Evening star., 1948-05-07
SEC Plans Contraction
To Force 7 Lawyers
To Tell Of Kaiser Role
BY the Assoeiotsd Pres,

DETROIT, May THE Securi-
ties and Exchange Commission
planned to go into Federal Court
today in an attempt to force two
attorneys to reveal for whom they
were acting in the $4,000, 900
Kaiser-F Frazer Corp. stock deal.
The two are Marvin c. Harrison
and Allan Hull, associates In q
Cleveland law firm.
The SEC Is trying to find out If
Mr.. Harrison acted as a go-between
for Otis & Co., Cleveland under.
writers, and David Martin, q De-
troit attorney who filed Q suit
against Kaiser-Frazer for James
Masterson of Philadelphia.
They also want to know from Mr..
Hull who sent him to Detroit to
watch for the filing of the law suit
last February 9.
Suit Basis of Withdrawal.
The suit was given as one reason
why Otis & Co. and First California
Co. withdrew from an agreement to
market 100000 shares of KAISER
Frazer stock. When they withdrew,
the deal fell through.
Louis Loss, chairman of the spe-
cial SEC committee investigating
this sudden withdrawal. told report
ers Federal Court complaint would
be filed later today.
The court will be asked to order
the two attorneys to name the
clients for whom they acted IN the
Kaiser-Fraze deal.
If the court issues such an order,
Mr.. Loss said, and the lawyers still
refuse to answer the SEC, they
might be cited for contempt.
Mr.. Harrison and Mr.. Hull refused
to answer the SECS questions on
grounds that their relations with
their clients were confidential.
Stock Deal Tips Revealed.
Nine more Detroit brokers took
the stand today to testify that they
knew in advance that new issue of
100000 Kaiser-Frazer shares was
coming out after the stock market
closed last February 3.
A dozen other brokers gave SIM
liar testimony Thursday.
Several of the brokers testified
that Otis & Co. tipped them of on
February 8 that the stock deal was
coming of later and that the price
would be $13 share. The stock sold
that day on the market at $3.50.
The brokers or their clients there
upon dumped thousands of shares
onto the market, where KAISER
Frazer was paying $3.50 in an at
tempt to keep the stock price steady.
Many of them planned to buy it
back later at $l3 share.
Says Call Was Unusual.
SEC Attorney J. Russell Kelly
asked Broker Jerome E. J. Keane.
a veteran of "a years in the market,
II such a tipoff was unusual.
well, it was a bti unusual" Mr..
Keane answered. TITS not very
often that the underwriting house
calls In fact they very rarely call.
They may wire you, or unuslly you
call them II you have an interest"
rs it usual or unusual for you to
receive q notice In advance that an
is coming out7" Mr.. Kelly
asked.
"It is unusual" Mr.. Keane replied.
However, Raymond w. Motel,
another veteran broker, said ut Is
not unusual to know beforehand
hat the Offering Is coming and its
Sees ZEE Possible viofatiori. -
He said it was, however, unusual
Tor Detroit brokers to be notified
before or at the same time as New
York houses.
The. SECS presiding otficer, Milton
kroll, said the reported action OF
Otis g. Co. In tipping OF brokers be-
ore the deal began might, under
certain circumstances, be . VIOLA
ion of Federal regulations.
Most Of the brokers who testified
said they were caught by
surprise when the two sellers ter
their agreement to dispose
If the stock.
Harold G. Montgomery, broker.
aid his New York Office told him
something smells" about the entire
stock deal.