Bond Blame

In the five-story-high trading room of the New York Stock Exchange, activity ceased one morning last week as Exchange Chairman Edward C. Werle stepped onto the balcony, sounded a bell, pounded his gavel and read a statement. In an action rarely taken, the exchange censured and fined the partners of Garvin, Bantel & Co. $25,000, suspended Senior Partner George K. Garvin from trading for three months.

What the exchange attempted to pin on Garvin, Bantel was some of the responsibility for the debacle in Government bonds this summer (TIME, Aug. 18).

As bond prices began to fall with the prospect of higher interest rates, speculators on thin margins were forced to sell, accelerating the decline. As specialists in collateral loans, Garvin, Bantel was active in financing for private buyers more than $300 million of the 2 5/8% Government issue dumped so heavily by speculators. The exchange charged that Garvin, Bantel had failed to find out full particulars on its customers, to see whether they could commit themselves so heavily, that it had accepted less than the required 5% margin in some cases. Actually, the firm's part in the bond slide was small. It financed only about 3% of the $10.3 billion marketed by the Treasury at the peak of activity. Though Wall Streeters feel that Garvin was singled out among many Street houses that did the same thing, they expect the case to bring tighter regulations, thus prevent any recurrence of speculative dumping.

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