Evening star., 1963-04-11
SEC Orders Sutro Bros.
Suspended From NASD
BY DONALD b. HADLEY
Star Financial Editor

Star FINANCIAL Edltor
The Securities and Exchange
Commission today ordered that
Sutro Bros. & Co., New York
and Washington securities firm,
be suspended for is days from
membership in the National AS
ISOLATION of Securities Dealers.
The orders involved two
two separate cases of securities
violations, one here and the
other in New York. The two Is
day suspensions will run con-
currently, starting on April %.
While suspended, the firm
cannot participate in securities
underwritings with other NASD
members, and other members
cannot grant price concessions
or discounts to Sutro Bros. on
over-the-counter transactions.
Since most securities firms of
the Nation are NASD members.
the firms operations in over
the-counter securities will be
restricted severely, but exchange
business will not be affected.
Two to Be Barred
The SEC orders stipulated
that while most of the firms
associates named as causes of
the suspension could continue
in the securities business, two
"willful" violators, David Hersh
OF Washington and Russell Sic
bach Of New York, would be
barred from the business.
1t said its findings consti-
tuted grounds for institution
Of proceedings against any
broker-dealers employing them
in the future.
In the Washington suspen-
sion case, the SEC reviewed
violations in a stock offering
for Agricultural Research De-
velopment. Inc, a new system
for mass production Of hogs, in
January, 1860.
In the sale Of this stock, the
SEC cited the offer, sale and
delivery Of unregistered securi-
ties and the publishing Of bids
for and purchasing the stock
while engaged in its distribu-
ton. 1t also charged made
quate supervision and controls
on the part Of the firms man
agement.
The commission found that
Irving Rudd, Stanley Bennett
and Mr.. Hersh, all of WASH
ington. were each q cause Of
the suspension order.
It added that findings should
not be considered a bar to Mr..
Rudd's future employment with
the registrant or Mr.. Benefits
continued or future employ
ment in the securities business.
Mr.. Hersh's situation stands
on a different footing, the
order said, although he had
no knowledge Of the activities
of Peterson and Jensen, who
were the promoters Of the ag-
ricultural firm.
Frear Dissents
In the Washington case,
William L. Cary, SEC chair
man, and Commissioners Man
uei F. Cohen and Jack M.
Whitney II Joined in the opin-
ion, while Commissioner J.
Allen Frear, jr., concurred In
part and dissented an part.
In his disse.ition, Mr.. Frear
said the penalty imposed upon
the registrailt was too lenient
and that the registrant should
be suspended from membership |
in the National Association Of
Securities Dealers for 80 days.
The other suspension arose
from q New York case In
which the commission charged
wilful violations of margin re-
quirements, credit arrange
and failure to maintain
effective supervision to prevent
arrangements by
statesmen, among other things.
The commission found that
Herold Friedman and a long
list of others in the firm we're
each a cause of the suspension
order.
It noted that its findings
should not be considered a bar
to the continued or future en-
ployment of any Of the indi-
yiduals named, with the
exception of Mr.. Siebach.
Stephen H. Floersheimer,
managing partner of Sutro
Bros, said "the commissions
Of the firm from the
NASD will not affect in any way
our ability to execute orders
for our clients or otherwise
service clients accounts" He
added: I'VE are gratified that
the commission confirmed the
good reputation Of the firm and
It's partners"
Mr.. Rudd. who resigned as a
partner in the firm in February,
but continues as q registered
representative in the Washing
ton office said he had no ad-
ditional comment. Mr.. Hersh
no longer is associated with the
firm.