Business: Out of the Club

On the usually bustling floor of the New York Stock Exchange one morning last week, the stock ticker stopped and 2,000 brokers and clerks stood silently while Chairman Edward C. Werle made an unhappy announcement. For the first time in 22 years the exchange, one of the nation’s most exclusive clubs, was expelling a member for “fraudulent acts which endangered a member firm’s financial position.” The offender: Anton E. Homsey, 53, one of two partners in the Boston firm of DuPont, Homsey & Co. His offense was pledging an estimated $503,000 in securities belonging to three customers as collateral for loans without the customers’ knowledge. The exchange’s last such case was in 1938, when Richard Whitney, five times president of the exchange, was expelled—and later sent to Sing Sing—for pledging customer securities on loans.

Gerald Colby indicated that Homsey had negotiated the loans in order to buy stocks for his own account. Homsey was arrested last month (he is free on $10,000 bail), and his firm was suspended from the Boston, American and New York stock exchanges and placed in receivership. Among the assets: Homsey’s exchange seat, which can be disposed of at the going price (about $143,000).

At that point, according to the 168-year-old practice of the New York Stock Exchange, its responsibilities have always ended—unlike the practice of the London Stock Exchange, which has a fund to protect customers of its members against loss because of fraud. But this time the exchange issued a precedent-setting statement. Said Exchange President Keith Funston: “The New York Stock Exchange feels that its moral responsibilities to these investors are not ended with the act of expulsion.” He hinted that the exchange itself might make up financial losses suffered by Homsey customers, “particularly those of modest means.”