BROKER'S FAILURE

New Zealand Herald, Volume LXXV, Issue 22985, 12 March 1938, Page 13

BROKER'S FAILURE

ARREST IN NEW YORK SERIOUS ALLEGATIONS PREDICAMENT OF FIRM By Telegraph—Press Association—Copyright (Received March 11, 5.5 p.m.) NEW YORK, March 10 The head of the brokerage firm of Richard Whitney Company, which is under suspension, Richard Whitney, was placed under formal arrest to-day. His fingerprints were taken and he was photographed and then released on "bail. He will appear for pleading to-morrow. The Public Prosecutor, Mr. Thomas E. Dewey, announces that other indictments may follow, but he has not yet had time to make a complete investigation of Whitney's tangled financial affairs. Further testimony given before Mr. Dewey in his capacity as State Attorney-General was to the effect that Whitney took securities from eight different private accounts on which he is alleged to have raised loans. .Rumours that his losses may total 10,000,000 dollars were current to-day but these could not be verified. Mr. Edward Morgan, jun., another partner in the Whitney firm, testified that he knew nothing about the firm's difficulties until March 7, when Whitney advised the firm to declare itself bankrupt. Witness said he was a floor trading member of the Stock Exchange and knew relatively little about the firm's affairs. He was surprised to learn that he had a debit account with the firm. Mr. Morgan said he had not wished to buy distillers' stock, but Whitney had arbitrarily assigned a portion to each member of the firm. It is indicated that Whitney's efforts to corner distillers' stocks, which in itself is against the law, were basically responsible for the firm's predicament. He is said to have paid as high as 45 dollars a share for some of the stock. While the developments in connection with the failure of the Richard Whitney Company persistently attracted major attention in Wall Street to-day, they continued to have no effect on the market.