SPECULATORS CRASH

Sun (Auckland), Volume III, Issue 885, 31 January 1930, Page 1

SPECULATORS CRASH

Financial Debacle In Canada SIXTEEN BROKERS ARRESTED Ring Operates Exchange

THE arrest of 16 of the. leading stockbrokers of Vancouver lias caused a financial sensation in Canada, where the principals of one of the oldest firms have been arrested. Millions of pounds are involved in the charges of fraud, which are directed against the arrested magnates.

United P. -i . —By Telegraph—Copyright Reed. 11 a.m. VANCOUVER, Thurs. A nation-wide financial sensation has been caused by the arrest of 16 stock brokers for alleged conspiracies to defraud the public through market ■manipulation. The old firm of Stobie Furlong was assigned after both of its principals were arrested.. Millions of pounds are involved. It is alleged that the brokers, acting cooperatively, ran up or down the prices of stocks to suit their own purposes, and took clients’ money without executing directed purpose. Provincial Governments are endeavouring to avoid a financial panic. The arrest of these brokers follows .15 months of marked speculative activity in mine and oil shares, after which, according to recent reports, the Stock Exchange business of "Western Canada disclosed an extraordinary phase of this form of gambling. A fortnight ago one of the largest brokerage houses in Vancouver, .with scores of branches in many cities, was

reported to have been raided by officers of the Attorney .-General's Department, who arrested the principals on a charge of dishonest market practices. It is alleged that this firm and other brokerage houses sold shares short for every customer’s purchase, with the result that when the local markets went down, following Hew York’s recent slump, customers’ accounts in thousands were simply confiscated, though the brokers had already sold the stock months before on their own account. The slump is said to have made millions for every brokerage house. One is reported to have cashed in £7,000,000. The net result of the situation, according to the case which the authorities are investigating, was that instead of the brokers owing customers millions of dollars, representing investments, these customers’ interests were simply wiped out. The Attorney-General is busily engaged devising legislation that will preclude brokers from trading in this way on their own account in future. The heads of the brokerage house now being prosecuted had notoriously sold short.