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Mr. PECORA. Had you been connected with the oil company for a number of years prior to November 1931 ?

Mr. Day. I do not want to be technical. I think I was there 3 or 4 years. I don't remember that. Prior to that I was with the Barnsdall Oil Co.

Mr. PECORA. Did you hear the testimony given before this committee yesterday by a witness named Charles C. Wright?

Mr. Day. Part of it, sir.

Mr. PECORA. Did you hear any portion of his testimony in which reference was made to a number of options on certain stocks issued by different corporations which had been given either to Mr. Wright or to his stock brokerage firm of Wright & Sexton by the firm of Redmond & Co.?

Mr. Day. Yes, sir. I think I heard two brought up.
Mr. PECORA. Which two were they?

Mr. Day. I think there was one in National Distillers. I am not sure about the other. I know approximately, because I read the testimony yesterday afternoon, and I am confused in my mind whether he said it in the morning or in the afternoon.

Mr. PECORA. During the year 1933, and particularly during the months of May, June, and July 1933, did Redmond & Co., have any options covering the stock of any of the so-called “ alcohol companies or repeal stocks "?

Mr. Day. Yes, sir.
Mr. PECORA. How many such options did it have last summer?
Mr. Day. I do not know, sir. May I refer to the records?

Mr. PECORA. Surely. You are free to refer to any records available to you, Mr. Day, at any time in the course of your examination.

Mr. Þay (after conferring with an associate). I presume, from your former statement, that you are referring to the so-called “ Repeal stocks ", and that you mean Libbey-Owens-Ford.

Mr. PECORA. That would be one of them. Mr. Day. That is all we have. Mr. PECORA. Did you have more than one option covering the stock of the Libbey-Owens-Ford Glass Co. last summer? When I say you, I refer, of course, to the firm, Redmond & Co.

Mr. Day. Yes, sir; I understand. There was one under date of June 1.

Mr. PECORA. I show you what purports to be a photostatic reproduction of such option dated June 1, 1933. Will you look at it and tell me if you recognize it as a true and correct copy of the option to which you have just referred?

Mr. Day. I believe that is correct.
Mr. PECORA. I offer it in evidence.
The CHAIRMAN. Let it be admitted.

(Copy of option, June 1, 1933, Libby-Owens Securities Corporation to Redmond & Co., was received in evidence, marked "Committee's Exhibit No. 67 ", Feb. 21, 1934, and the same was subsequently read into the record by Mr. Pecora.)

Mr. PECORA. The document received in evidence as “ Committee's Eshibit 67" reads as follows (reading]:

JUNE 1, 1933. REDMOND & Co.,

48 Wall Street, New York City. DEAR SIRS: The undersigned, Libbey-Owens Securities Corporation, a Delaware corporation, confirms its agreement as follows:

1. The undersigned has sold, and you and others associated with you on certain terms have purchased from the undersigned, 65,000 shares of common stock without par value of Libbey-Owens-Ford Glass Company, an Ohio corporation, at the price of $26.50 per share flat. Delivery of the certificates for such shares and payment therefor shall be made in New York City at the office of The Guaranty Trust Company of New York, 140 Broadway, on or before 3 o'clock p.m., (D.S.T.), June 5, 1933.

2. In consideration of your agreeing to purchase as aforesaid the above 65,000 shares, the undersigned agrees that it will sell, or cause to be sold, to you and associates, at your option, at any time and from time to time on or before 3 o'clock P. M. (D.S.T.), July 3, 1933, all or any part of 20,000 additional shares of such common stock without par value of Libbey-Owens-Ford Glass Company, at the price of $27.50 per share flat.

3. In case you shall purchase the 20,000 additional shares referred to in paragraph 2, the undersigned will sell, or cause to be sold, to you and associates, at your option, at any time and from time to time on or before 3 o'clock P.M. (D.S.T.), August 1, 1933, all or any part of 20,000 additional shares of such common stock without par value of Libbey-Owens-Ford Glass Company, at the price of $28.50 per share flat.

4. In case you shall purchase the 40,000 additional shares referred to in paragraphs 2 and 3, the undersigned will sell, or cause to be sold, to you and associates, at your option, at any time and from time to time on or before 3 o'clock p.m. (D.S.T.), September 1, 1933, all or any part of 20,000 additional shares of such common stock without par value of Libbey-Owen-Ford Glass Company, at $30.50 per share flat.

5. In case you shall purchase the 60,000 additional shares referred to in paragraphs 2, 3 and 4, the undersigned will sell, or cause to be sold, to you and associates, at your option, at any time and from time to time on or before 3 o'clock p.m. (D.S.T.), October 2, 1933, all or any part of 20,000_additional shares of such common stock without par value of Libbey-Owen-Ford Glass Company, at $30.50 per share flat.

6. Redmond & Co. may exercise any of the options referred to in paragraphs 2, 3 4 and 5 to purchase the additional shares of common stock without par value of Libbey-Owens-Ford Glass Company mentioned therein from time to time by giving one days' notice in writing of your election to purchase such shares to the undersigned, in care of Mr. J. Donald Duncan, 50 Broadway, New York City, and thereupon the undersigned will deliver or cause to be delivered to you the certificates for such shares at said office of Guaranty Trust Company of New York on the day following such notice against payinent therefor.

7. It is understood that the undersigned shall be entitled to receive any dividends which may be declared upon the shares of common stock without par value of Libbey-Owens-Ford Glass Company covered by any of the above mentioned options, which shall be payable to holders of record of a date prior to the purchase by you of such shares, and that you shall be entitled to receive all such dividends which shall be payable to holders of record of a date subsequent to the purchase by you of such shares. 8. All shares of common stock without par value of Libbey-Owens-Ford Glass Company referred to in paragraphs 1 to 5 inclusive hereof which shall be purchased by you are and shall be listed on the New York Stock Exchange. The certificates for all such shares purchased by you hereunder are to be delivered to you in negotiable form for delivery on the New York Stock Exchange, and the undersigned agrees to pay all requisite stock transfer taxes payable in connection with the sale of any of such shares to you hereunder. All payments for shares purchased by you hereunder are to be made in New York funds, by certified' check.

9. The undersigned agrees that it will not, so long as any of the above cptions shall be in effect, sell any other shares of common stock without par value of Libbey-Owens-Ford Glass Company which it may own, except at a price in excess of $35.00 per share.

If the foregoing is in accordance with your understanding, will you please confirm your agreement therewith. Yours very truly,

LIBBEY-OWENS SECURITIES CORPORATION By GORDON AUCHINCLOSS (signed)

President. Attest: J. DONALD DUNCAN (signed) Secretary.

JUNE 1, 1933. LIBBEY-OWENS SECURITIES CORPORATION

15 Exchange Place, Jersey City, New Jersey. DEAR SIRS: The undersigned hereby confirm their agreement with you in accordance with the terms of your foregoing letter dated June 1, 1933. Yours very truly,

REDMOND & Co.

By PERBY OSBORN (signed). Now, Mr. Day, this letter refers to Redmond & Co. having some associates in this option. Who were those associates?

Mr. Day. The Hyva Corporation; Lehmann Bros.; Bell & Beckwith; Walter P. Chrysler; Joseph P. Kennedy; Kuhn Loeb & Co.; Wright & Sexton; Redmond & Co.

Mr. PECORA. What kind of a corporation is the Hyva Corporation?
Mr. Day. I do not know, sir.
Mr. PECORA. Do you know who its officers are?
Mr. Day. No, sir.
Mr. PECORA. Do you know anything at all about the corporation!

Mr. DAY. I have a recollection that Mr. Sinclair is interested in the Hyva Corporation.

Mr. Pecora. Is it a so-called “private corporation ” of Mr. Sinclair's ?

Mr. Day. I know nothing about it.
Mr. Pecora. Who is Joseph P. Kennedy?

Mr. Day. Mr. Kennedy is a capitalist, or well-known private citizen.

Mr. PECORA. Do you know what his business is?
Mr. Day. I do not think he is in business.

Mr. PECORA. When you say he is a capitalist, does that cover your understanding of what his business is?

Mr. Day. Well, I do not know. My understanding of a capitalist is somebody who has considerable funds and does not have to work

Mr. PECORA. I am not a capitalist.
Mr. Day. Neither am I, sir. I have no objection to being.
Mr. PECORA. Who are Bell & Beckwith?
Mr. Day. They are a Toledo Stock Exchange house.
Mr. PECORA. With membership on any stock exchange?
Mr. Day. I believe on the New York Stock Exchange.
Mr. PECORA. They have their principal office in Toledo, Ohio?
Mr. Day. That is my understanding.
Mr. PECORA. Who are Lehmann Bros. ?

Mr. Day. Lehmann Bros. are a stock-exchange house; a banking house.

Mr. Pecora. In New York City ?

Mr. Day. Yes, sir.
Mr. PECORA. Who is W. P. Chrysler?
Mr. Day. I understand Mr. Chrysler is in the automobile business.

Mr. PECORA. I think I have heard that. Kuhn, Loeb & Co. we know something about, because one of the partners of the firm-in fact several of the partners of the firm have been witnesses before this committee. Wright & Sexton we know something about through the testimony we heard yesterday. Who organized this group or syndicate that got the option that has been offered in evidence here in the name of Redmond & Co.?

Mr. Day. My recollection is that it was organized by Kuhn-Loeb. Mr. PECORA. Do you know which particular member of that firm actively dealt with the organization of this group or syndicate?

Mr. DAY. I think Mr. Elisha Walker.

Mr. PECORA. Who managed whatever operations or transactions were conducted in behalf of this group or syndicate under this option?

Mr. DAY. Redmond & Co.

Mr. PECORA. What particular member of that firm had charge of those transactions or operations?

Mr. Day. I suppose I had the most to do with it-not all.

Mr. PECORA. What was the purpose of this group or syndicate in obtaining this option and operating under it?

Mr. DAY. To distribute the stock and make some money.

Mr. PECORA. The stock was listed on the New York Stock Exchange at the time.

Mr. Day. Yes, sir; that is my understanding.

Mr. PECORA. Have you a copy of any agreement evidencing the respective rights and interests of the different members or participants in this group or syndicate, Mr. Day?

Mr. Day. I have a memorandum here from which I gave you the names of the members. I think it is the same one, probably, which you hold, showing a 5 percent interest for the Hyva Corporationam I answering your question?

Mr. PECORA. You do not mean 5 percent interest, do you? Mr. Day. I mean 5/65ths; Lermann Brothers, 61/2/65ths; Bell & Beckwith, 10/65ths; Walter P. Chrysler, 5/65ths; Joseph P. Kennedy, 10/65ths; Kuhn-Loeb & Co., *1312/65ths; Wright & Sexton, 5/65ths; Redmond & Co., 10/65ths.

Mr. PECORA. Was there not a formal agreement which defined the participations, rights, interests, and liabilities of the various members of this syndicate or group?

Mr. Day. Unfortunately, Mr. Pecora, I have not that with me. Mr. PECORA. There was such an agreement, however? Mr. Day. There was such an agreement, however. There was a letter sent to each one defining it.

Mr. PECORA. Have you a copy of any such letter? Mr. Day. I am afraid that they did not bring me a letter on that, but I have a subsequent letter, I think, on the second one. I think this is the second one [handing paper to Mr. Pecora).

Mr. PECORA. I notice, in the option agreement which has been offered in evidence and which has been marked Committee's Ex

híbit No. 67”, the following provision, marked paragraph 9 (reading]:

The undersigned (meaning Libbey-Owens Securities Corporation) agrees that it will not, so long as any of the above options shall be in effect, sell any other shares of common stock without par value of Libber-Owens-Ford Glass Co. which it may own, except at a price in excess of $35 per share.

Mr. Day, what was the reason for the inclusion of that provision in this option?

Mr. Day. Because, as I recollect, or as I was told, their holdings were very large, and if they were selling while this group was trying to constructively liquidate their block, their holdings would have made it so large, so impossible, at the same time, that a price of $35 was fixed.

Mr. PECORA. In other words, it was designed to keep off the market, during the operations of the group or syndicate that was formed to constructively, as you have said, dispose of the shares covered by this option, such other shares of the stock as the Libbey-Owens Securities Co. owned?

Mr. Day. I think that would be correct; yes, sir.

Mr. Pecora. I assume that that provision was put in there at the instance of the optionees.

Mr. Day. Yes, sir.

Mr. PECORA. And in order to facilitate them in effectuating their purpose of disposing of this optioned stock at a profit to themselves?

Mr. Day. Yes, sir.

Mr. PECORA. How was it contemplated by this group, or the managers of the group, namely, Redmond & Co., to dispose of the stock covered by this option?

Mr. DAY. On the market.
Mr. PECORA. That is, through trading in the open market?
Mr. Day. Yes, sir.

Mr. PECORA. This group or syndicate really constituted a pool, did it not, to trade in this stock under this option?

Mr. Day. The word "pool" has been used in reference to so many things—it was certainly a syndicate to distribute this stock.

Mr. PECORA. Such syndicates have commonly been called pools, have they not?

Mr. Day. Yes, sir.
Mr. PECORA. And this is that kind of a syndicate?
Mr. Day. Yes, sir.

Mr. PECORA. In connection with the purposes of this pool, to dispose of the stock covered by this option, was it intended that the pool should both buy and sell in its trading ?

Mr. Day. Yes, sir.

Mr. PECORA. Why was it necessary to buy and sell in order to enable the pool to dispose of this optioned stock at a profit?

Mr. Day. To have a free market in the stock.
Mr. PECORA. Was not the market free!
Mr. Day. There was practically no market in the stock.

Mr. PECORA. Was it an inactive market on June 1 last, when this option was obtained ?

Mr. Day. It was not an inactive market, but it was not a big market.

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