on the exchange as any member
had in the past. To have brushed
aside all personal feelings and to have
preferred charges when alleged wrong
doing was discovered is a sign that
the Stock Exchange has become re-
sponsive to an awakened public opin-
Ion, which demands that business and
finance police itself if it does not wish
to force an even more drastic form
Of discipline through Government
agencies.
The discovery that there had been
an irregularity occurred through the
sending out of QUESTIONABLE by the
Stock Exchange itself to its members
Heretofore such inquiries had always
been directed only to firms with mar
gin accounts, but the all-inclusive
questionable. which has been recently
introduced, brought to the attention
Of the exchanges Business Conduct
Committee facts which led to prompt
investigation by it's own accountants
last week.
Acts in Secret.
The committee did not let anybody
on the outside know what it was in
vestigating until it completed its state
n1ent of charges. A decision was made
last Monday to file charges alleging
that the Whitney concern had been
engaged in conduct inconsistent with
the just and equitable principles of
trade"
AS soon as these charges were Or
dered filed and the Stock Exchange
member suspended until full hearing
could be held on March II. Charles
Gay, new president of the New York
Stock Exchange, got on a train and
came here to tell Chairman Douglas
Of the Securities and Exchange Com
mission what had happened, so that,
when the news was released on Tues
day in New York, the Government
would be in possession of all the facts
up to and including the action of the
Committee on Business Conduct
It is known that the committee took
its action before it was aware that
any petition in bankruptcy would be
filed by the member in question. In
a sense a precedent was broken in
ordering the suspension of the member
firm concurrently with the filing of
the charges rather than after the
usual hearing before the Board of
Governors of the exchange This step
was taken undoubtedly in the interest
Of the Stock Exchange position with
the public. so that the people gener-
ally might know how promptly action
has followed Immediately after the
facts concerning irregularity had been
detected.
Frank Disclosure Made.
There can be no doubt that the
speedy handling of the case by the
Stock Exchange had made a pro-
found impression here. Especially is
this true of the frank disclosure of
all available information. The various
inquiries which are being conducted
by the Federal and State authorities
will lean on the fact-finding processes
started through the Stock Exchange
itself.
Until full hearing on the charges
March II, the public will be unable
to Judge exactly what did occur and
what defense or specific reply is made
by the suspended member, but the
Stock Exchange recognized what
seemed to 1t misconduct entirely apart
from any question of insolvency. 1t
Is this phase of the matter which is
most pleasing to those who have been
insisting that American business men.
when allied in strong trade associa-
lions, can do more to squelch what
may prove to be unethical conduct
than is possible by series of cumber-
some statutes which only make it diff
ficult for law-abiding and ethical BUSH
ness men to engage in their legiti-
mate operations.
1t will be recalled that not long ago
Chairman Douglas made a statement
urging the Stock Exchange to be more
vigorous in self-discipline and express
ing confidence in the capacity of the
Stock Exchange to formulate rules for
the policing of transactions and of
members of the exchange itself. Here,
In the first important test of self-dis-
cipline-for there have been many
other cases of perhaps not so conspic-
uous q nature-the exchange meas
ured up to its responsibilities and did
not allow considerations of personal
friendship or regard or prestige to
interfere with the stern discharge of
public duty. Certainly what has just
happened will go long way toward
convincing liberals that radicalism Is
superiuous if intelligent conservatives
will conduct the business and finance
Of the country along lines that appeal
to the Nation as ethical, fair and
equitable.