Business & Finance: Customers' Funds

Testifying before SEC last month, Edward H. H. Simmons said he had known that his former fellow Exchange Governor Richard Whitney had used cash belonging to the Gratuity Fund, but had not thought this significant enough to report to the Exchange because using customers' cash was general practice among brokerage houses. SEC regarded this assertion as remarkable, ordered the Exchange to look into the matter.

The Exchange found that on March 31 the 452 member firms handling margin accounts in the metropolitan area were custodians of free cash balances of $245,562,000 belonging to customers. After sampling 60 presumably representative firms with aggregate...

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