| Type | Brokerage |
|---|---|
| Industry | Financial services |
| Founded | 1920 |
| Defunct | March 29, 1922 |
| Fate | Failed in 1922, partners indicted for bucketing |
| Headquarters | 42 Broadway and 30 E. 42nd Street, Manhattan, , |
Key people | D. C. Raynor, E. H. Truesdell, B. J. Nicholas |
| Products | Stockbrokerage |
Raynor, Nicholas & Truesdell was a New York brokerage based on Broadway in the 1920s. It was a member of the Consolidated Stock Exchange,[1] before failing on April 29, 1922.[2] The failure resulted in a highly publicized lawsuit over whether the firm committed mail fraud and bucketing before failing.
History
Founding and failure
The brokerage firm was founded in 1920 in New York.[3] According to records, as early as November 21, 1921, Consolidated had discussed the firm's methods, as it was known for bucketing.[4]
As of 1922, it was based at 42 Broadway and 30 East 42nd Street, and were members of the Consolidated Stock Exchange of New York. Firm members included D. C. Raynor, E. H. Truesdell, and B. J. Nicholas.[1] The firm soon ran into financial difficulties. In November 1923 at the bankruptcy hearing, speculator Louis B. Appleton told that he and his brother Charles put up $50,000 before the failure as an advance to the firm, to help keep it afloat.[5]
The firm failed on April 29, 1922.[2] In October 1923, testimony about the firm revealed that it failed in April 1922 for $4,000,000, and that the committee of the Consolidated Exchange had been aware of its failing condition six weeks before that.[6] The failure amount was in 1924 reported as "more than $2,000,000."[7]
Bucketing and fraud charges
In December 1923, De Witt C. Raynor was indicted by the Federal Grand Jury in connection with the failure, after testifying that May. When the hearing resumed the following June, he had disappeared, failing to answer to a subpoena. He was still missing by July 1923, when he should have surrendered for his arrest.[7] On January 23, 1924, it was revealed after an examination of the books that Raynor, Nicholas Truesdell owed $1,250,000 to be divided among 2,500 customers, and had $80,000 in assets. That day, several curb brokers were called in to testify on their dealings with the firm's check history.[2] On February 1, 1924, De Witt Raynor walked into the office of the United States Marshal in Havana and surrendered himself, disclaiming any voluntary violation of the law.[7] On November 6, 1924, De Witt C. Raynor plead guilty before a federal judge on charges of conspiracy and using the mails to defraud. Other co-defendants at the time included William Silkworth, Louis Gilbough of Consolidated, Blaine J. Nicholas and Earl H. Truesdell, and several others including Peter Owens, office manager of the Raynor firm. Lawyer Peter McCoy was prosecutor.[8]
On November 29, 1924, Silkworth and five others also found guilty of bucketing,[3] with Silkworth convicted of mail fraud relating to his brokerage and Raynor, Nicholas and Truesdell in 1922.[9] During the appeal process, McCoy gave testimony before the Circuit Court of Appeals that Raynor, Nicholas & Truesdell had engaged in extensive bucketing operations since its founding late 1920. McCoy further testified that Silkworth had provided the firm's bucketing operations with the protection of Consolidated. The Judge ruled against the motion raised by defendants, which was that bucketing did not have a Federal statute against it at the time, and ruled in favor of McCoy on February 1, 1926 with the November conviction upheld.[3] Silkworth served three months of a year sentence in 1926, with other brokers also serving time.[10]
See also
References
- 1 2 "Brokers". 1922. Retrieved March 10, 2018.
- 1 2 3 "Raynor Has $80,000 And Owes $1,250,000; Small Pickings Left for 2,500 Customers of the Failed Consolidated Firm". The New York Times. The New York Times, New York City, United States. January 23, 1924. Retrieved March 10, 2018.
- 1 2 3 "Silkworth Loses; Conviction Stands; Sentence of Former President of Consolidated Exchange for Fraud Is Affirmed. Ruling Covers 5 Others Found Guilty of Bucketing -- Sixth Defendant Decided to Serve Term In Prison". The New York Times. New York City, New York. February 2, 1926. Retrieved April 12, 2017.
- ↑ "RRaynor Firm Asked Time to Recover; Partner, on Stand, Admits That It Was Not Possible to Save Brokerage House". The New York Times. The New York Times, New York City, United States. November 18, 1924. Retrieved March 10, 2018.
- ↑ "Speculator Tells of Loan to Brokers; Louis B. Appleton Says He and His Brother Put Up $50,000 BEFORE $4,000,000 FAILURE Advance to Raynor, Nicholas & Truesdell Arranged at "Sumptuous" Delmonico Lunch". The New York Times. The New York Times, New York City, United States. November 2, 1923. Retrieved March 10, 2018.
- ↑ "Insolvent Brokers Allowed to Go On; Condition of Raynor, Nicholas & Truesdell Reported to Consolidated Before Crash". The New York Times. The New York Times, New York City, United States. October 10, 1923. Retrieved March 10, 2018.
- 1 2 3 "Raynor Surrenders on Fraud Charges; New York Broker Involved in $2,000,000 Failure Gives Self Up in New Orleans". The New York Times. The New York Times, New York City, United States. February 2, 1924. Retrieved March 10, 2018.
- ↑ "Raynor is Guilty; Silkworth Fights; Broker, Whose Plea Is Accepted, May Become a Witness for the Government". The New York Times. The New York Times, New York City, United States. November 7, 1924. Retrieved March 10, 2018.
- ↑ "Silkworth Again Held; Former Head of Consolidated Ex- change Accused in Theft.", The New York Times, New York City, p. 13, May 18, 1933, retrieved February 13, 2017
- ↑ "Silkworth Quits Jail; May Become Realtors; Broker Says 'Persecution' for His Advocacy of Strauss Bill Caused Imprisonment". The New York Times. New York City, New York. September 7, 1926. p. 6. Retrieved April 12, 2017.