The Waterbury Democrat., 1940-05-01
Linked With Pools?

LinKeU NItU EUOhG
 Much time was spent yesterday afternoon by U. S. Atty Kaufmann to prove that MT. Phillips was n member of pool or pools with oth- CT stock brokers, which pool or pools had in mlnd the promotion of Me- Kesson stocks. In his questions to MT. Phillips he tried to emphasize particularly that MT. Phillips was urging that pool be formed among brokers so that market could be created for the common stock of the McKeSson and Robbins of Con- necticut.
 MT. Phillips denied that he urged the creation of such pool but said he did enter one pool He said the pool was to consist of 10000 shares of McKesson's of Conn. common stock,
 MT. Phillips stated that he con- sidered the pool he entered fair dealing although he admitted that some pools were operated to the detriment of buying public,
 Not this one though" said Mir, Phillips.
 Atty. Kaufmann asked MT. Phil lips If it wasn't important to Stabi- lize the market in the interest of the stock involved in the pool.
 MT. Phillips admitted that stabil- iSation was good thing. Atty, Kaufmann then asked considering Phillips interest in McKesson's and If 1t was essential that the market be stabilized to protect him and the R, r, qrlggS Co.,, which he repre- sentcd.
 MT, Phillips stated that R, r Griggs had nothing to do with the 1 pool and that he did not enter the pool with any preconcelved ideas Of protecting himself.
 Public Knowledge
 Atty. Kaufmann then asked if members of pool controlling q large number of shares of stock were not In a position to be Ion the inside" and operate against the in- tereSts of the public. MT. Phillips in- sisted that the pool he entered did not.
 Has the public any way of know ing that a pool existsP" asked Atty Kaufmann.
 q don't know replied MT. Phil lips.
 Isn't it so?' asked the govern ment attorney that people who are in pool and are in the know can act to the disadvantage of the pub lic."
 MT. Phillips reiterated that he was only in one pool and that 1t was not operated 10 the disadvantage of the public.
 "In a pool the public doesn't know there's false setup, do they?" asked Atty, Kaufmann.
 MT. Phillips replied there was no false Setup in connection with the pool in question.
 Didn't the operation of that pool create quotations for Connecticut McKessons?" asked Atty. Kauf- mann, and didn't the man who bought stock believe ticker quota tions were right?"
 MT. Phillips again stated that his pool was not created to deceive the public. He said that pools are not unusual.
 The local broker then said that the members of the pool were guid- ed Tn their buying and selling by Hutton and Co.,, nationally known brokers, and Julian Thompson, Me- KesSon and Robbins treasurer, who after investigation of the affairs of the concern brought about the $2l,- 100000 expose.
 Fantastic Theory ! Atty. Kaufmann then asked if [ the pool was not operated very much in the favor of R. r. Griggs and Co. so that that firm could rep resent McKesson's as being steady" in the dark periods of the depres- sion.
 That's the most fantastic theory I ever heard in my life" replied Phillips.
 Atty. Kaufman then went into the matter of the $200,000 loan, which the Connecticut McKesson, s allegedly made to Coster and asked several questions as to why the Con- necticut setup should put up col- lateral with E B. Smith and Co. to take care of this loan.
 Why wasn't the loan made through the Maryland Coz" asked Kaufmann. 'It was made through the Connecticut McKeSson Co, wasn't it, because that was more or less of family affair and had few directors while there were 30 direc- tors in the Maryland Co.,, who might become suspicious"
 Phillips said that this was ab- Solutely not so.
 Why didn't Coster go to a bank for his loan?" asked Kaufman. Phillips replied that at that time Coster couldn't get a loan of such size at a bank
 You were doing Coster a great big favor and yourself big favor, weren't you?' said Kaufmann.
 Phillips denied that he was doing himself aay big favor Phillips said to use Wall street term he was not rigging the pool and that every member of the pool was a substantial stockholder in McKes- son and Robbins. 1 Kaufman then asked Phillips fl the purpose Of the McKesson Ldt the Canadian firm. wasn't to bring more capital to the Connecticut McKessong.
 Phillips said it was not. Good Gesture
 You testified In this case and before the Grand Jury, didn't you