SHARLBROKER'S FALL.

Dominion, Volume 5, Issue 1354, 3 February 1912, Page 4

SHARLBROKER'S FALL.

ALLEGED RASH SPECULATION. DEALS IN MINING STOCK. (By Teleefaph-Prooa Association.) Auckland, February 2, James Scott Lennox, until recently a sharchrokar ill Auckland, was charged at tho i'olico Court to-day before Mr. K. C. Culten, ,5..M., with tliat, being a person adjudged bankrupt, on August t), )'.))), he had by rash and hazardous speculations brought about his bankruptcy. Lennox pleaded not guilty, and was represented by Mr. A. L. Lenniston. Mr. Siclwyn Mays appeared for the prosecution. Jlr: W. S. Fisher, the Official Assignee, said the accuMtd was adjudged bankrupt on August The filed schedule showed liabilities of -£5500, and assets of ,£1950, leaving a nominal deficiency of .€3550. As far as the actual position could bo ascertained t'lio accused's liabilitiea amounted to .£0552, his realised assets to JJ2G9, while his seat on the Stock Exchange, though a doubtful asset, might be put down at .£SOO, leaving a deficiency of ,£5783. 'Jlio estate under tho most favourable circumstanoes would not pay a dividend of more than Is. Gd. in the £. Tho accused's books, said the witness, showed that he had done considerable business. If lie had couliued hi.s operations to legitimate sharebroking business (buying and felling shares on commission), he would have made a handsome and safe living. That was shown by tho list produced of his commissions earned from July, 1908, to June, 11)11, but Iho accused. omburked on a carper of speculation in mining shares on his own aocount, parly in tho last period noted in the following list of commissions:—Earn. e;l ill tile half-year ended December, 1908, <£710; to .1 une, 11101), ,£907; lo December, 190!), iCIODS; to June, 1010, .£1)20; to Docemlyer, 11)10, JMGO; to June, 1011, .£303. In October, 1001), lie had, according to hifl own statements, no liabilities, and tho following assotsCredit balance at tho bank, .£2OO to .£300; book debts, between .£•1000 and .£SOOO (estimated to produc® .£IOO to .£500); selling value of his seat on an interest in tho Ngatiawa gold mine, worth from -JCISOO to ,£2000; and an interest iu his grandfather's will, worth .£SOO. Accused's credit balaiioo at tho bank had disappeared in May, 1910, and he had overdrawn to the extent of .£261; and only on ono occasion after that mouth hod he ever a credit balance at tho bank, namely ,£4OO, on September 30, 1910. After September, 1910, his payments exceeded liis receipts by amounts varying from ,£257. to .£2232. On June 30, 1011, lie owed the Newton branch' of the Bank of New South Wales X 1230, and the Auckland branch ,£391. Tho Auckland overdraft was paid' off presumably by tho guaranThe witness produced a list of accused'* debit and credit balances at the end of each month from August 31, 1909, to Juno 30, 1011, and stated that after May, 1910, the accused had no asset in the shape of 1 a bank balance, though there was a credit balanc* in September, 1910. Tho cash books showed that in tho first throe days in October, 1910, accused's payments had exceeded his receipts by ,£7Bl. His seat on tho exchange was of problematical value, to date it had produced nothing, and it was held according to tho rules of exchange against accused's liabilities'to his fellow brokers. The witness staled -that at the time of his bankruptcy Lennox included hook debts of .£2500 as estimated to produce ,£B7B, whereas these had realised only X"3 His interest in the Ngatiawa Mine, which had been put down at .£ISOO to ,£2OOO had vanished, for lie had forfeitcd all but 000 shares, and in JLay, 1910 had purchased a parcel of 80,010 forfeited shares for .£lO lte. 3d. He owed .£3ll to tho liquidator of the Ngatiawa Company for calls, and Court fees unpaid. His intorest in his grandfathers will could not ho considered ns mi nsset ft tor November, 1910, in which month he had mortgaged it, together with his interest in his life policies. The assignee, continuing, said the aocused was not entitled to regard his commission earnings as an asset available lor speculation, for his private account shewed that his private expenditure was very heavv: for example, from August, 11, ISM 9. to .Time 29, 1911 (22j months) Ins drawings oil private account exceeded tho credits bv .£1920. It was sigmhcant that at a period when 'his finances were at their worst state, from January 31 to May 31, 1911, a trial balance-shoot prepared by his own accountant and corroborated by the ledger, showed that his net personal drawings amounted toArJS-, while his commissions earned for the sain« period amounted only to .£248. At this stago there was produced n comparative statement of commissions earned by Lennox in relation to turnover. For the six months ending December, 1009, turnover, .£190,080; commission, .£IO9B. To June, 1910, toovcr ,£224,199; commission, ,£920. To December, 1910 turnover ,£233,010; commission, .£4OO. To June, 1911, turnover, commission, X3G3 Ss. Till tho last halfyear fcli© gross turnover mcrcofioa and tho amount of tho commissions decreased, said witii<sss. This was evidonoo of speculation and fihowod that transactions brouclit no commission. A summary of tho accused's losses on Talisman simulations was produced to show that on Jiel>ruarv 28, 1911, Lennox had over-sold 31*7 shams. The share account of that date showed a balance to credit of Ai43a. ir lie had then squared up, 314/ shares would have cost him 455. each U170S0), leaving 'him a profit of ,£405. At the end _ of Juno tho position was ns Mows:-BtU-anco, lo credit of ac „ co " n „ t ;A\ over-sold, 5055 at 505., .£12,<12. Tho lom thr-n was ,£l7lO. .. A summary to show accused s loss* by speculations in shares waspTOchiewla-sfoU lows: Talisman Consolidated, ftcvr Occidentals (August 4, 1909, to "7 1911) .£188; Occidental Consolidated (January 31, 1911, to May 31, 1911), •£«<! Golden Belt, .£119; Zeelmn Consolidated, ci:i7 ; Ngatiawa, ,£008; total, .£4119. "Witness said that there was evidcnce o. over-selling, especially in regard to Lennode's transactions in Talisman shores. The following was a list of Talisman Consolidated shares accused's books; June. inco. 27, 1910, 1525; November 25, IJIO, 1-83. »>R I'lll. 3147; March 31, 1911, vino; ApriP'so! lAt. May 31 - fiilO* Juno 30, 5085. Tho accused, whoso defence was roeerrcd, was committed for trial, hail beiTO allowed in one surety of JUSO or two of i£7s. ,