March 22, 1971
Subject: Samuel H. Sloan (File #8-15750)
120 Liberty Street
New York, N.Y.
(NY-4804)
During the course of the examination of the subjects books and records, I noted the check #292 dated March 1, 1971 in the amount of $33,387.50 was paid and the checkbook indicated no explanation of the entry.
Upon questioning Mr. Sloan regarding this item, he said that a Mr. Joseph Iny of Wayne, New Jersey had advanced to Mr. Sloan some $58,175.00 with a view towards forming a partnership. Mr. Sloan further stated that he and Mr. Iny never consummated this partnership and the above mentioned check was a partial return of Mr. Iny's capital.
As a result of my findings, I charged $58,175.00 as loans payable instead of capital, as reflected by subject.
Analysis of the trial balance as at February 26, 1971 reflected the following capital position:
Net Current Capital $28,193.84
Less: 30% market value of
proprietary securities $36,193.80
Less: Prescribed % of Fail Penalty 1,821.00 38,014.80
__________
Adjusted Net Capital (Deficit) (9,820.96)
Aggregate Indebtedness $122,808.00
Required Adjusted Net
Capital (20:1) Ratio 6,140.00 6,140.00
__________
Total Deficiency $15,961.36cc: James J. Todd
George W. Brandt, Jr. _______________________
Sheldon G. Kanoff
Securities Investigator
The above memo, which I obtained through the Freedom of Information Act, is one of the many outrageous things which happened to me while I was a registered Securities Broker/Dealer. Sheldon G. Kanoff, the Securities Investigator, did not even have a college education. He also had no special background or training in accounting, bookkeeping or securities. Yet, on the basis of a remark which he claims that I made (I have no recollection of making such a remark) Kanoff wrote $58,175.00 off of my capital, thereby putting me into a net capital deficiency, even though, according to his own figures, I had a net worth of $28,193.84.
His numbers make no sense. In addition, what happened on March 1, 1971 had nothing to do with my net capital on February 26, 1971. What really happened is that Joseph Iny sold 1000 shares of Kaiser Steel on settlement date March 1, 1971 for 33 3/8 per share. This is the reason I had paid him $33,387.50 on that date. This transaction had nothing to do with any "loan payable."
The truth was that Joseph Iny was a wealthy Iraqi Jew living in Deal, New Jersey. He was also a stockbroker with Granger & Co., a member of the New York Stock Exchange. However, Mr. Iny did not have any clients. All of his trades at Granger & Co. were for his own account. I know this because the broker who sat next to him was Saul Ronheim, a chess player and my personal friend. Joseph Iny was a man whom I had met at Charlie Hidalgo's Chess House on 72nd Street. He was a backgammon player.
Saul Ronheim had brought Mr. Iny into Granger & Co. Because Mr. Iny had no actual clients, he was being required to pay full New York Stock Exchange commissions at Granger & Co. for his own trades. Mr. Iny was addicted to Kaiser Steel Corporation, and all of his trades were in the stock of that corporation.
Mr. Iny's father, who had given Mr. Iny all of his money, was trying to cure this addiction. He made his son promise never again to buy stock in Kaiser Steel. Otherwise, he would take all his money away. The son dutifully promised to do this, but then he would secretly come over to my office and buy Kaiser Steel through me.
This was a violation of the rules of the New York Stock Exchange, because a broker such as Mr. Iny who worked for a member firm of that exchange was required by NYSE rules to put all his trades through his employer. However, I was not a member of that exchange and was not bound by those rules.
Mr. Iny believed that he was under investigation by the IRS. I have no idea whether this was true, but he had an almost paranoid fear of the IRS. This was another reason why he funnelled some of his trades in Kaiser Steel through me.
Tragically, in 1971, at about this time, one of his two sons, a boy of about 6 or 7 years, was hit and killed by a passing motorist in front of his home in Deal, New Jersey. Mr. Iny used this tragedy as an excuse for some of his improper actions.
When Granger & Co. found out that Mr. Iny was trading in Kaiser Steel shares through Samuel H. Sloan & Co., Mr. David Granger notified the New York Stock Exchange, which instituted disciplinary proceedings against Mr. Iny. Mr. Iny was eventually sanctioned and given a short suspension.
Apparently, Mr. Iny believed that if he complained to the S.E.C. against me, the S.E.C. would intercede with both the New York Stock Exchange and the IRS and stop the proceedings against him.
This entire incident, which really boiled down to nothing, was the sole basis for the SEC's entire case against me. The SEC under Chairman Casey and his right hand man Stanley Sporkin had assigned a fundamentally dishonest and crooked young attorney named William Nortman, who always lied, to prosecute a case against me. They were not willing to admit that they had no case. If fact, nobody other than Mr. Iny ever made a complaint against me. Mr. Iny did not have a valid complaint, either. I had given him all his stock. He always got paid on the settlement date. Moreover, he had made a lot of money, when Kaiser Steel later went up to the 58 range. I did not even charge him a commission on his trades. I was not required to do so, because I was a not a member of a national securities exchange. I had made no profit, thinking that he was a friend. Yet, he later testified against me twice.
Moreover, nobody made any other complaint against me. I honored all of my contracts. Nobody has ever accused me of any sort of fraud, embezzlement or any other improper actions. Everybody got paid, on the correct date. I did not become insolvent or go into receivership. I stayed in business for another four years. Nobody has ever claimed that they lost even one penny because of me or my firm. Meanwhile, other brokers were going bankrupt to the extent of millions of dollars, to be bailed out by the federal government at the taxpayer's expense, and no case was ever brought against most of them.
The case against me, which is filled with lies perpetrated by William Nortman, Thomas Bierne and Jerome Selvers, is reported as SEC v. Sloan, 369 F. Supp. 996 (1974). In spite of the impressive sounding list of accusations against me, I still have my books and records from that time and I can still prove that every one of these allegations is false.
Indeed, it was the SEC which was engaging in fraud, lying and illegal activities at that time, not me. Attorneys working for the SEC at that time have since admitted and even testified that they were taught and trained in how to lie in courses and classes given under Casey and Sporkin.
If anybody wants to help me with my lawsuit, I want to sue Stanley Sporkin and the rest of his crooked friends for one billion dollars. It will be a tough case to win, because Sporkin is now a federal judge in the Washington, DC Circuit. Casey, who later became Director of the CIA, is dead. I just hope that they remembered to drive a stake through his heart before they buried him.
Sam Sloan