INSOLVENT FIRM

New Zealand Herald, Volume LXXV, Issue 22984, 11 March 1938, Page 9

INSOLVENT FIRM

WATT, STREET FAILURE

HEAD ISSUES STATEMENT OTHER MEMBERS ABSOLVED By Telegraph—Press Association —Copyright (Received March 10, 6.30 p.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 ho knew certain of his actions were wrong and expresses readiness to "meet the consequences.'' A 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 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 611,000 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. ESTIMATE OF LOSSES LARGE SUMS MENTIONED COUNTRY ESTATE PLEDGED (Received March 10, 7 p.m.) NEW YORK. March 10

The New 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 had a 49$ 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 various rumours concerning the case, one beine; that members of Mr. Whitney's family and his 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 pre-j 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.