Loser

Having spent a fortnight questioning those who might have profited from the $5,000,000,000 evaporation of U. S. investment trust assets between 1929 and 1936, the Securities & Exchange Commission's Inquisitor David Schenker last week turned his attention to a notable loser. Up to the witness stand in Washington's SEC building stepped tall, lank Vice President Charles Franklin ("Boss") Kettermg of General Motors Corp.

A genius when it comes to a gasoline motor, Multi-millionaire Kettering is No. 3 man in the world's largest automobile concern, runs GM's great research laboratories. From last week's testimony, however, it soon became clear that he is a better inventor than investor. To Mr. Kettering, in the spring of 1930, went two hale fellows, Ralph W. Simonds.of Baker, Simonds & Co. and Luther D. Thomas of Detroit's Fidelity Trust. They and their firms were sponsoring an investment trust called Yosemite Holding Corp. On their recommendation "Boss" Kettering bought through them 40,000 shares of Yosemite at $6.50.

Under the agreement the stock was to come from the company's treasury. But did Scientist Kettering know, asked Inquisitor Schenker, that only 30,000 was thus withdrawn, that Messrs, Simonds & Thomas went into the open market to buy the other 10,000, thereby running up the price and improving their waterlogged position; that the stock for which he paid $6.50 per share was sold to them by the company for only $5.95. Inventor Kettering sputtered a shocked: "No!" There were some other things which Mr. Kettering evidently did not know about a venture into which he had sunk $260,000.

Inquisitor: How was it, Mr. Kettering, that you became a member of the Yosemite board of directors?

Inventor: I can't say.

Inquisitor: Do you mean that you do not know how you became a member of the board?

Inventor: No, I do not, and I have tried to find out how it happened.

Inquisitor: Did you take any part in the management of the company?

Inventor: No.

Those who were responsible for Yosemite's management, revealed Inquisitor Schenker, had sold out in 1932 to Equity Corp., which the same year clever Wallace Groves had begun to piece together mainly from broken-down trusts (TIME, Aug. 10). For his 40,000 shares of Yosemite Inventor Kettering received in exchange 20,000 shares of Equity, which he later disposed of for $1 a share.

Did Inventor Kettering know that Promoter Groves had managed to swap his 327,000 shares of Yosemite for 1,150,000 shares of Equity Corp. stock, asked SEC's counsel? The answer was "No."

Inquisitor: All you know is that you came in with $260,000 and went out with $20,000?

Inventor: It wasn't very profitable.

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