Evening star., 1939-02-15
Sc. T.. Studies Action
AGAINST -Four Who
Refused 10 Testify
Trunsomericu Probe
Is Adjourned After
Witnesses BuIk

IS AoJ0uTneo ArteT
Witnesses BoIk
By the Associated Press.
The Securities and Exchange Com
mission today was considering what
it would do about four witnesses who
baked at questions during a hear
ing on Trans-America Corp.
o. John Rogge, commission at
torney, said yesterday he would ask
the commission to apply to District
Court for an order compelling testi-
mony or for punitive action. The Sc
curities Exchange Act of 1884, part
of which Mr.. Rogge read to the wit
nesses, provides maximum punish
ment of $1,000 fine and a year in
jail for witnesses who refuse to tes-
tify. Any punishment must be
meted out by court, however.
Hearings Adjourned.
The witnesses were Miss Margaret
Mallory, personal secretary to A.
P. Giannini, chairman of Trans
America Corp: Charles j. Smith,
San Francisco broker; w. E. Clay
ton, jr.. secretary-treasurer of Pa
ciflc Coast Mortgage Co., and Carl
Stamer, vice president of the mort
gage company.
The witnesses, all of whom ap-
peared with lawyers, refused to tes-
tify on the ground the commission
had no right to investigate affairs
of the Pacific Coast Mortgage Co.
in connection with its Transamerica
inquiry.
Pending decision on what should
be done with the witnesses, Mr..
Rogge asked for and received an
adjournment of the Transamerica
hearing until March 20.
The hearing resulted from an
order of the commission last No
vember to determine whether
Transameria securities should be
suspended from trading on stock
exchanges because of alleged false
or misleading statements in the
registration statement filed for the
S. E. c. by Transamerica in 1887.
Order Braadened.
Miss Mallory and Mr.. Smith both
were asked and refused to say
whether it was true 10000 shares
of the capital stock of the mort
gage company were registered In
their names in 1885, while Mr.. Clay
ton and Mr.. Stamer declined to
produce records concerning what, If
any. profits the mortgage company
made by dealing in Transamerica
securities, and what, if any, pay
ments it made to A. P. Giannini.
Once before, when Mr.. Rogge tried
to delve into affairs of the mort
gage company, the commission up
held Transamerica objections that
his questions we're not within the
scope of the S. E. c. investigating
order. However, the commission
later broadened its order in an effort
to legalize the questions.
Mr.. Rogge denounced the wit
nesses' refusal to testify as an "out-
rageous case of contumacy"
The Pacific Coast Mortgage Co
once was a part of the companies
which now form Transamerica's Z
vast corporate holdings, but was sold
in 1882 to A. o. Stewart for $3,200,-
900.
Giannini Denounces
Propaganda
SAN FRANCISCO, Feb. Is [R.-
A. P. Giannini, West Coast financier
issued a statement yesterday de-
nouncing what he called Govern
ment by propaganda and commits
sions.
Back home from Washington
where the Securities and Exchange
Commission inquired into his COM
pensation from Transamerica Corp,
the founder of the Vests biggest
financial house declared: IT am
cured and disillusioned; Govern
ment by headlines-that is the
regime we are living under today.
"A wild scramble for the head
lines seems to be the governing pas
sion of those in Government.
Every bureau has its propagan-
dist, every department has its
myriad of publicity men, handouts
reign supreme, and when handouts
don't meet the response expected of
them, there are always the inspired
columnists whose ears are always
open for rumor-mongering and who
pass the material out as inside dope
through syndicated columns misin-
forming millions throughout the
country"
Mr.. Giannini said he went to
Washington expecting to find broad
principles of equity and justice DOM
mating the hearing rooms. I
found bright young men, fresh from
academic halls, completely unin-
formed of life and experience and
the ways of business, dominating
important councils.
by using the forces of propa-
ganda, they try to compensate for
their lack of experience and train
ing. They make of what should be
sound and deliberate proceedings
springboards for their wisecracks. u
Scrap Iron Club Cast
Reheorses for Play