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Inquisitor Pecora learned that Oilman Harry Ford Sinclair had asked Mr. Cutten to head a syndicate which was to buy 1,130,000 shares of Sinclair Consolidated from the company at $30 a share. At first, when Sinclair was selling on the New York Stock Exchange at $28 a share, Mr. Cutten was not interested but when it later rose to $32 he accepted. Harry Sinclair, Arthur Cutten, Blair & Co. and Chase Securities each got a 22]% participation in the $33,000,000 syndicate, and the balance was allotted among such friendly interests as the security affiliate of Chicago's Continental National Bank & Trust (now Continental Illinois National Bank & Trust), the bank's Chairman Arthur Reynolds, and Promoter Archie Moulton Andrews. Some of the participations were subdivided and Albert Henry Wiggin's family-owned Shermar Corp. got one-third of Chase Securities' allotment and in the end an $877,000 profit.* No cash was required, for the purchase price was paid as the stock was sold to the public. A separate syndicate was formed to make the market.
Pecora: Was that a device for manipulating the market?
Cutten: No. We didn't have to manipulate the market at that time. It was a perpendicular market—always going up.
Pecora: What was its purpose?
Cutten: To make some money.
And Mr. Cutten volunteered: "When the market goes off a little bit, we buy and then the market goes up. . . . When the market goes up we sell."
Why William Samuel Fitzpatrick, chairman of Prairie Oil, then a Sinclair competitor but later merged, was paid $300,000 out of the pool's profits although he had no interest, Mr. Cutten could not explain. "All we know, then," remarked Inquisitor Pecora, exasperated, "is that it wasn't made at Christmas time, so it couldn't have been a Christmas gift."
Nor could Mr. Cutten recall any of the transactions which the Senators were sure were "wash" sales between the purchasing syndicate and the trading syndicate. His attorney urged that his client's memory was "not of the best." Mr. Cutten had directed the market operations, which sold all 1,130,000 shares in seven months at an average profit of nearly $11 a share, from Chicago. His cousin Ruloff Cutten, a floor member of E. F. Hutton & Co., had executed his orders. Whenever Mr. Cutten felt vague on a point he would refer to "my cousin Ruloff." Cousin Ruloff, a onetime actor whom Speculator Cutten took off the stage and taught the lore of the market, was summoned to appear this week.
Wiggin & Clarke. The Senators had even more trouble following their inquisitor's next revelation, for he led them through the tropical financing of General Theatres Equipment, Inc. Under the swift hand of Harley Lyman Clarke, who had previously garnered a fortune in utility promotion, G. T. E. swelled from a small concern with a promising film projector into an overripe holding company controlling among other things Fox Film Corp. Its decline & fall pulled down the old stock exchange houses of Pynchon & Co. and West & Co. and cost Chase Bank more millions than Mr. Wiggin cares to remember.