BROKERS AND CLIENTS

New Zealand Herald, Volume LI, Issue 15613, 20 May 1914, Page 6

BROKERS AND CLIENTS

TRUST ACCOUNTS DEEDED.

CASE OF VINCENT ALLEN.

CONVICTION ONLY RECORDED.

A conviction- only was recorded by Mr. F. V. Frazcr,. S.M., at the Police Courtyesterday in the case in which Vincent Martin Allen, formerly a member .of the Auckland Stock Exchange, 65 years of age, was charged with three breaches of the- Bankruptcy. Act. Tho charges were that Allen being adjudicated a bankrupt at Auckland, on, April 4, 1913, did between April 4, 1911, and April 4. 1913, contract a debt of £650 with Robert E. Grieve when he had no reasonable expectation of being able to pay it, as well as other debts contracted; that by rash and hazardous , speculation he brought about his bankruptcy; and that he failed to keep proper books of account. '

When tho case came before the Court on Monday, it was adjourned in order to give Mr. A. Hanna, who appeared for defendant, an opportunity of quoting an instance where Mr. Justice Edwards had merely recorded a conviction in a similar case which came before him. Yesterday Mr. Hanna mentioned the case. Counsel said'that any sentence on Allen would seriously affect his health. He pleaded for leniency in the strongest terms on acount of the defendant's age, and his weak state of health. •.'.'.'.

Mr. Hall-Jones/ who appeared for the prosecution, concurred with what Mr. Hanna had said. The office which he represented had been strenuously endeavouring to secure, a regulation, whereby all sharebrokers would bo compelled to keep trust accounts of their clients' money. When it was remembered that solicitors had to have their trust accounts audited this was a very reasonable request to make.

. His Worship said the whole trouble appeared to have arisen through Grieve leaving in the. hands of defendant large sums of money for investment. He thought ho could say . with a clear conscience' that he could acquit defendant of having had any deliberate intention to defraud, or to break the Bankruptcy Act. ■ " I am glad," said His Worship, "that an opportunity has occurred of referring' to the question of trust accounts beinckept by sharebrokers." Under the Land Agents' Act, 1912, land agents were compelled to keep trust accounts. Before a land agent wais licensed me must first give a bond, with an approved surety for £500,, to secure that he would properly comply with the provisions of the Act in regard to trust accounts. For many y«ars solicitors had been under the obligation to keep trust'accounts, but last year the law was made very much more stringent, and it now provided for an annual audit of all solicitors' trust accounts. The law in regard to such accounts was enacted because of various frttuds, or discrepancies in accounts that had taken place in the past. ■ Minimising the Bisk.

Although the provision for keeping trust accounts would not be an absolute bar to dishonesty, it would, he thought, very considerably minimise the risk of loss in the case of persons leaving moneys for investment. A'roan who was not a criminal by intention, but who had allowed matters to drift, would be less likely to fall into error with his trust obligation when he know that his trust accounts had to he regularly audited, and when he knew that it was illegal to mix his own moneys ' with his clients' moneys in one account. " I see no reason why sharebrokers should not be brought into line with solicitors and land agents, and be compelled to keep a separate trust account, into which all clients' moneys should be paid," His Worship declared. "That would mean that; in a. case

like the present, so long as the defendant did not mix his own moneys with his clients' moneys, no matter what his own personal financial position might be, his clients would not suffer. Their trust moneys would be protected By law."

A Great Difficulty. In reference to the case under notice, His Worship said that his great difficulty .had been to decide how to deal with defendant, who he did not believe was guilty of any actual criminal intent. The policy of judges in the past had been to impose some short term of imprisonment, usually without lard labour, in cases where a man had committed a- breach of the Bankruptcy Act. The reason given by the judges was that it was necessary to'protect the commercial public by " enforcing the penal clauses of the Act" But. uo doubt, there were exceptions to a rule of that sort. To inflict any term of imprisonment on. Allen.would no doubt be injurious to his health, as he was an old man—he seemed to be older than his actual years. No good would be served by imprisoning the defendant, who had been punished by having been brought before the Court on a criminal breach of the Bankruptcy Act. His Worship did not think tluit the leniency of the Court granted to a man in weak health, and of advanced roars, was likely to be made use of by ill-disposed people. The case should not be taken as n precedent. A conviction was entered against the defendant, who was ordered t» come up for sentence when called upon.