FINANCIAL SCANDAL

Grey River Argus, 11 March 1938, Page 9

FINANCIAL SCANDAL

BIG NEW YORK BROKERS Completely Insolvent fAus. & N.Z. Cable Assn.] (Received March 10, 9.30 p.m.) NEW YORK, March 10 Mr. Richard Whitney, of Richard Whitney and Co., one of the most important United States brokerage firms which was suspended from the Stock I Exchange on. Monday when its insolvency was admitted, has issued a statement absolving other members of the firm of Richard Whitney and Company from any responsibility ■for the bankruptcy. He admitted that he knew that certain of his actions were wrong, and expressed readiness “to meet the consequences.” The preliminary examination revealed that he personally withdrew securities valued at 400,000 dollars from the accounts of two of his firm s customers. It was further revealed that his six partners, in tneir own accounts with those firms, had a net debit balance of 817,000 dollars. Whitney’s personal debit balance was 611,000 dollars. Effect on Market GOVERNMENT SECURITIES STRENGTHENED. (Received March 10, 10.20 p.m.) NEW YORK, March 10. The relations of the Company’s affairs has not had any appreciable effect on the market to-day, it being considered to be a matter involving solely the financial status of one house. It is felt that the chief psychological effect will be to strengthen the hands of the Securities Exchange Commission and the Government. The contention is that the Stock Exchange firms must develop a greater sense of public responsibility. The “New York Times" states that the firm’s losses are between 1,600,000 and 2,000,000 dollars.There is no indication as yet of Whitney’s own losses. He had a 49i per cent, interest in the firm. He has apparently made many large loans trying to repair ms fortunes. One of these was for 300,000 dollars for which he pledged his countiy estate.

Other newspapers retail various rumours, one to the effect that members of Whitney’s family and friends lent him more than 1,000,000 dollars in an effort to rescue him from his predicament. Wall Street gossip also alleges that the J. P. Morgan Company was prepared to advance all the necessaryfunds to rectify the firm’s position, when it was first indicated that it was facing what might be termed a normal bankruptcy. However, when the Stock Exchange investigation began in January, and all brokers were compelled to file statements of their condition, it was disclosed that irregularities might be punished criminally, and the J. P. Morgan Company declined any further assistance.