Word: broker
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...obtains credit for such customers, thus enabling them to buy "on margin." If, for example, an investor buys through a brokerage house 100 shares of U. S. Steel stock at $100 per share, he can either pay the purchase price of $10,000, or he can deposit with the broker $2,000, say, as "margin" and let the broker obtain the remaining $8,000 for him. This the broker does by paying the seller the $10,000 due, and then borrowing the $8,000 from a bank upon the collateral of the stock certificate. Thus most of the stock certificates...
This practice with regard to "margin" stock is unavoidable and is in every way legal and legitimate. But owing to the fact that most brokerage customers do not fully understand the business, it permits unprincipled brokers to sell out their customers' stock as fast as it is purchased&−which is "bucketing." If the customer asks where his stock is, he is told that it is at a bank in a "loan envelope," and he has to take the broker's word for it. The "bucketing" broker profits from this illegal and underhanded practice in two ways...
There is a law in New York State which compels a stock broker to give, on his customer's demand, the name of the other party from whom or to whom the customer's stock was bought or sold. For this reason the bucketshops, which originally never bought or sold anything at all, must legitimately purchase for their customers, and this they almost always do. But the deception which they practice consists in at once selling the same amount of the same stock at as near the same price as possible, for some "dummy" or imaginary account...
...consequently most important, especially during declining or "bearish" markets, for customers to most carefully investigate their brokers' methods of doing business. In this respect, if the broker is a member of the New York Stock Exchange it is a great indication that his business will be honestly handled because of the severe rules of that institution regarding business conduct. Moreover, the customer cannot afford to take the letters of recommendation issued by banks regarding stock brokers too seriously, for the big bucketshops sometimes keep larger sums of money on deposit with a bank than a legitimate brokerage firm. They...
...Company have been silenced for the moment by the clamor about sugar. Wicked men, it would seem, are holding up the price of the consumer's dearest luxury, it is merely necessary to find the wicked men. But the search goes on from producer to jobber and from broker to consumer, each solemnly shaking his head and pointing to his neighbor. The last man in line with some consternation raises his eyes in significant reverence to an economic law. New committees set out on the quest every day with no success. In vulgar circles this game goes by the name...