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Mr. PECORA. When you noticed it in this particular opinion of counsel filed in connection with this application, did it excite any suspicion or feeling that the matter should further be inquired into?

Mr. ALTSCHUL. No, sir. We thought that that was a clause that was put in, because the final—this was an application for authority to list when a transaction under negotiation was finally completed, and that was simply the phrase that counsel used to protect themselves against the details of the transaction which they had not fully before them.

Mr. PECORA. It was a sort of a saving clause?
Mr. ALTSCHUL. Yes, sir.
Mr. PECORA. For the protection of counsel ?

Mr. ALTSCHUL. I don't know what that means legally. I suppose so. The full opinion is here. I suppose you have it.

Mr. Pecora. Yes, sir. Under the caption of “Authority for and purpose of issue” that appears not only in proof no. 1 of this application but also in the final printed application, the statement is made as follows:

The company proposes to issue upon due authority of the board of directors up to 25,000 shares of its common stock on account of the purchase of assets for which it is now negotiating and which may be acquired in the near future upon official notice of issuance and payment in full with a statement of the application of proceeds or property acquired. The shares which it is proposed to issue will be registered with the Federal Trade Commission in compliance with the provisions of the Securities Act of 1933.

Now, your committee approved this application without knowing what the assets which were to be purchased through the issuance of this additional stock actually were, didn't it?

Mr. ALTSCHUL. They approved the application under those conditions, sir, but the stock would not be issued until the information had been further furnished to us.

Mr. PECORA. Well, is it customary for the committee to make such conditional approvals of applications for stock listings?

Mr. ALTSCHUL. From time to time, when it is urged upon the committee that there are business reasons why the company wants authority to add to the list certain shares for a purpose that will be disclosed before the listing is actually granted, to faciliate the business we sometimes grant the authority, with a view to having a chance to review the situation further.

Mr. PECORA. Do those situations arise more or less frequently?

Mr. ALTSCHUL. They arise from time to time. They have arisen in other instances. I would not say they arise every meeting or every month, but they do arise from time to time.

Mr. PECORA. Wasn't any information whatsoever given to the stock-list committee or any of its examiners or attaches by the American Commercial Alcohol Corporation respecting the matter of the assets which that corporation hoped to acquire through the issuance of this additional stock?

Mr. ALTSCHUL. Speaking only for the stock-list committee, the information that was before them is the information in the application. There was no further information available.

Mr. Pecora. The information in the application is of the most general character.

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Mr. ALTSCHUL. The comment of the examiners, which will throw some light on what had come into their hands, I think is in your possession, sir.

Mr. PECORA. By that comment do you mean, among other things, this so-called "memorandum” for Mr. Tirrell, signed by L. Hasselbach ?

Mr. ALTSCHUL, No, sir.
Mr. PECORA. Dated July 20, 1933 ?

Mr. ALTSCHUL. No, sir; I don't mean that. I mean the comment to the committee, comment by Mr. Tirrell, meeting of July 24, 1933. Here; I will give you a copy, sir [handing document to Mr. Pecora]. The last thing on the page. That throws some light on the previous question, too, I believe, sir.

Mr. PECORA. I offer in evidence the document produced by the witness with respect to this comment.

The CHAIRMAN. Let it be admitted.

(Comment by Mr. Tirrell, meeting of July 24, 1933, produced by Mr. Altschul, was thereupon designated “ Committee Exhibit No. 64, Feb. 21, 1934 ", and appears in full immediately following, where read by Mr. Pecora.)

Mr. PECORA. The document has been received as “Committee Exhibit No. 64” and reads as follows (reading]: AMERICAN COMMERCIAL ALCOHOL CORPORATION

7-24-33 Common stock $20 par, additional listing 25,000 shares.

The applicant company is negotiating for the purchase of what it regards as one of the important distillery properties in Kentucky. The issue of stock up to 25,000 shares has been authorized by the directors in connection with this proposition. The company believes it will be very harmful to the negotiations to describe the properties in the application, but is apparently willing to give a full description in final printing if negotiations are closed before that time, or to make complete disclosure as soon as negotiations are terminated.

In somewhat similar cases the committee has respected the wishes of the company, with the understanding that such disclosures would be made at the earliest possible time, and, provided the company can obtain a satisfactory opinion from counsel in relation to the bearing of the Securities Law on the issue of this stock, there is no objection to the listing requested. Meeting of July 24, 1933—Comment by Mr. Tirrell: American Commercial Alcohol Corporation common stock $20 par, additional listing 25,000 shares.

The company has been very late in submitting this application. For what it considers urgent business reasons, the company wishes to have the application considered by the committee at its meeting Monday. The stock has been fully authorized by its directors to be issued up to 25,000 shares in connection with the purchase of the assets of distillery properties in Kentucky. At the time of writing this comment the negotiations had not been finally completed, and until that time the company does not wish to announce, either in a draft of the application or in any other way, the name of the company whose properties are to be acquired.

In similar circumstances the committee, in the case of the Air Reduction Company, and more recently in connection with the Monsanto Chemical Company, has approved listing on condition that full disclosure be made promptly upon the termination of negotiations.

The company has been asked to submit opinion of counsel in relation to the bearing of the issuance of the stock covered by the application to the provisions of the securities law regarding registration. No definite opinion has been received, and unless this is cleared up before the meeting of the stock list committee, it may be considered an obstacle to the listing requested. An appearance before the committee has been arranged. If the company will undertake to make full disclosure regarding the properties to be acquired in your

promptly upon completion of negotiations, and can satisfy the committee with regard to the possible application of the securities law, there is no objection to the listing requested.

Now, Mr. Altschul, was the appearance before the committee which in this comment by Mr. Tirrell had been arranged actually consummated ?

Mr. ALTSCHUL. Yes, sir. Mr. PECORA. And who appeared before the committee in behalf of the American Commercial Alcohol Corporation?

Mr. ALTSCHUL. According to my record here, sir, Mr. Brown.
Mr. PECORA. Mr. Russell R. Brown?

Mr. ALTSCHUL. I take it for granted Mr. Russell R. Brown-yes, Mr. Russell R. Brown. And Mr. Egginton and Mr. Heiss of Larkin, Rathbone & Perry.

Mr. PECORA. Mr. Egginton and Mr. Heiss are connected with the law firm of Larkin, Rathbone & Perry.

Mr. ALTSCHUL. Yes.

Mr. PECORA. Have you any minutes of the proceedings had before your committee in connection with that appearance? Mr. ALTSCHUL. I have a copy, yes, sir, of the original, which is

hands. Mr. PECORA. Have you a copy of the minutes of your committee meeting at which this appearance was made before you?

Mr. ALTSCHUL. Yes, sir.

Mr. PECORA. I have a copy here which you were kind enough to furnish to us, and I will read into the record, if you will kindly follow me while I do so.

Mr. ALTSCHUL. Right.

Mr. PECORA. The minutes with respect to such appearance before your committee, appearing at pages 154 and 155 [reading]:

AMERICAN COMMERCIAL ALCOHOL COMPANY. There appear before the committee Messrs. H. Egginton and Mr. H. Heiss, Messrs. Larkin, Rathbone & Perry, counsel for the corporation, and Russell R. Brown, chairman of the board, and Cecil Page, secretary and director of the corporation.

The CHAIRMAN. The question you are discussing with us is the question of the need of registration under the Securities bill.

Mr. Brown. We have decided to comply with the Act.
The CHAIRMAN. You are going to comply with registration ?

Mr. EGGINTON. We have written an opinion that the Act does not apply. We checked it with our correspondence with the Federal Trade Commission, and they believe that the Act does apply. I think the opinion is entirely erroneous, but they are going to stick to it.

The CHAIRMAN. Then you will make application, I suppose, for approval on notice to this committe that the registration requirements be met with?

Mr. EGGINTON. Yes.
Mr. Brown. That is correct.
Mr. EGGINTON. The listing application would be approved ?

The CHAIRMAN. And you wanted to explain the secrecy in regard to the purchase of the stock until the deal you were interested in is completed, as I understood?

Mr. Brown. I am perfectly

The Chairman. At all events, when your final application comes in, if this stock is used, then the purpose for which it is used will be fully set forth?

Mr. BROWN. It will be disclosed.
The CHAIRMAN. Any other questions?
Mr. SEAMAN. No.

Mr. Hoxsey. No. They are to file a copy of the registration statement with this committee.

Mr. EGGINTON. We will file an opinion of counsel as to the propriety of the issue upon your approval, and also file a copy of the registration when that is concluded.

The CHAIRMAN. As I understand it, you cannot physically issue all the stock until 20 days. So if we pass it on official notice of issuance after the reg. istration requirements have been complied with, then you are protected and we are. Mr. EGGINTON. Yes. Mr. SEAMAN. You say you are going to file an opinion. That is the opinion you do not think you have to comply?

Mr. EGGINTON. No; we have taken out the other expression of opinion. The CHAIRMAN. I think that leaves no point further to discuss between us, unless you have something, Mr. Brown? Mr. BROWN. No; I have nothing. Messrs. H. Egginton, F. H. Heiss, Russell R. Brown, and Cecil Page retired. Application A-10,119 of American Commercial Alcohol Corporation approved for recommendation to the governing committee, subject to compliance with registration requirements under Securities Act of 1933 and disclosure of properties to be acquired with the securities issued hereunder.

That completes the minutes of that particular hearing.
Mr. ALTSCHUL. Yes, sir,

Mr. PECORA. And Mr. Seaman who is referred to in these minutes is another member of the stock list committee?

Mr. ALTSCHUL. Yes, sir. Mr. PECORA. Mr. Hoxsey is the Mr. ALTSCHUL. Executive assistant. Mr. PECORA. Executive assistant to the committee? Mr. ALTSCHUL. Correct. Mr. PECORA. When was this meeting of your committee held at which Mr. Brown appeared and Mr. Page, Mr. Egginton, and Mr. Heiss?

Mr. ALTSCHUL. July 24, 1933, sir. .

Mr. PECORA. And it was at that same meeting that you had before you the document marked in evidence here as Committee Exhibit No. 64”, which includes the comment for the guidance of the committee by Mr. Tirrell?

Mr. ALTSCHUL. The last part of that I am sure we had before us
at that time. I don't remember if the first ones related to that or not.
That important part we had before us. [Showing document to Mr.
Pecora. Does this relate to the same thing?
Mr. PECORA. Apparently; yes.
Mr. ALTSCHUL. Yes, sir.

Mr. Pecora. Apparently up to July 24, 1933, the representations that had been made to your committee and its executive-.what do you call him?

Mr. ALTSCHUL. Assistant.
Mr. PECORA. Executive assistant, Mr. Hoxsey-
Mr. ALTSCHUL. And his staff.

Mr. PECORA. By and on behalf of the American Commercial Alcohol Corporation, were that it wanted to issue these additional 25,000 shares to enable it to acquire certain distillery properties in Kentucky

Mr. ALTSCHUL. I don't want to try to bandy words, but that is not exactly accurate. They wanted to have authority to issue them in connection with the acquisition of the property.

Mr. PECORA. Yes.

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Mr. ALTSCHUL. They could not issue it until then.
Mr. PECORA. No.
Mr. ALTSCHUL. I am sure we are quite in accord.

Mr. PECORA. The representations, in other words, which had been made to your committee up to the time that it approved this application on July 24, last, by or on behalf of the American Commercial Alcohol Corporation were to the effect that that corporation contemplated acquiring some distillery properties in the State of Kentucky, and in connection with such acquisition intended to issue additional shares up to 25,000; is that right?

Mr. ALTSCHUL. The purpose of issuing in the application that was before us read:

The company proposes to issue upon due authority of the board of directors up to 25,000 shares of its common stock on account of the purchase of assets which it is now negotiating and which may be acquired in the near future.

Mr. PECORA. Yes; but in the comment by Mr. Tirrell which is part of exhibit no. 64 that you produced

Mr. ALTSCHUL. That is right.

Mr. PECORA. Mr. Tirrell stated specifically that “the company", meaning the American Commercial Alcohol Corporationhas been very late in submitting this application. For what it considers urgent business reasons, the company wishes to have the application considered by the committee at its meeting Monday. The stock has been fully authorized by its directors to issue up to 25,000 shares in connection with the purchase of assets of distillery properties in Kentucky.

Mr. ALTSCHUL. That is right. You have my only copy of that now, sir, and I did not have that before me. That is right. I did not have that.

Mr. PECORA. So it is quite apparent from this that what has been told to the committee on behalf of the American Commercial Alcohol Corporation as the nature of the assets that it intended to acquire with the issuance of these additional 25,000 shares

Mr. ALTSCHUL. That is right.
Mr. PECORA. Was the distillery property in Kentucky.
Mr. ALTSCHUL. That is correct, sir.

Mr. PECORA. Now, you heard the testimony this morning of Mr. Russell R. Brown, to the effect that what the corporation intended to acquire was the capital stock of a corporation known as the Spirits Corporation, which was in turn to acquire the capital stock of another corporation to be organized, called the Sid Klein Corporation, didn't you?

Mr. ALTSCHUL. Yes, sir.

Mr. PECORA. And that testimony and the testimony given by Mr. Brown with regard to the organization of the Spirits Corporation and the acquisition of its stock by the American Commercial Alcohol Corporation had nothing to do with the acquisition of any distillery property in Kentucky, did it?

Mr. ALTSCHUL. I really cannot answer that question. I don't know whether there were distillery properties in Kentucky that were taken over in corporate form or not. I am not sufficiently familiar with it to know. There may have been.

Mr. PECORA. You heard the testimony of Mr. Brown that within a month after they made this application to your committee the

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