DEALINGS IN SHARES.

Dominion, Volume 4, Issue 1208, 17 August 1911, Page 6

DEALINGS IN SHARES.

A BROKER'S BANKRUPTCY. INTERESTING QUESTIONS AND ANSWERS. (By Tclesraph.—Press Association.! Auckland, August 16. A meeting of creditors in the bankrupt estate of James Scott Lennox, shorobroker, was held at tlie office of tho Official Assignee this morning. Tho Assignee (Mr. W. S. Fisher) presided. In spraking of tho position of tho estate, tho Assignee said that if the assets realised anything liko the values placed on them by the bankrupt the estate should pay a dividend of about. Gs. Bd. in the £, and he would be very pleased if ho could pay that amount.- He proposed to have a full investigation made into the position. In regard to the debtor's seat on tho Stock Exchange, he understood that the exchange had forfeited the seat and had sold it, aud applied the proceeds towards payments of the amount? owing by the bankrupt to some of the members of the exchange, who were thus placed iu the position of preferential creditors. "It seems to me," ho added, "to be an extraordinary thing if the Stock Exchange is allowed to do this, and the matter as to whether they have such power should be fully investigated. In regard, to the book debts, which amounted to JC2500, and were estimated to produce .£875, he understool that a lorge proportion of the accounts were disputed. He proposed to place tho shares in the estate in the hands of a broker for sale at current rates at the earliest opportunity. In reply to a question, tho Assignee stated that calls were due on some of the shares. He had purposely refrained from giving the names of the companies in which shares were held.

He then road the statement filed by the bankrupt, iu which bankrupt Mributcd his position to tlio slump in Waihi shares.

The bankrupt, -who was sworn, was first examined by MF. Gould. In reply to the first question, tho debtor said that he was not. in difficulties long before, the slump in Waihi shares took place. Mr. Gould: D}d you not, in March, 1910, receive a cheque for .£276 from Mr. Greene for the purchase of 200 Talisman shares?— Yes. I am" not sure of tho amount. It was .£250 or upwards. AVore these shares purchased ?—Yes. Then why is tho transaction not shown in the company's register?—Tho transfer should havo gone through in the ordinary wav.

Mr. Gould stated that a search of the register failed to show that the shares had boon purchased. To bankrupt: Can you give no explanation why the transfer was mot registered ?—No. All transfers wcro dealt with by my clerk.

Did not Mr. Green? call at vour office in regard to the shares?—He 'has never personally asked mo anything about tho shares.

Is it -not a fact that on March 15 last Mr. Greene sold through you other Talisman shares of which ho had the scrip certificates?— Yes. He sold 300 shares through me about that date. That -number included 100 that you were instructed to purchase a year previously. Can you explain why no transfer has been registered in regard to the 100 shares sold by your—l caiinot say without my books. Are the creditors then to understand that you have been leaving share tran.v actions involving wveral hundred pounds to your clerks?— There is no chance of doing anything else. That'is the usual practice of brokers. We aro away at calls about three hours each day. . You make no.imputations against your, clerks?— No." ■'■.■" You say you were not in difficulties before the slump in Waihi?—No. Do you say that you purchased tho Talisman shares for Mr. Greene and paid out the money for them?— Yes. I think so, but I must look at my books first. Mr. Gould: It ssems that we are to be stuck up all along the line by the absencf of the books. It was explained that tho books, which were in M r - Hannn's office, could be produced later, and it was agreed that tho examination should proceed as far as possible without them. Mr. Gould (to bankrupt):'Do you say that it is the. common practice of the Talisman Company to pay dividends to brokers on behalf of shareholders? Mr. Raima:' The dividend warrants aTo often made out in favour of brokers on account of shareholders. Mr. Gould: But not when the shares are registered in tho holders' own names. Mr. Hanna: Not without a written authority. In reply to Mr. Grundy, bankrupt stated that when dealing in Waihi shares last year he sold in Auckland and bought in London, as he could make a profit on such transactions. \ Mr. Grundy: You wcro. paid by Mr. Casey to buy 50 Waihi shares for him. Where are these shares?—l have not got them. What has become of them?— They were lent to mo by Mr. Casey, and I have never been able to return them. I paid him interest on them. Mr. Stanton: Have you .bought- shares in all cases in which you have received money for that purpose?—lu nearly (every case. You cannot always get the parcels you want. I have bought, them in every case, except that of Mrs. Knock and Mr. Harris. When you cannot get the shares, do you represent tho matter to your clients?— Not always. ' The' broker is responsible. Then a client may go for months and months without knowing that shares are not bought? Is that the common practice amongst brokers?— They arc not told unless they inquire what became of the shares. You bought for Mr. Eodgerson ?—They wero lent to me, and I sold them. I paid him interest on them What did you do with the money that you received for the shares? Did you not look upon that as Mr. Rodgerson's money?—l looked upon it as money with which to replace the shares. But you did not do so, so you practically sold his shares and 'put tho money into your pocket? _ The debtor stated that tho money was intended to represent the shares, and Mr. Hanna said that as long as interest was paid on the shares a broker was to make use of them. Mr. Gould: When you received money front clients for the purchase of shares aid you treat it as trust money?— No. I paid it into the office account. You kept no trust account?—No; but I now think it might have been better to. do so. .

Mr. Gillies: In March last I instructed you to buy 100 Taranaki Petroleum shares for mc. Did you buy therapies. The Assignee: And were these shares sold by you?— Yes. Mr- Gillies: You sold my shares and used the proceeds ?—Yes. On the motion of Mr. Green, seconded ».Y Mr. Gillies, it was resolved that the debtor be exnmined by the Assignee as to various share transactions, and that the bonds of account be produced. It was stated that the examination would not be a public one, and that the question of a further meeting of creditors would ther. be decided. Tho meeting then adjourned sine die.