Evening star., 1940-08-09
Investment House
Suspended by 5. {. {.
As Giannini Front
WoIston & Co. Charged
With Issuing False
Registration Statement
BY the Associated Press.

BY the Associated Press.
The Securities and Exchange
Commission yesterday revoked the
registration of Walston g. Co., San
Francisco investment house, and
suspended for six months the Stock
Exchange memberships of Vernon
c. Walston and William Sherman
Hoelscher, partners in the firm.
The order, based on charges OF
false and misleading statements in
registering with the S. E. c., be-
comes effective September 10.
The S. E. c. began its inquiry April
rs, 1899, against Charles de Y
Elkus and Clifford P. Hoffman, in
addition to those named in yester-
days order.
Says Gianninis in Control.
In an opinion, the s. E. C. said:
I'VE are satisfied that. throughout
the period in question, Virgil Gian-
mini (son of A. P. Giannini, head
of the family wished to control a
brokerage firm and also to keep
such control secret. The record
suggests that two major motives
impelled Virgil Giannini to desire
to control seemingly independent
brokerage house:
"(a) The Giannini family. chiefly
Virgil Gianninis father and brother,
were in control Cor directed the
market operations) of publicly
owned coporations, including Trans
America Corp, Bank of America
N. T. & S. A. and Pacific Coast
Mortgage Co. Virgil Giannini may
have desired to conceal the fact
that a member of the Giannini fam
lily was, in effect, receiving a sub
stantial profit from the commits
sions paid by these corporations to
Walston g. Co. ..
"(b) Throughout the period In
question Virgil Giannini's father
and brother were engaged in large
scale market operations, the pur-
pose of which, according to the
respondents testimony, was to sta
bilize' or support the market in
! the stock of Trans America Corp
1t was unquestionably extremely
useful to the Giannini family to
control an ostensibly independent
brokerage house through which to
conduct these operations.
Invested Large Sums.
However, whatever Virgil Gian-
minis motives may have been they
| 1f ctrorntt, fn
him to invest large sums of money
in Walston e. Co. and to resort to
elaborate stratgems to conceal his
| interest.
THE record further establishes
that Virgil Giannini, in effectuating
his plan, received full cooperation
from partners of Walston g. Co.
81. They willingly acted as fronts
and became parties to the maze o1
agreements designed to conceal the
true situation from the outside
world.
90. There were insistent rumors
in San Francisco financial circle;
that Walston & Co. had Giannin
backing. Whenever the named part
ners were confronted with such
rumor they invariably denied 1t.
Gave Misleading Picture.
"3. They failed to reveal to tht
stock exchanges of which they wer'
members the fact that they were
acting for an undisclosed control
| ing interest. Rather, they filed witt
the stock exchanges the partner
ship agreements which gav'
misleading picture of the financing
of the firm"
The commission said that evl
dence showed that Virgil Giannin
"for all practical purposes, owned
from 10 per cent to 80 per cent o
the firm," and that in addition n
had advanced up to $120,000 as ad
ditional working capital.
Among those named in the origina
order, Hoffman was a son-in-laW o
A. P. Giannini and Elkus was tn
Giannini family lawyer.