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/ Wed. Dec. 16, 1970 - Plaindealer - Sec. 1 Pg. 12 w McCLORY REPORTS From W ashington Some 6,000 customers of the First Devonshire corporation would be left out in the cold under a bill providing secur­ ities investor protection-unless the New York Stock Exchange makes good on its commitment to indemnify them. The recent near collapse of Goodbody and company, with threatened losses to its 225,000 customers, brought to public attention the shaky conditions of many brokerage firms. In­ deed, the trading privileges of a number of other member firms were suspended because of their unsound financial conditions -- or practices. When the First Devonshire corporation was declared bank­ rupt earlier this year, the cus­ tomers, many of whom reside in the 12th Congressional dis­ trict, were threatened with sub­ stantial losses. Furthermore, in the bill before Congress, these customers have been o- mitted from the plan to protect present and future customers of brokerage firms belonging to national stock exchanges. The magnitude of the prob­ lem is revealed by the fact that an estimated $2 billion of customers' money is on deposit with brokers belonging to the New York Stock Exchange. As a further example, it is report­ ed that customers' securities valued at $18 billion were being held recently by a single large brokerage firm. Following the collapse of Ira Haiq>t and Co., in 1963, the New York Stock Exchange establish­ ed a trust fund intended to indenpiify customers of mem­ ber brokerage firms against fi­ nancial losses. After commit­ ting approximately $55 million in recent days, the fund is a- bout exhausted and the trustees of the New York Stock Exchange Trust Fund declined to recog­ nize claims of First Devonshire customers and of two other firms.t In order to avoid possible future losses, the House of Representatives passed the Se­ curities Investor Protection Act of 1970. This measure estab­ lishes a semi-public corpora­ tion with five directors appoint­ ed from the stock exchanges, and two directors to be named by the President, to adminis­ ter a trust fund sufficient to meet individual customer's claims of not more than $50,000 each. The trust fund, not to exceed $150 million, would be financed by assessments based on gross revenues of securities firms. In the event borrowings from the U.S. Treasury would be required, the board of direc­ tors would be augmented to eleven members with a major­ ity of "public" directors to be appointed by the President. The legislation has strong support from the Administra­ tion, as well as from the stock exchanges, and from both the Republican and Democratic lea­ dership in the Congress. The one question left in lim­ bo is the plight of the 6,000 customers of First Devonshire corporation. Many of these cus­ tomers were served by Alvin Epstein, a resident of Highland Park who, until recently, was manager of First Devonshire's Chicago office. Denial of pro­ tection to these investors, while providing full indemnification to the customers of Goodbody and company and nine other broker­ age firms, was unacceptable to the House of Representatives. , Mr. Epstein came to this mem­ ber in Washington in their be­ half. In the course of the debates, the chairman of the House Sub­ committee, Congressman John Moss of California, gave as­ surances that in connection with the enactment of the Securities Investor Protection Act of 1970, the officers of the New York Stock Exchange had given a "firm commitment" that the customers of the Firs^ Devon­ shire Corporation would be in­ demnified. These assurances are consistent with equity and justice. This is particularly so since First Devonshire's cus­ tomers themselves contributed to the trust fund from which in­ demnification of customers of other member firms was pro­ vided. As indicated earlier, the cus­ tomers of First Devonshire corporation may be out in the cold - at this moment. However, if officers of the New York Stock Exchange should fail on their "firm commitment," things could become quite hot on Wall street. your Christmas store COAT /lAONTC^O/WERY McHENRY MARKET PLACE spurgeons SALE THIS WEEK ONLY! 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Lazy Daisy: Bath $2.50 - Hand $1.50 • Wash Cloth 70c • Fingertip 79c - Bath Mat $4.50 Blue/Green on White Pink/Orange on White, Red/Blue on White, Black/ Brown on White. Many other Gift Boxed Towels o By Fieldcresf. SPECIAL! SUPERB MINK-TOPPED SUEDE COATS SPECTACULAR AT OUR TINY PRICE! This is the status-look coat you search * for, here, at this hard-to-believe low price! Our fashion aristocrat in genuine suede flaunts a wedding-ring collar of lush natural mink. Carefully tailored with side slits, pockets. Taupe, grey, beige or dark brown. Misses' 8 to 20. Furs labeled for country of origin of ̂ imported furs. / 55 WARDS Rt 14 - Crystal Lake