Business Notes Investigations

When E.F. Hutton pleaded guilty last month to 2,000 counts of wire and mail fraud involving kited checks, its top officers denied any knowledge of the wrongdoing. A House Judiciary subcommittee last week produced documents that raised questions about Hutton's claim. Among them was a Hutton memo, apparently addressed to Hutton President George L. Ball, describing "disproportionately high interest . . . from aggressive overdrafting with several branches in the Washington, D.C., area."

Ball, now head of Prudential-Bache Securities, said he received no such memo, only a routine briefing paper in November 1981 that made no reference to any overdraft scheme. Ball and Hutton executives did say that another document mentioning the overdrafting was written in March 1982. By then, Hutton said, the practices had been uncovered and halted. Ball and Hutton claimed that the March memo later got stapled to the November one. The committee, said Ball, / was led to believe that the documents "constituted a single memo addressed to me." Committee members were skeptical. Ohio Democrat Edward Feighan said he doubted that "overdrafts of more than $100 million were not brought to the attention of upper management."