Evening star., 1938-12-28

New York Exchange
'MonopoIistic' Privileges of
Members Would Be
CurtoiIed
TO the Editor Of The Star:
Senator Guffey of PENNSYLVANIA, ac-
cording to news item, has requested
the Department of Justice to investigate
the monopoly" of the dissemination of
race track information and race track
gambling. Immediate action in New
York City was taken by the authorities
who conducted raids.
Although have not the political
weight Of the Senator, may I suggest
through your publication that similar
action be taken by the administration
to investigate the "monopolistic" char
acter OF the New York Stock Exchange
and the agencies which have q monopoly
Of dissemination of stock market tips?"
The monopolistic influence Of the stock
exchange is best illustrated by data re-
leased by the Securities and Exchange
Commission. They state that in period
OF five days trading during the week end
ing October IS, 1898, a portion of 1875
members of the stock exchange traded
1894, ,598 shares of stock for their own
account. This was 1888 per cent Of the
total stock transactions participated in
by hundreds of thousands of people and
corporations throughout the world.
Many of the stock exchange members
do not trade for their own account,
merely acting as brokers for the invest
ing or specializing public. This I cite to
indicate that that the large volume of
trading above referred to represents only
the activities Of the professional members
who operate for their own account and
profit and in many proven instances to
the disadvantage and losses to the
public.
The monopolistic privileges of men,
bership Of the stock exchange are:
l. They can accept orders to sell securi-
ties from one Of the public customers
and execute the buying order OF another
public customer at higher price, thereby
proflting.
2. No commissions are paid by men,
bers on their transactions. The public
are subjected to high rate of COM
missions.
3. Members operating on the floor of
the exchange can buy or sell securities
Immediately upon release of news items
which affect security values long before
the customer orders can be transmitted
to the exchange from brokers' Offices,
many OF which are thousands of miles
distant from Wall Street.
Despite the existence of the S. E. C.
the same market rigging tactics of the
1929 era have been used. Specialists
have taken unfair advantage Of the pub
lie during severe reactionary phases of
the market.
One specialist was suspended for
having taken unfair advantage of the
public in transactions involving some
$4,000 shares Of stock. The punishment
three months vacation.
Two members were found guilty of
having rigged the market in stock, the
company of which has since been placed
In receivership. The punishment-per-
mission to resign and not undergo ex-
animation 50 that details Of the market
jiggle would not become public knowl-
edge.
In both instances the member punish
ment did not fit the crime. The public,
as usual, took the nckings.
Unlike the majority Of critics offer
suggestions of remedial nature:
l. Eliminate all members from trading
for their own account, directly or in
directly.
2. Eliminate the use Of the Dow-Jones
averages from the boards of the brokers
ofnces. They are an instrument Of
danger in that they can be manipulated
by the professional operators to stim-
ulate either buying or selling of securi-
ties by the public.
3. Make 1t obligatory that all members
Of the exchange who place market tips"
on their bulletin boards be responsible
for any losses resulting to customers who
purchase or sell stocks on the tnforma-
tion.
4. Make it criminal act for the false
creation Of markets to induce public buy
ing or selling.
1t has been stated in local newspapers
that the revelations involving the w. P.
A. in New Mexico was the result of a
letter to the editor" I trust you may
approve insertion Of this letter in your
columns. It may have an effect of
awakening the administration as well as
the public to the dangers of the monopo-
listic and racketeering control in the
trading of securities on the New York
Stock Exchange.
WILLIAM H. BUSH.
West Los Angeles, Calf.
December IS.
Wants Severe Curb