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board of directors of his corporation completely abandoned the negotiations or that which it had in mind with respect to acquiring the distillery property in Kentucky? Mr. ALTSCHUL. Mr. Pecora, I might say this-I mean I am not

I trying to question that at all-I am not familiar enough with Mr. Brown's testimony to be sure that I got all the implications of it, but the authority and purpose of the issue which we felt was before us and on which we acted, the actual document, in other words, is the listing application itself. But the comment of Mr. Terrill we considered in connection with it naturally, but the document which we thought covered the actual authorization and purpose was not, either so far as the company was concerned or so far as we were concerned, limited, in our mind, by Mr. Terrill's comment. I don't know whether that has any bearing on what you are driving at, but I wanted to make that quite clear.

Mr. PECORA. Well, are you overlooking the fact that

Mr. ALTSCHUL (interposing). I am not overlooking the implications of that comment, Mr. Pecora. The point really is that the authorization that we granted was the broad authorization covered by the application, and that at the time we gave that authorization there was that comment before us. So the authorization was not in any sense limited by that comment.

Mr. PECORA. Here is a statement contained in committee exhibit no. 64, which is the document that you produced this morning, reading as follows: The applicant companyThat is, the American Commercial Alcohol CorporationMr. ALTSCHUL. That is right.

Mr. PECORA (continuing): 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.

Mr. ALTSCHUL. I don't know whether the point that I am making has any bearing in connection with what you are leading to or not. So if you don't mind, I would just as leave pass it and see if it has any bearing.

Mr. PECORA. Who is the author of that statement which I have just read from committee exhibit no. 64!

Mr. ALTSCHUL. That is Mr. Tirrell, who is our chief examiner.

Mr. PECORA. That indicates to you, doesn't it, that Mr. Tirrell had been informed

Mr. ALTSCHUL. Oh, yes; no doubt of it.

Mr. PECORA. By the American Commercial Alcohol Corporation

Mr. ALTSCHUL. Yes.

Mr. PECORA. That that was the specific purpose which the corporation had in mind in connection with this proposed issue of 25,000 additional shares?

Mr. ALTSCHUL. Oh, no doubt about that at all. My only point was that the authority that we granted was based on broader terms than Mr. Tirrell's information would lead us to think.

Now, for instance, if on the listing application Mr. Tirrell's statement had been made as to the purpose and they had limited themselves to that specific purpose, and we had acted upon it in that way, that would have confined the listing to that extent.

My only point is that the manner in which it was acted upon was in conformity with the application of the company, and while we had that information and the information had some influence on our decision, the application itself did not take that form. As I say, I don't know whether that has any bearing on what you are leading up to.

Mr. PECORA. But, Mr. Altschul, when the committee acts on these applications, it acts not only on the statements and representations embodied in the application itself, but also on such reports and information placed before it by its own assistants ?

Mr. ALTSCHUL. That is true.
Mr. PECORA. Does it not!
Mr. ALTSCHUL. Oh, yes; that is correct.

Mr. PECORA. And its assistants make, or are supposed to make, an investigation or inquiry and to lay before the stock list committee the results thereof in passing on these applications?

Mr. ALTSCHUL. That is correct.

Mr. PECORA. When applications of this kind come before your committee does your committee ever go behind the application or the report of its examiners and go directly to the corporate proceedings of the corporation !

Mr. ALTSCHUL. We get transcripts of the minute books authorizing the issue. We get a copy of the resolution of the board which authorizes the issue. Beyond that we do not go into the corporate records of the company.

Mr. PECORA. Did you get transcripts of the resolution of the board of directors of the American Commercial Alcohol Corporation with regard to this proposed issue?

Mr. ALTSCHUL. I think so. I think I have it here some place. Yes, sir (producing document].

Mr. PECORA, May I have the resolution?

Mr. ALTSCHUL (handing document to Mr. Pecora). There is a copy in your files, sir.

Mr. Pecora. Is this all you got by way of a copy of corporate resolutions?

Mr. ALTSCHUL. Yes, sir; and that is the resolution that is referred to on the face of the listing application in the authority and purpose to issue.

Mr. PECORA. I offer that document in evidence, the copy of the resolution produced by the witness.

The CHAIRMAN. Let it be admitted.

('Transcript from minutes of executive committee meeting of American Commercial Alcohol Corporation of July 19, 1933, was thereupon designated “ Committee Exhibit No. 65, Feb. 21, 1934", and appenrs in the record in full immediately following, where read by Mr. Pecora.)

Mr. PECORA. The document produced by the witness and just received in evidence as exhibit no. 65 reads as follows [reading]:

AMERICAN COMMERCIAL ALCOHOL CORPORATION

TRANSCRIPT FROM THE MINUTES, EXECUTIVE COMMITTEE MEETING JULY 19, 1933

Resolved, that the proper officers of the Corporation be and they hereby are authorized to issue up to 25,000 shares of the Corporation's Common Stock in exchange for certain properties and assets of equivalent value, for the acquisition of which negotiations are now in progress, such stock, however, not to be issued unless and until final arrangements, approved by the Company's counsel and satisfactory to the Board of Directors, are made which will permit such stock to be issued full paid and non-assessable. Certified a true record this 24th day of July, 1933.

(Signed) CECIL PAGE,

Secretary. Now I show you what purports to be a certificate of Cecil Page, secretary of the American Commercial Alcohol Corporation, attesting to the correctness and authenticity of certain resolution or certain resolutions adopted by the board of directors of the American Commercial Alcohol Corporation at a meeting thereof held on August 8, 1933. Will you look at it and tell me if you recognize it to be an original document filed with the stock-list committee of the New York Stock Exchange, as appears by the stamped endorsement thereon, on December 14, 1933 ?

Mr. ALTSCHUL. That is our stock-list stamp.
Mr. PECORA. I offer it in evidence.
The CHAIRMAN. Let it be admitted.

(Certificate of correctness and authenticity of resolutions adopted by board of directors of American Commercial Alcohol Corporation on Aug. 8, 1933, was thereupon designated " Committee Exhibit No. 66, Feb. 21, 1934 ", and is as follows:)

COMMITTEE EXHIBIT No. 66, FEBRUARY 21, 1934

I, CECIL PAGE, Secretary of American Commercial Alcohol Corporation, do hereby certify that the following is a true and correct copy of certain resolutions adopted by the Board of Directors of American Commercial Alcohol Corporation at a meeting of said Board duly called and held at the office of the Corporation on Tuesday, August 8, 1933:

Resolved, That this Company acquire from Mr. Knox B. Phagan, 10,000 shares of the no par common stock of the Spirits Corporation, a Maryland corporation, in consideration of the delivery by this company to Mr. Knox B. Phagan of 10,000 shares of the common stock of the par value of $20 a share of this company;

Further resolved, That upon the assignment and transfer to this Company by Mr. Knox B. Phagan of said 10,000 shares of the Common No Par Stock of The Spirits Corporation, the proper officers of this Company be and they hereby are authorized either

(a) To issue, execute and deliver to or upon the order of Mr. Knox B. Phagan a certificate or certificates representing 10,000 shares of the Common stock of the par value of this Company; or

(b) To borrow from such sources and on such terms as said officers, being advised by counsel, may deem proper, 10,000 shares of the issued and outstanding Common Stock of the par value of $20 per share of this Company, and to assign and transfer said 10,000 shares of said Common Stock when so borrowed to or upon the order of Mr. Knox B. Phagan, and thereafter, at such time as said officers, being advised by counsel, may deem advisable, to issue and deliver 10,000 shares of the Common Stock of the par value of $20 each of this Company to or upon the order of the person, firm, or corpnration from whom or which said stock shall have been so borrowed :

Further resolved, That in the judgment of the Directors of this Company the actual value of said 10,000 shares of the Common no par Stock of The Spirits Corporation is not less than $465,000.

Further resolved, That the officers of the Corporation be and they hereby are authorized and directed to file with the Maryland State Tax Commission a Stock Issuance Statement in such form as the Commission shall require regarding the issuance of stock as aforesaid to be issued to said Mr. Knox B. Phagan and also to file same with any state authorities where required.

Further resolved, That said 10,000 shares of the Common Stock of this Corporation of the par value of $20 per share, when issued to said Mr. Knox B. Phagan or his nominee, for the consideration hereinbefore stated, shall be and are hereby declared to be fully paid stock and shall not be liable to any further payment with respect to said shares.

Further resolved, That Mr. Cecil Page, the Secretary of this Corporation, be and he hereby is authorized and directed, upon the issuance of said 10,000 shares of the Common $20 par Stock of this Corporation as aforesaid and receipt of payment in full, to advise the New York Stock Exchange thereof, together with a statement of the application of the proceeds or property acquired in said transaction in accordance with the terms of the application filed by this Company under date of July 19, 1933, (Application No. A-10,117) with the New York Stock Exchange, for the listing on said Exchange of 25,000 additional shares of the Common Stock of the par value of $20 per share of this Company.

Further resolved, That the proper officers of the Corporation be and they hereby are empowered, authorized and directed to do any and all further acts and things which they, with the advice of counsel may deem necessary or proper to carry into effect all the matters hereinbefore set forth and the acts and things to be performed by this Corporation in connection therewith,

(Signed) CECIL PAGE,

Secretary. Mr. PECORA. This last document, marked in evidence as " Exhibit No. 66”, shows upon its face, does it not, that it was not contemplated to issue any stock in exchange for the acquisition of the distillery property in Kentucky?

Mr. ÅLTSCHUL (after perusing document). I would say so, sir.

Mr. PECORA. I want you to look at exhibit no. 63 received in evidence this morning and consisting of the so-called “supplemental statement” filed with the committee on stock list, New York Stock Exchange, by the American Commercial Alcohol Corporation, of December 30, 1933, although apparently was submitted to the gov. erning committee of the stock exchange on December 13, 1933. Will you look at it and tell me if you saw that or a copy of that before?

Mr. ALTSCHUL (after examining document). Yes, sir.

Mr. PECORA. Was any investigation made of the condition reflected by the balance sheet statement which forms part of this supplemental statement ?

Mr. ALTSCHUL. No, sir; and, Mr. Pecora, you understand that that is not the document that was before the stock list committee in connection with the application of listing these 10,000 shares, don't you?

Mr. PECORA. Well, that was in the information, the supplemental information which, according to the requirement of the stock list committee, was to be furnished by the American Commercial Alcohol Corporation, was it not?

Mr. ALTSCHUL. At the time this came before the stock list committee, you will find in your files—I don't know whether this is your numbering or not-but you will find a document dated November 23, 1933, which preceded that.

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Mr. PECORA. What is the November, this third document? Mr. ALTSCHUL. I don't know whether this is what you refer to or not [handing document to Mr. Pecora). It comes from your files.

Mr. PECORA. The document you produced bearing date November 23, 1933, is identical with the first two printed paragraphs of the document marked "Exhibit No. 63 ", isn't it?

Mr. ALTSCHUL. Yes, sir; I think so. I think you will find this is in printed form similar to this, without the other material, in your files. It is merely a proof, in other words.

Mr. PECORA. The situation presented to your committee was that on July 19, 1933, application in its final form was filed with your committee, or rather proof no. 2 was before your committee, which showed that the company wanted to issue up to 25,000 shares in order to enable it to purchase certain unnamed, undesignated assets?

Mr. ALTSCHUL. I think that was proof no. 1, sir, but the rest of your statement is correct.

Mr. PECORA. Proof no. 1, all right. And that application when it came before your committee for action on July 24, last, was supplemented with information given to your committee by its examiners, namely, Mr. Tirrell and Mr. Hasselbach, in the form of the document marked in evidence here as committee exhibit no. 64! Isn't that so?

Mr. ALTSCHUL. Oh, yes; it was supplemented by that information.

Mr. PECORA. Yes; and on July 24 when your committee met and approved this application it was told by its examiners that the purpose of the issue, the proposed issue rather, of the 25,000 shares was to enable the American Commercial Alcohol Corporation to acquire one of the important distillery properties in Kentucky; is that right? Mr. ALTSCHUL. That is correct, sir.

Mr. PECORA. On the 24th of July your committee approved the application, and on the 26th of July it was also approved by the governing committee of the stock exchange?

Mr. ALTSCHUL. That is correct, sir.

Mr. PECORA. Presumably on the same information which your committee had ?

Mr. ALTSCHUL. No, sir.
Mr. PECORA. What else did it have?

Mr. ALTSCHUL. It had less than that. It had the information that is contained in the face of the application. That is what I was trying to make the point before, that the authority and purpose of the issue, by which we were bound and by which the company was bound, or as we understood, was the authority and purpose of the issue as outlined in the listing application, and not in any supplementary information that may have come through this memorandum.

Mr. PECORA. On July 24, when your committee approved the application, it approved it with knowledge given to it by its own examiners that the purpose of the proposed issue was to enable the American Commercial Alcohol Corporation to acquire one of the important distillery properties in Kentucky?

Mr. ALTSCHUL. That is correct.
Mr. PECORA. That is correct?

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