[net.invest] E F Hutton

wmartin@brl-tgr.ARPA (Will Martin ) (05/31/85)

What was so bad about what E. F. Hutton did? As far as I have seen, from the 
limited news coverage of the incident or practice that I have seen, they did
nothing more than sensibly manage their assets, by controlling their use of 
float. What I have heard is that no one or no organization was actually
*harmed* by their actions; just that certain banks MADE LESS INTEREST than
they would have had, if THEY had done the controlling, like they do to all
of us, instead of being under the control of this other entity (Hutton).

What could possibly be wrong with that? It seems "turnabout is fair play",
to me. Maybe I know too little about just what was done, but it certainly
hasn't been made clear that, if I owned Hutton, I would have disapproved
of what the people did -- it seems like they did what they SHOULD, to 
maximize return to the company by handling their money with knowledge
and skill.

I'd appreciate seeing postings explaining what was WRONG with what Hutton did.
(NOT just what was "illegal" -- illegality has nothing to do with 
"rightness" or "wrongness" any more, especially in laws relating to 
financial or business practices, which are totally artificial constructs
with no grounding in morality.)

Regards,
Will Martin

USENET: seismo!brl-bmd!wmartin     or   ARPA/MILNET: wmartin@almsa-1.ARPA

z@rocksvax.UUCP (06/04/85)

What EF Hutton did was something call "check kiting."  It is illegal.  It is
effectively obtaining a loan from an institution or individual without their
consent.  Many people who work in financial institutions are fired each year
specifically for kiting funds.  It is a suprisingly common form of *FRAUD*.

//Z\\
James M. Ziobro
Ziobro.Henr@Xerox.ARPA (soon to be Ziobro.Henr@Xerox.COM)
{rochester,amd,sunybcs,allegra}!rocksvax!z

john@hp-pcd.UUCP (john) (06/12/85)

<<<

   The reason that EF Hutton was caught was because some small bank had the
audacity to bounce one of their checks simply because they didn't have enough
in their accounts to cover it. (I think it was for around $8 Million). Furthur
investigations revealed that this was happening on regular basis and that most
banks would honor any such checks knowing the EF Hutton would soon be 
depositing enough money to cover it. 





John Eaton
!hplabs!hp-pcd!john