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August 15, 1968 - Image 66

Resource type:
Text
Publication:
The Michigan Daily, 1968-08-15

Disclaimer: Computer generated plain text may have errors. Read more about this.

Page Six

THE MICHIGAN DAILY

Thursday, August 15, 1968

Pa e.i.T EM.H GA.AI YT h rd..A u ut.. 1 6

_F- _________ ___________

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LEAKS SECRET:
Merrill Lynch charged with fraud

American Airlines
Bank of the Commonwealth
Burroughs Corporation
Continental National
American Group
Detroit Bank and Trust
Company
Ernst & Ernst
Ex-Cell-O Corporation
Federal-Mogul Corporation
Ford Motor Company
General Motors Company'

J. L. Hudson Company
Kelly Services
S. S. Kresge Company
Kroger Company
Lockheed Aircraft
Corporation
Lybrand, Ross Bros.
& Montgomery
Michigan Bank
Mobil Oil Company
Montgomery Ward &
Company
National Bank of Detroit

Peat, Marwick, Mitchell
& Company

Price Waterhouse
& Company
Ross Roy, Inc.
Rutten, Welling &
Company
Touche, Ross, Bailey
& Smart
U. S. Government (Internal
Revenue Service)
Vickers, Inc.
Arthur Young & Company

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The firms listed above will provide University of Michigan un-
dergraduate juniors interested in Business Administration with
an opportunity to be employed as a member of their manage-
ment organization in between academic semesters. Students
who qualify will be ppid an average of $550 per month.

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WASHI4GTON ()-The Se-
curities and Exchange Commission
has leveled fraud charges against
Wall Street's biggest securities
firm on grounds that it leaked a
big-money secret only to certain
major investors.
The regulatory agency set no
date Tuesday when it announced
hearings would be held on char-
ges by its staff against the na-
tion's biggest and best known
broker-dealer, Merrill, L y n c h,
Pierce, Fenner & Smith.
Nine officers and five salesmen
of the firm, as well as 15 insti-
tutional investors-the alleged
receivers of the hot tip from Mer-
rill Lynch-also were called on
Ithe carpet.
The investors included the Mad-
ison Fund and Dreyfus Corp., top
mutual funds.
"We are convinced that none
of our people acted wrongfully and
you can be sure we will defend
our position vigorously," Merrill
Lynch said in a statement issued
in New York.
John Haire, chairman of An-
chor Corp., into which Investors
Management Co., one of the cited
firms, was consolidated recently
said: "To the best of our knowl-
edge, we did not receive any non-
public information regarding
Douglas Aircraft from Merrill
Lynch which was not available to
us from other sources."
According to the SEC, Merrill
Lynch was helping Douglas Air-
craft Co. prepare a bond issue
when it learned the big plane-
builder's earnings, contrary to
earlier optimistic reports, were in
bad shape.
The SEC version of what fol-
lowed is that this word passed
through the Merrill Lynch per-
sonnel to a chosen few investors
and that immediately thereafter
these began to sell off their hold-
ings in Douglas in the expecta-
tion that its value was about to
drop.
Meanwhile, the regulatory
agency said, other Douglas share-

Maddox leaves the convention,
vows opposition to 'liberals'

4

owners were left in the dark-
indeed, Merrill Lynch continued
to sell Douglas to anyone w h o
wanted to buy, the SEC said.
The dumping lasted half a
week-until June 24, when Doug-
las publicity announced it might
be faced with a no-profit year.
During the unloading, the SEC
said, the large investors it has
cited cleared their portfolios of
190,000 shares of the unwanted
stock. An informed source said

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FOR IMMEDIATE INFORMATION-
CALL TODAY FROM 1:00 p.m. to 8 p.m.-761-6536

CHICAGO P) -- Gov. Lester
Maddox withdrew as a candidate
for the Democratic presidential
nomination yesterday and headed
back to Georgia promising to
campaign against the party's
nominee in the general election.
As Maddox endedhish10-day
candidacy, which never had the
support of more than a handful
of Democratic National Conven-
tion delegates, he sought without
success to withdraw convention
credentials of Georgia regulars
who agreed to sit alongside a
rival slate headed by Negro State
Rep. Julian Bond.
Maddox denounced the conven-
tion's decision to split Georgia's
votes evenly between Bond's slate
and the regulars he and State
Chairman James Gray had select-
ed. About one-third of the 64
regulars had walked out Tuesday
night when the convention adopt-
ed the compromise seating plan.
At a news conference, Maddox
said he talked Tuesday night
with former Alabama Gov. George
C. Wallace. He left open the pos-
sibility he would campaign openly
*or Wallace's third-party presi-
dential bid, saying he would have
an announcement next week.
"I'm not going to oppose George
Wallace," he said. "... I so advis-
ed him last night."
Maddox, asked whether he
would support Republican presi-
dential nominee Richard M. Nix-

these shares sold for some $4.5
million more than they would
have brought if traded at the
price that prevailed June 29.
To reward Merrill Lynch for
sharing the secret with them, the
SEC said, the favored customers,
when making subsequent large.
transactions with other firms,
would direct that the commissions
be split, part going to Merrill
Lynch.
In Wall Street parlance, t h i s

is a "give up," a practice the SEC
has already drawn a bead on in
hearings it opened in July. The
New York Stock Exchange,
formerly a defender of give ups,
announced recently it was pre-
pared to see them banned.
Merrill Lynch personnel cited
were Winthrop Lens, chairman of
the executive committee; Gillette
K. Martin, senior vice president;
seven vice presidents and f i v e
salesmen.

on, replied: "I wouldn't leave the
Democratic party, the state party1
anyway."
He decried Democratic liberals1
as "socialists who have surrend- '
ered to the beatniks, the criminalj
element of this country, the mis-
fits and the misguided."
Standing beneath seven huge
American flags in the C o n r a d'
Hilton Hotel's ornate Grand Ball-
room, Maddox referred to the
party's leaders and said "in obed-
ience to God and loyalty to my
country, I denounce them . .. " I

the convention credentials of all
the delegates he and Gray ap-
pointed. But, Johnson said, par-
ty officials refused on grounds a
delegate's credentials could not
be withdrawn after he had been
forinally certified.
Biafra braces
for assault
LAGOS 0P) -- Federal spokes-
men said yesterday the Nigerian

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"I'm not going to support any army was advancing on all fronts
of the liberal nominees in the gen- after the supreme commander,
eral election," the balding gov-
ernor said, adding that all present Maj. Gen. Yakubu Gowon, order-
candidates for the Democratic ed a final assault to crush secess-
nomination fall into his category I ionist Biafra.
of liberal. "The final assault has begun,"
He replied "Yes, sir" when ask- said a Gowon aide. He did not
ed whether he would oppose, and divulge details of the fighting.
campaign against, Vice President The Biafrans claimed in a radio
Hubert H. Humphrey, the party's broadcast that they stopped cone
likely nominee, federal column nine miles south
Maddox, who, had resigned as of Aba, their main administrative
a convention delegate Monday, and communications center, and
said he and some of Georgia's pushed another column back to
regulars were returning to At- the Imo River 15 miles south
lanta by plane yesterday after- of the town.

r
7

noon.-
When the convention opened its
Wednesday session, 37 of the reg-
ulars took their seats on the floor
with Bond's slate.
One of the regulars, State Seri.
Leroy Johnson' of Atlanta, said
Maddox had tried to withdraw.

They also claimed Biafran
troops forced federal troops to re-
treat 40 miles north of Aba into
the sector controlled by Nigeria's
1st Division.
The Biafrans said they were
under "indiscriminate and heavy
bombardment on all fronts."

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Maddox had tried to withdraw bombardment on all fronts."
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WAWAr'J S~llrII

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