section 10 because it encourages exclusive broker to favor and sponsor only securi ties on his particular exchange for commission consideration and likewise causes exclusive underwriter or dealer to recommend only those securities in which they personally are interested. In view of the excellent self-regulatory measures embodied within the fair-practice provisions of investment bankers' code approved by this group today, section 14 of bill is not only burdensome but unnecessary. Furthermore, believe section 14 destructive to unlisted market here because majority of western issues are not listed on any exchange and their marketability would be narrowed to detriment of both corporation and security owner. Partial list houses present follows: Anglo California National Bank, American Trust Co., Bank of America, N. H. Bennett & Co., Bennett, Richards & Co., Brush Slocumb & Co., Blyth & Co., Cavalier & Co., City Co., Conrad, Bruce & Co., Davis Skaggs & Co., Denault & Co., Elworthy & Co., Eyre Palmer & Co., Heller Bruce & Co., Hellman Wade & Co., Henderson & Co., Heron & Co., Martin Judge, Jr., & Co., Leppo & Co., Mitchum Tully & Co., R. H. Moulton & Co., R. N. Miller & Co., Rollins & Sons, Inc., Schwabacher & Co., Shaw Hooker & Co., Weeden & Co., Dean Witter & Co., Wulff Hansen & Co. SECURITY DEALERS ASSOCIATION OF SAN FRANCISCO. DEAN WITTER, LOS ANGELES, CALIF., February 27, 1934-1:52 a.m. Washington, District of Columbia: Security Dealers Association of southern California, a voluntary association composed of 71 investment dealers all operating in Southern California, 20 members having seats on some exchange operating both as broker and dealer, and 51 members having no stock-exchange seats but acting both as broker and dealer, had a meeting today unanimously authorizing you to represent their association before Senate Banking Committee and Interstate and Foreign Commerce Committee in connection with Fletcher-Rayburn bill. Our group here particularly concerned with section 6A which we feel in present form would preclude extension of credit by banks on unlisted securities in regular course of business and feel should be definitely clarified. Section 10 we feel affects particularly legitimate small investment dealers whose relationship with client makes it necessary for them to act both as agent and principal in giving rounded investment service. Dealer who is intrusted with client's investment account should surely be allowed to act as agent for that client if he feels it necessary. Section 14 presents a particular problem in this territory as there are more than 1,000 issues, unlisted bonds and preferred stocks, traded in which are in most cases obligations of companies so small that their size would preclude compliance with any rigid rules that may be set up by Federal Trade Commission. We are wiring directly to committee as an association and some of our members also wiring members of the committee. Please advise in what way we may be of further assistance. SECURITY DEALERS ASSOCIATION OF SOUTHERN CALIFORNIA. By Edw. McWILLIAMS, Secretary. DEAN WITTER, Washington, D.C.: PORTLAND, OREG., February 28, 1934—12:24 a.m. The board of governors of the Investment Bond Club of Portland, having 33 dealers as members, would like you to represent the organization before Senate and House committees in regard to Fletcher-Rayburn bill. Our organization is disturbed by provisions in the bill which seriously hamper investment houses which are primarily dealers, these same provisions failing in our opinion to afford investing public any protection. Sections 10 and 14 are particularly offensive in this connection. Section 6A would seriously injure holders of high grade unlisted bonds. In general we see no occasion for provisions of act which hamper investment dealers who occasionally act as brokers for convenience of customers. After all we have the Securities Act of 1933 and our code besides State regulations. INVESTMENT BOND CLUB OF PORTLAND, Dean WITTER: WINTHROP, MITCHELL & Co. Following resolution passed today: Resolved that Dean Witter is authorized to represent the following investment-banking firms in hearings before the Senate Banking Committee and the House Interstate and Foreign-Committee in connection with the Fletcher-Rayburn bill and to oppose sections adversely affecting the investment-banking business. This resolution signed by E. A. Strout, Inc., Dumheller Ehrlichman & White, Wm. P. Harper & Son and Co., Bramhall & Stein, C. H. Eberting & Co., Ferris & Hardgrove, The Crawford Goodwin Co., Grande Stolle & Co., Hartley Rogers & Co., Harold H. Houston & Co., John A. Kutz & Co., Lanser Agnew & Co., Arthur G. Latimer, Sharples & Lewis, George E. Maine & Co., J. D. Matthews & Co., Prescott Oakes, Riker and Woolsey, Inc., The Quinn Smith Co., John C. Blackford, F. K. Easter & Co., Greening & Co., All Seattle, and Hewitt Reeder & Co., Evans, McLane & Co. of Tacoma and Murphey, Favre & Co., Ferris and Hardgrove, Richards & Blum Inc., Spokane Eastern Co., All Spokane. This list includes practically every investment dealer in Seattle, Tacoma, and Spokane. STANLEY MINOR. DEAN WITTER & Co. Form no. 1-Specimen only.-Sale of owned securities in which firm has profit. Mr. JOHN SMITH, San Francisco. DEAR MR. SMITH: At the request of Mr. John Doe, we are pleased to confirm sale to you of $1,000 par value Pacific Gas & Electric Co. first and refunding 41⁄2percent bond due June 1, 1950; price 871⁄2 plus accrued interest. In this transaction we act as principals, confirming at a net price which includes a profit to us. We understand you wish to complete this transaction tomorrow, December 29. Thanking you for this business, we are Yours very truly, DEAN WITTER & Co. DEAN WITTER & Co., Form no. 2-Specimen only.-Sale of owned securities in which we have a loss to another dealer. As a matter of record we are pleased to confirm sale to you of $1,000 par value Pacific Gas & Electric Co., first refunding 41⁄2 percent gold bond, due June 1, 1960; price 871⁄2 plus accrued interest. In this transaction we act as principals, confirming at a net price. regular. Thanking you for this business, we are Delivery DEAN WITTER & Co. DEAN WITTER & Co., San Francisco, December 28, 1933. Form no. 3-Specimen only.-Brokerage transactions, showing purchase for a/c of customer with commission shown on attached bill. Note bill specifies 'Bond department." Mr. JOHN SMITH, San Francisco. DEAR MR. SMITH: At the request of Mr. John Doe we are pleased to confirm purchase for your account of $1,000 par value Pacific Gas & Electric Co. first and refunding 4-percent gold bond, due June 1, 1960; price 871⁄2, plus accrued interest plus commission. We understand you wish to complete this transaction tomorrow, December 29, 1933. Thanking you for this business, we are, Yours very truly, DEAN WITTER & Co. NOTE. On this form we will include the legend: "In this transaction we act as brokers." Form no. 4-Specimen only.-Brokerage transaction showing sale for a/c customer indicating commission charge. Bill to accompany and to be marked "Bond department.' Mr. JOHN SMITH, San Francisco. DEAR MR. SMITH: At the request of Mr. John Doe, we are pleased to confirm sale for your account of $1,000 par value Pacific Gas & Electric Co. first and refunding 4-percent gold bond due June 1, 1960; price 872, plus accrued interest less commission. We understand you wish to complete this transaction tomorrow, December 29, 1933. Thanking you for this business, we are, Yours very truly, DEAN WITTER & CO. NOTE. On this form we will include the legend, “In this transaction we act as brokers." DEAN WITTER & Co., Form no. 5-Specimen only.—Sale to customer from inventory in which we have profit. See attached bill marked “Bond department.” DEAR MR. SMITH: At the request of Mr. John Doe, we are pleased to confirm sale to you, $1,000 par value Pacific Gas & Electric Co., first and refunding 44-percent gold bond due June 1, 1960; price 871⁄2, plus accrued interest. In this transaction we act as principals, confirming at a net price which includes a profit to us. Our detailed statement is attached hereto. We understand you wish to complete this transaction tomorrow, December 29, .1933. Thanking you for this business, we are, Yours very truly, DEAN WITTER & Co. Specimen No. 5.-Bond Department. DEAN WITTER & Co., Sold to: Mr. JOHN SMITH, San Francisco. San Francisco, February 20, 1934. 1,000 Pacific Gas & Electric Co. 42's, due June 1, 1960, 871⁄2July and December 1 accrued interest, 28 days--- Due Dean Witter & Co. ___ $875.00 3. 50 878.50 In this transaction we act as principals, confirming at a net price which includes a profit to us. Please add additional interest per day if not paid on Form No. 6. Specimen only.—Sale from inventory for own account if we have a loss in securities sold. Mr. JOHN SMITH, San Francisco. DEAN WITTER & Co., DEAR MR. SMITH: At the request of Mr. John Doe, we are pleased to confirm sale to you of $1,000 par value Pacific Gas & Electric Co. first and refunding 41⁄2 percent bonds due June 1, 1960; price 872, plus accrued interest. In this transaction we act as principals, confirming at a net price. We understand you wish to complete this transaction tomorrow, December 29, 1933. Thanking you for this business, we are Yours very truly, DEAN WITTER & Co. Form No. 7-Specimen only.-Sale to another dealer of securities in which we have a profit. BLYTH & Co., San Francisco: DEAN WITTER & Co., As a matter of record we are pleased to confirm sale to you of $1,000 par value Pacific Gas & Electric Co. first and refunding 41⁄2 percent gold bonds, due June 1, 1960; price 872, plus accrued interest. In this transaction we act as principals, confirming at a net price which includes a profit to us. Received from Dean Witter & Co. the following securities: $1,000 Pacific Gas & Electric Co. 41⁄2's due 6-1-60 No. 6-1-34 et seq. coupons attached. In this transaction we act as principals, confirming at a net price, which includes profit to us. At the request of Mr. John Doe, we are pleased to confirm purchase from you of $1,000 par value Pacific Gas & Electric Co. First and refunding 41⁄2 percent gold bond, due June 1, 1960. In this transaction we act as principals. We understand you wish to complete this transaction tomorrow, December 29, 1933. Thanking you for this business, we are DEAN WITTER & Co., By The CHAIRMAN. We will hear Mr. Newbold. STATEMENT OF JOHN S. NEWBOLD, MEMBER OF THE FIRM OF W. H. NEWBOLD'S SON & CO., PHILADELPHIA, PA. The CHAIRMAN. Will you qualify by stating your name and address, and business? Mr. NEWBOLD. John S. Newbold, Jenkintown, Pa.; member of the firm of W. H. Newbold's Son & Co., Philadelphia. We wish to present a memorandum relating to section 10 of the proposed bill, and if I may read that memorandum, which you have before you, I will proceed. The CHAIRMAN. You may proceed. Mr. NEWBOLD. This group of investment dealers have engaged in the business of selling investment securities to their clients in the city of Philadelphia, Pa., throughout the course of a long career. The names and the period of time which these firms or their predecessors have rendered this service are: Length of service, years 170 97 90 69 62 42 38 28 27 9 Janney & Co....... Yarnall & Co.... The investor in this country is properly deeply interested in the kind of man he must turn to in the safeguarding of his savings. The investment dealer should possess honor, good faith, and sound judgment. These, coupled with wide practical experience in testing values in all kinds of investment markets, are indispensable requisites in the man or group of men who hope to embark on a successful career in looking after the financial interests of other fellow men. |