Broke at the Broker's

In 1957 Mrs. Bertha Hecht, a 66-year-old widow in San Mateo, Calif., turned over her inherited portfolio of blue-chip stocks worth $533,161 to a representative of Wall Street's venerable Harris, Upham & Co. Seven years later, she found her fortune cut in half. She is still fighting to recoup her losses.

Last week, after four years of legal battles, a "conduct committee" of the National Association of Securities Dealers found the brokerage house guilty of failing to "exercise proper and adequate supervision" over its San Francisco branch. The committee ruled that Harris, Upham be fined $50,000 and that the San Francisco office manager, Arthur R. Mejia, be suspended for five days and fined $5,000. In addition, Asa V. Wilder, the broker who handled Mrs. Hecht's account and who has since left the firm, was fined $10,000 and had his registration revoked. Harris, Upham has 30 days to appeal the decision to the N.A.S.D. board.

Earlier this year, a California federal court judge, William T. Sweigert, claimed that if Mrs. Hecht's portfolio had been left untouched from 1957 to 1964, its value would have increased from $533,161 to $1,026,775. Instead, her account plunged to $251,308. The judge found that Mrs. Hecht's account had been "grossly and unfairly churned" by more than 10,000 transactions in an effort to generate commissions. Judge Sweigert therefore ordered that the firm pay Mrs. Hecht $504,391 in damages. Harris, Upham is appealing that decision.

In any event, Mrs. Hecht paid Harris, Upham a total of $232,000 in commissions and interest on margin loans. Not surprisingly, the California widow was one of Harris, Upham's best customers in that state; in fact, for seven years she accounted for 4.7% of the San Francisco office's revenue.

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