MISUSE OF FUNDS ALLEGED

Timaru Herald, Volume CXLIV, Issue 20984, 12 March 1938, Page 11

MISUSE OF FUNDS ALLEGED

FINANCIER’S HUGE LOSSES ARREST FOLLOWS BANKRUPTCY SEQUEL TO COMPANY’S FAILURE United Press Association—By Electric Telegraph—Copyright (Received March 11, 9.45 p.m.) NEW YORK, March 11. A country Grand Jury indicted Richard Whitney, whose flrm was suspended from the Stock Exchange on the grounds of insolvency, of grand larceny. Specific charges involved the misuse of a 100,600 dollars of a trust - i.d established under the wall of his father-in-law, George Sheldon. Whitney was later placed under formal arrest, his fingerprints taken and he also was photographed. Ha was then released on ball and will appear for pleading to-morrow. It is : nnounced that other indictments may follow but a complete Investigation has not yet been made. Rumours that Whitney’s losses may total 10,000.000 dollars were current but could not be verified. It is indicated that Whitney's efforts to corner the stock of the distillers which in itself is against the law was basically responsible for the firm's predicament. Whitney paid as high as 45 dollars a share for some of ths stock. Prevented Crash in 1929 Whitney bought a seat on the New York Stock Exchange in 1912 and. as head of the brokerage firm of the Richard Whitney Company, made rapid progress in the financial world of New York. In a few years he was elected vice-president of the Stock Exchange, and the sudden slump in the autumn of 1929 found him in that position and also acting-president. All the work of direction on the Stock Exchange throughout ths critical weeks that followed fell on Whitney. His level-headed guidance and mastery of the situation, together with his close co-operation with the leading bankers, undoubtedly prevented the rapid collapse of prices from creating a nation-wide panic. He even threw the whole of his fortune into the pool in the process of steadying the market. The Governing Committee of the Stock Exchange afterwards took the unprecedented step of passing a resolution of thanks to him as the man who had saved the situation. In May, 1930, when he w T as appointed president, he was the youngest holder of that office in the history of the Stock Exchange.