STOCK EXCHANGE SUED.

Auckland Star, Volume LXIII, Issue 264, 7 November 1932, Page 4

STOCK EXCHANGE SUED.

HUGE CLAIM FOR DAMAGES. INVESTMENT TRUST PLAINTIFFS. COURT GRANTS INJUNCTION. In New Zealand persons directly connected with Investment Trusts are not eligible as members of the stock exchanges, but in U.S.A. there is no such embargo, but instead the exchange has endeavoured ■to make regulations with a view to a proper control of investment corporation activities. However, these effo'rts apparently bring complications. According to the "New York Times" of September 17: "The New York Stock Exchange, Richard Whitney, its president, and 40 members of its governing committee, were named defendants yesterday in a suit for triple damages of $21,000,000 filed in United States District Court by Pirnie Simons and Company, Inc., brokerage firm of Springfield, Mass.

"The suit, alleging conspiracy in restraint of trade in violation of the Sherman Anti-trust Law and the Clayton Act, is/based on the plaintiff's contention that its business has been damaged to the extent of $4,000,000 by a rule of the Exchange .said to interfere with the sale of its securities in packages. "The defendants, through, a resolution of the Exchange's governing committee, are charged with having established a boycott among its 1375 members on a selected portfolio plan which the investment house had advertised and promoted.

"The plaintiff corporation, which is not a member of the Exchange, filed its suit through David L. Podell, attorney, of 39, Broadway. The action is the second it lias begun against the defendant, Justice William H. Black in State Supreme Court having recently granted an injunction restraining the Exchange from carrying out the resolution of its committee.

Pirnie Simons and Company bases its claim for triple damages allowed under the Clayton Act on a demand for punitive damages of $3,000,000 in addition to its demand for $4,000,000. "The investment firm, according to the complaint, conducted its business through the medium and agency of Stock Exchange members. During the middle of last May, it is set forth, it introduced a method of selling securities known as the 'unit group or package plan.' " This plan,' the complaint explained, 'consists in substance of the purchasing, assembling and offering for sale and selling as a unit of a diversified selection of securities of industrial, railroad, public utilities and other corporations in the United States which are listed on the New York Stock Exchange, i The said units consisted of one share of each of the corporations included in each particular diversified unit or group.' "The plaintiff, it is further explained, agreed to repurchase within a year of the date of sale 'said units or portfolios' from any of its customers, 'such purchase to be made at current bid prices of the New York Stock Exchange without brokerage charges.' "Asserting that their purchases complied, with the Stock Exchange regulations, the complainants charge that on June 22 the governing committee adopted a rule requiring that at least five shares of the stock of any one company be included in any portfolio. This was intended to prevent them from obtaining stocks through members of the exchange, it was asserted. By this act and by the use of its influence with other groups including the State security comniission, the exchange 'with malicious intent' conspired to destroy the plaintiff's business, unless it would agree to the Stock Exchange rules, the complaint charges."