Mr. M. 8, Chen gave evidence that on March 9, 1934, he delivered to the American-Oriental Finance Corporation 40 shares of American Tel. & Tel. and, 40 shares of Canadian Pacific Stock, and in a teller of that date requested specifically that such shares should be put into a safe-keeping account. On March 12, 1934, the Finance Corporation acknowledged the receipt of those shares, and stated that they would be put into safe-keeping. On April 26, 1934, a letter was received {rom the E.' A. Pierce Company, addressed to" the Finance Corporation, acknowlesting line receipt of the shares in question. [Later, voltness leamed that his shares iliad. been sold without his instrue-
George Morton Rose, recalled, in answer to Dr. Sellett, stated that the [actual work of a treasurer was not done by him, and, so far as he knew. Hie was a legal cover only. "I never saw the ininules of any meeting of! directors, and I. never attended any'
by request, during the summer of, 'Dr. Sellett—During the time that} you were In the employ of the Corporation, did Mr. Raven take any active part' in its affalrs?—He was very often in Mr, Brown's office: he presided at the weekly meetings of The exceulive council, which comprised the managers of the Raven group: he presided at the monthly directors meetings of the A.O.F. Cor and, tothe best of my he was supplied with ly information on the position of the Finance Corporation, in respect business' done," and the dinaneial position, Cross-examined by Mr. Franklin, witness stated that, when Mr. Brown left, he moved into his office, and took over his oflelal routine work.
was then that I first learned that {fully paid-up shares, unless requested by clients to be put into a safe-keep-{ing account, were kept in the gen account of the A.O.P. Corporation with the E, A. Pierce Ca.
Did Mr, Brown explain to you, In addition io the other reasons you have given, that If al the shares in and out hid to be cabled the cost Would be tremendous?—Yes, that was an additional' reason, and' also the matier of convenience, He did not point out to me that the New York Stock "Exchange requirements wore inapplicable to the A.O.F. Corporation Dbeeauso they were not a member, and hat. the safe-keeping. requirements, therefore, of the New York Stock Exchange were not followed.
Why did you bring the matier up to Mr. Brown on his return from his holiday in Japan?—The matter had been brought to my attention, and 1 took st up with him with the idea of completing my education in the Dusiness: the explanation given me at the ime seemed reasonable, "After Mr. Haley came to' Shanghai 1035," said witness. "he discussed with me, early in 1984, the question of the fully paid-up shares; he did 0 on a number of occasions as office manager, and he pointed out to me that those fully paid-up shares should be segregated, I understood from Mr. Raven that the Corporation was not agreement. with Mr. Haley on. that subject, and that the malter would be taken up with Pierce & Ca, and settled in consultation, after which the necessary adjustments would be Did you ever try to get Mr, Driscoll, of the Raven Trust Ca, to pay in additional margin on behalf of the Trust Company?—Yes, I was con tinually after him, A great many, of their code accounts continued under. margined, and after Mr. Brown loft {ook that up with Mr. Driscoll several times, and endeavoured to get more margin from the Trust Company.
All the A, OF. Corporation's securlties had a ready sales value, had they nol?—No, that is not so: the money market at that time was very tight. The shares which were held by the American-Oriental group could be, Jand were, acceptable by some banks here in town, but other banks would not accept them. I cannot say whether the refusal of certain banks to lend against those shares was duc to the Ughtness.of the money market, but, in the case of the selling of the shares, the position was even worse, for, with the exception of the rubber market, conditions were very bad indeed, Crocs-examined by Mr. Evans: Did' you ever resign as treasurer?—Yes, Verbally, when I had timm with Nr. Raven in June, 1934, Was there any time when you ceased to regard yourself as treasurer after. you were appointed, and prior {fo June, 1994?—No. T considered 1 had the title of treasurer during that time, and T signed documents in connection with the Corporation's income tax returns for 1033.
Did your name appear on the tetter= heads of the Finance Corporation as treasurer, prior to 1934?—Yes, up to the time 1 left, and after: it appeared fon the papers. the liquidator used after the Corporation lad closed.
Did you form any opinion of your own as to the propriety or impropriety of the action of the Finance Corporation in keening fully paid-up shares ina general account?—Yes, T formed such an opinion after heat ing Me, Haley's views.
'Did you then immediately take the' matter up with Mr, Brown?—Practfeally, within the next day of 30.
re-examination by Dr. Sellett, the witness slated that the Finance Corporation inaugurated a camp al selling through their salesmen certain Shares of which the Finance Corporation held a considerable block Of American-Oriental bank "B" (nonvoting) shares, in which the capital of the Finance Corporation had been invested, Dr. Sellett asked witness if any one with whom he discussed the stion of transferring what money was avalable from Unis transnetion to cover the margin account in New York agreed with him that this should be done. No, Me. Weyler's objection to it was that it involved some eight per cent. interest took the matter up with Mr. Sander,
Text read from the printed page and cleaned; old type leaves the occasional error.