FLOTATION OF COMPANIES IN LONDON.

Otago Witness, Issue 2251, 22 April 1897, Page 18

FLOTATION OF COMPANIES IN LONDON.

The cable news of the 13th contained the information that Messrs E. A. Bidsdale and Co. have recovered .£BOOO damages from Mr H. P. Houston, M.P. for Liverpool, for libel. This is the outcome of a case which throws a lurid light on modern Stock Exchange methods. Mr Houston is understood to have been the promoter of the " Lady Hampton Consolidated Gold Mines," Western Australia. In October last a prospectus was advertised inviting subscriptions for .£1 50,000, part of the nominal capital of £250,000. In a few days it was announced that letters of " allotment and regret " had been sent out, and the inference was that the shares had been over-subscribed. That was not so, as only £220,000 was allotted. Of this £148,000 was credited to the Antipodes Exploration (the intermediary promoting agency), £45,213 to Mr Houston, £5000 to a Liverpool shipowner, £1250 to the secretary of the company, £1000 ea£h to eight other persons, and about £14,000 in smaller amounts. Two firms of Stock Exchange jobbers were approached for the purpose of "making a market" for the shares, but their terms were exorbitant, and finally the business was undertaken by Ridsdale and Co. The two firms which had failed to secure the *' deal " set to work to wreck the company by selling the shares freely on the supposition that the capital had been fully subscribed, and that nervous applicants would be frightened out of their holdings. But the shares were firmly held in blocks, and the " bears" found it impossible to fulfil their obligationsr—that is, the shares they had undertaken to deliver they could not procure. Then, of course, there was trouble. A firm which had been heavily hit by " selling short " to Mr Houston used some nasty remarks to that gentleman, and were compelled to write an abject letter of apology and pay £1000 to the charities. The firm in question, Messrs Stoneham and 'Messengeb, were still short of between two and three thousand shares. The other " bears '"' were let in on payment of £10 to £20 per share, the shares having no real value. Curiously enough, 'also, Messrs Bidsdalb, who were to have " made the market," were- " left short" of 200 shares, and though an Gffer to cancel the sale was made, the terms of the offer were understood ■when the- mail left to be about to form the grounds for an action for libel. This is probably the action now referred to in the cable news. The Economist, from which the foregoing particulars are taken, makes some candid remarks on the whole transaction, but these were mild compared with what some of the financial papers said\ The company had applied to the Stock •Exchange for a special settlement, ■which was fixed for November 25, but a couple of days before that date it was postponed, and the postponement was repeated for two~months. No reasons for this were vouchsafed by the committee. That there was dealing in the shares prior to allotment was obvious, and the Economist says that if the allotment was not deliberately designed to *' corner " the recalcitrant jobbers then things are not what the_y seem. It

further stigmatises the business as unsavoury, and points out the direction in which the rules of the Exchange want amending. But most, people will agree that not only do the rules require j amendment, but the persons who are I guided by them. Events such as these go to show that a strictly honourable man would fare badly on the London share market. I