Mr. PORTER (after examining document). Yes, sir.
Mr. PECORA. I offer it in evidence.

The CHAIRMAN. Let it be admitted.

(Letter dated April 28, 1933, from Seton Porter, president National Distillers Products Corporation, to Illinois Glass Consolidated Corporation, was thereupon designated "Committee Exhibit No. 75, February 22, 1934", and the same appears in the record immediately following, where read by Mr. Pecora.)

Mr. PECORA. The document has been received in evidence as committee exhibit no. 75, and reads as follows:

The ILLINOIS GLASS CONSOLIDATED CORPORATION,

Alton, Ill.

APRIL 28, 1933.

GENTLEMEN: We hereby confirm the same to you of 10,000 shares of the common stock of National Distillers Products Corporation, as and when listed by the New York Stock Exchange, on 48 hours' notice to you at the office of your President, Mr. William E. Levis, 965 Wall Street, Toledo, Ohio, at $25 per share, purchase price payable on delivery of stock to you.

As these 10,000 shares are part of the new issue of 200,000 shares authorized at the stockholders' meeting on April 19th, delivery will have to be delayed until we are able to consummate certain details in connection with listing arrangements on the New York Stock Exchange which counsel advises us can not be completed until about May 11th. Therefore, we agree to make delivery as soon as possible after these arrangements are completed and in no event later than 30 days from date.

It is understood in connection with this sale that it is the intention of the Corporation to issue to its present stockholders warrants covering the right to subscribe to additional stock on the basis of 1 share for each 10 shares now held and these warrants will not apply to the 10,000 shares covered by this agreement.

Very truly yours,

Accepted by:

NATIONAL DISTILLERS PRODUCTS CORPORATION, By SETON PORTER, President.

ILLINOIS GLASS CONSOLIDATED CORPORATION, By WILLIAM E. LEVIS.

Did your corporation on this same date, April 28, 1933, also make a firm sale of 10,000 shares of its common stock to Redmond & Co. at $25 a share?

Mr. PORTER. Yes, sir.

Mr. PECORA. I show you what purports to be a photostatic reproduction of a letter addressed to Redmond & Co. by you as president of the National Distillers Products Corporation dated April 28, 1933. Will you please look at it and tell me if it is a true and correct copy of the letter evidencing such sale?

Mr. PORTER (after examining document). Yes, sir.

Mr. PECORA. I offer it in evidence.

The CHAIRMAN. Let it be admitted.

(Letter dated Apr. 28, 1933, from Seaton Porter, President National Distillers Products Corporation, to Redmond & Co., was thereupon designated "Committee Exhibit No. 76, Feb. 22, 1934," and the same appears in the record in full immediately following where read by Mr. Pecora.)

Mr. PECORA. The letter has been received in evidence as committee exhibit no. 76, and reads as follows:

REDMOND & Co.,

APRIL 28, 1933. /

48 Wall Street, New York, N.Y. GENTLEMEN: We hereby confirm the sale to you of ten thousand (10,000) shares of common stock of National Distillers Products Corporation, as and 175541-34-PT 14- -7

when listed by the New York Stock Exchange and on forty-eight hours' notice to you at your main office, 48 Wall Street, New York, N.Y., at $25 a share, the purchase price payable on delivery of the stock to you.

As these 10,000 shares are part of the new issue of 200,000 shares just authorized at the stockholders' meeting on April 19th, delivery will have to be delayed until we are able to complete certain details in connection with listing arrangements on the New York Stock Exchange which counsel advises us cannot be completed until about May 11th. Therefore, we agree to make delivery as soon as possible after these arrangements are completed and in any event not later than thirty days from date.

It is understood in connection with this sale that it is the intent of the corporation to issue to its present stockholders warrants covering the right to subscribe to additional stock on the basis of one share for each ten shares now held and that these warrants will not apply to the ten thousand shares covered by this agreement. We understand that you have given an option to purchase these shares to Mr. William E. Levis on behalf of himself and his associates. Very truly yours, NATIONAL DISTILLERS PRODUCTS CORPORATION, By SETON PORTER, President.

Accepted by:

REDMOND & COMPANY, By MASON DAY.

Mr. Porter, referring to the option for 12,000 shares mentioned in the letter to Mr. William E. Levis of April 28, 1953, which has been received in evidence as exhibit no. 74, will you tell us whether or not your corporation reported to the New York Stock Exchange the granting of that option?

Mr. PORTER. We reported it on I think May 18. [After conferring with associates.] I think it was May 18.

Mr. PECORA. Did you report it to the stock exchange?

Mr. PORTER. We sent a letter to the stockholders on May 18.

Mr. PECORA. No; to the stock exchange, New York Stock Exchange?

Mr. PORTER. Certainly a letter was sent to all stockholders on May 18.

Mr. PECORA. No; I am asking you if the giving of this option for 12,000 shares referred to in the letter to Mr. Levis of April 28, 1933, which has been marked in evidence as committee exhibit no. 74, was reported to the New York Stock Exchange by or on behalf of your corporation.

Mr. PORTER. It was not reported at that time; no, sir.

Mr. PECORA. When was it reported?

Mr. PORTER. I think officially reported when we applied for the listing on May 25. It was reported

Mr. PECORA. Oh, aren't you mistaken about that?

Mr. PORTER. I may be, sir.

Mr. PECORA. Well, you better look up your records on that between now and the reconvening of the committee after recess.

Mr. PORTER. Right.

The CHAIRMAN. The committee will take a recess until half past 2. (Accordingly, at 1:06 p.m., a recess was taken until 2:30 p.m. of the same day.)

AFTERNOON SESSION

The committee resumed at 2:30 p.m. on the expiration of the

recess.

The CHAIRMAN. The committee will resume. I believe Mr. Porter is on the stand.

TESTIMONY OF SETON PORTER, PRESIDENT NATIONAL DISTILLERS PRODUCTS CORPORATION, NEW YORK CITY—Resumed

Mr. PECORA. Mr. Porter, wasn't the application for the listing of the additional shares, that included those 12,000 shares covered by that option, made on or about June 12, 1933?

Mr. PORTER. The application was made on that date. That is, the stock exchange was put on notice of this option by a letter which we mailed to our stockholders on May 18, a copy thereof being sent to them. But the application is dated June 12, 1933, I believe, as. you have stated.

Mr. PECORA. Now, Mr. Porter, during 1933 rights were given to stockholders of record of your corporation, to subscribe for certain shares of the common stock of the corporation, on the ratio of 1 share for each 10 shares then held, and what was the subscription price at which the offer was made to the stockholders?

Mr. PORTER. At $25 per share.

Mr. PECORA. When was that done?

Mr. PORTER. They were offered that at the same time that this sale of 40,000 shares was made.

Mr. PECORA. And that was on April 27, 1933, wasn't it?

Mr. PORTER. The board of directors made the authorization on that date. That is, they met on that date and authorized it. And the stockholders were notified shortly thereafter.

Mr. PECORA. How many shares were offered to stockholders on these terms?

Mr. PORTER. The number was 27,591 shares.

Mr. PECORA. What was the market quotation of the stock on that date?

Mr. PORTER. On what date?

Mr. PECORA. On the 27th of April 1933.

Mr. PORTER. I think on that day the low was about 30 and the high was about 32. I mean on that particular day.

Mr. PECORA. The exact figures I think are a low of 30% and a high of 323%.

it?

Mr. PORTER. That is right.

The CHAIRMAN. And how many shares did the stockholders take? Mr. PORTER. It was 25,000 shares, I believe.

Mr. PECORA. As a matter of fact it was 27,450 shares, wasn't

Mr. PORTER. I just gave the amount, 27,591 shares.

Mr. PECORA. No. That was the number of shares offered to stockholders.

Mr. PORTER. Oh. And now you want to know how many shares they took?

Mr. PECORA. Yes. How many shares were subscribed for by them?

Mr. PORTER. Practically all of them.

Mr. PECORA. Practically all of them, did you say?

Mr. PORTER. I find that they subscribed for all but 141 shares offered to them, substantially all.

Mr. PECORA. That offer was made to stockholders at about the same time that the company entered into this agreement with Red

mond & Co., and with William E. Levis and with the Owens Illinois Glass Co., to purchase larger blocks of that stock in the aggregate than the 27,591 shares offered to stockholders at $25 a share, wasn't it?

Mr. PORTER. Yes, sir.

Mr. PECORA. Why were not the stockholders offered all of that stock instead of only 27,591 shares?

Mr. PORTER. Well, you see, market conditions had been such, and I believe were such practically on that date, that there would have been no opportunity, or no possibility, I might say, of a large offer to stockholders being taken by them. In other words, in January of that year the stock had a low of 17 and a high of 1834; in February a low of 16% and a high of 2234; in March a low of 19% and a high of 273%, and the over-all record for April was a low of 25 and a high of 322. Now, then, we commenced those negotiations, which were not consummated at the end of April, is that it?

Mr. PECORA. Yes, April 28.

Mr. PORTER. On April 28; yes. Some 3 weeks prior to that time. when the stock was selling around $25 a share, and when there was no possible opportunity of the stockholders being willing to subscribe to any considerable quantity of shares at any such price.

Mr. PECORA. Well, the fact of the matter is that at the same time your company made these firm contracts with Redmond & Co., William E. Levis, and the Owens Illinois Glass Co., it made this offer to its stockholders to take 27,591 shares at $25 a share, didn't it? Mr. PORTER. Well

Mr. PECORA (Continuing). And the fact is that your company made that offer to its stockholders at the same time that it closed deals with Redmond & Co., William E. Levis, and the Owens Illinois Glass Co.

Mr. PORTER. That is right.

Mr. PECORA. Well, then, at that time you must have had a pretty well-defined notion that the stockholders would take the 27,591 shares that were offered to them?

Mr. PORTER. That is right.

Mr. PECORA. Well, why didn't you think they would take the balance of that issue at $25 a share?

Mr. PORTER. Oh. The balance of that issue you are talking about? Mr. PECORA. Yes.

Mr. PORTER. Well, of course, we had already made the commitment.

Mr. PECORA. Well, you did not make it until April 28.

Mr. PORTER. It was not ratified by the board of directors until that date.

Mr. PECORA. But the firm commitment wasn't made until April 28, and it was ratified by the board of directors subsequently. Mr. PORTER. On April 27; yes, sir.

Mr. PECORA. It was at that same time that the 27,591 shares were offered to your stockholders at $25 a share, wasn't it?

Mr. PORTER. That is right.

Mr. PECORA. Well, now, at that time you must have had the notion that your stockholders would subscribe for those 27,591 shares at $25 a share.

Mr. PORTER. That is right.

Mr. PECORA. Why didn't you make the offer to include all the shares that you had agreed to sell on April 28 to Levis, Redmond & Co. and Owens Illinois Glass Co.?

Mr. PORTER. We had already agreed to sell those 40,000 shares to them prior to that time.

Mr. PECORA. Oh, no. The agreement was evidenced on April 27. Mr. PORTER. Yes; the written agreement.

Mr. PECORA. That was when it became a firm offer, didn't it? Mr. PORTER. Yes. It could not have been legally binding until ratified by the board of directors, which was not done until that day. That is right. But

Mr. PECORA (interposing). All right. But go ahead.

Mr. PORTER. Now, it was pursuant to negotiations which were conducted for about 3 weeks prior to that time, and to an understanding verbally reached, with the general approval of the directors, to make this sale at $25 a share; at least some 2 or 3 weeks prior to that time. The market at the particular date that the directors met and ratified the offering, was 31; you are quite correct on that.

Mr. PECORA. What I want to know is, why the stockholders of your company were not given an opportunity to subscribe not only for the 27,591 shares which were offered to them, but for the 40,000 shares

Mr. PORTER (interposing). That we had already agreed to sell.

Mr. PECORA (Continuing). That you agreed on April 28, the following day, to sell to Redmond & Co., William E. Levis, and the Owens Illinois Glass Co.

Mr. PORTER. As I have already stated I think, we had agreed with them verbally, and which was confirmed, to sell those shares at $25. Mr. PECORA. When did you make that agreement for those private sales?

Mr. PORTER. About 2 weeks prior to that time, 2 or 3 weeks prior to that time.

Mr. PECORA. Are you sure of that?

Mr. PORTER. Yes, sir.

Mr. PECORA. Well, now, I show you what purports to be a copy of a letter sent by your corporation, over your signature as its president, to Redmond & Co., dated April 27, 1933. Will you look at it and tell me if you recognize it as being a true and correct copy of a letter that you caused to be sent to Redmond & Co. on that date?

Mr. PORTER (after casually looking at the paper). No, sir; that is not, I think, the correct letter that we did send to them. I do not think that letter was ever signed. It is marked up here

Mr. PECORA (interposing). It might interest you to know that that copy of a letter, the one I am showing you, came from the files of Mr. Levis. If the letter was never sent, how did it happen to be in his files?

Mr. PORTER. Well, this, doubtless, is a part of the drafts of the negotiations, or something of that kind. I do not doubt the existence of the thing, of its having been typed, but the letter was never signed. That letter was never signed. That is the day before the other letter was written.

Mr. PECORA. It is dated April 27, 1933.