Discipline

When an applicant joins the New York Stock Exchange, he must agree to submit to such penalties for discipline as its authorities may impose, even to the point of expulsion from membership. Just as a private club is not compelled to tolerate the presence of an objectionable member because of legal restraint, so the Exchange, which is a voluntary association, is equally free. Last year, the Exchange authorities called Nathan J. Miller,* senior partner of the Stock Exchange house of Miller& Co., on the carpet. His firm was found guilty of "washing stock,"--i.e., making fictitious sales without real change of ownership--in the shares of the Southern States Oil Company on the Curb Market, and promptyl expelled from the Stock Exchange. Mr. Miller secured a temporary injunction to this order. But this injunction has recently been dissolved by Justice Robert F. Wagner of the N. Y. Supreme Court and the action of the Exchange has thus been fully upheld.

Years ago, a case occurred where the Exchange was not so fortunate; and the petitioning member was allowed, in the teeth of the market's authorities, to return to the floor. However, the law cannot compel one man to trade with another. The broker in question was "sent to Coventry." No one recognized or spoke to him. His bids and offers were ignored and he could do no business on the Exchange floor. After an hour or so, he gave it up and retired from the Stock Exchange as gracefully as possible. Never since that time has the Exchange's power to discipline its members for irregular business methods been seriously threatened by the courts.

*Not to be confused with Nathan L. Miller, onetime (1921-23) Governor of the State of New York, who now practices law (Miller & Otis) in Manhattan.