BLAME TAKEN.

Auckland Star, Volume LXIX, Issue 59, 11 March 1938, Page 7

BLAME TAKEN.

INSOLVENT FIRM. Richard Whitney Prepared to Meet Consequences. ASSOCIATES ABSOLVED. United Press Association.—Copyright. (Received 10.30 a.m.) NEW YORK, March 10. A statement has been issued by Mr. Richard Whitney, head of the Richard Whitney Company, one of the most important brokerage firms in the United States, following the firm's suspension from the New York Stock Exchange on the ground of insolvency, after Mr. Whitney's admission that he was unable to meet his obligations.

Mr. Whitney absolves other members of the firm from responsibility. He admits that he knew certain of his actions were wrong and expresses readiness to "meet the consequences."

A preliminary examination revealed that lie personally withdrew securities valued at 400,000 dollars from the accounts of two of his firm's customers. It was further revealed that six partners, in their own accounts with the firm, had a net debit balance of 817,000 dollars, Mr. Whitney's personal debit balance being «11,000~ dollars.

The revelations of the company's affairs did not have any appreciable effect on the market yesterday, being considered a matter involving solely the financial status of one house. Psychologically it is felt the chief effect will be to strengthen the hands of the Securities and Exchange Commission and the Government in the contention that Stock Exchange firms must develop a greater sense of public responsibility. Country Estate Pledged. The "Xew York Times" states that the losses of the Richard Whitney Company are between 1,000.000 and 2,000,000 dollars. There is not yet any indication of the extent of Mr. Whitney's own losses. He bad a 49i per cent interest in the firm. It is stated that apparently he made many large loans in trying to repair his fortunes, one being for 300,000 dollars, for which he pledged his country estate. Other newspapers publish varioiil rumours concerning the case, one being that members of Mr. Whitney's family and his friends lent him more than 1.000.0(10 dollars in an effort to rescue him from his predicament.

Wall Street gossip also alleges that the J. P. Morgan Company was pre- ! pared to advance all the necessary funds to rectify the firm's position when first it was indicated that it was facing what might be termed a normal bankruptcy, but that when the Stock Exchange investigation which began in January (when the change of rules compelled all brokers to file statements of their condition) disclosed irregularities, the J. P. Morgan Company declined further assistance. While the Whitney developments persistently attracted major attention in Wall Street, they continued to have no effect on the market to-dav.