Embezzlements and defalcations in brokerage firms;

              Embezzlements and Defalcations in Brokerage Firms
BY HAROLD V. PETRILLO Partner, New York Office
Presented before Accounting Division of the Association of Stock Exchange Firms, New York — March 1960
ALTHOUGH the subject matter of this brief talk is about embezzle-
merits and defalcations, I shall fall back on an accountant's cliché and mention that the nature of a discussion such as this, however, is necessarily critical.
By that I mean that twelve years ago I spoke to this Division on the same topic, apparently with little or no effect. A dozen years ago I described the average embezzler, the average amounts of short­ages,
the average years of employment; all statistics have been very capably prepared and made available by the bonding companies.
We haven't learned our lessons very well and, unfortunately, since that time, conditions have deteriorated; they have worsened because we are undoubtedly in a period of moral degradation. This lowering of moral standards is evident when we contemplate the television quiz shows—the finest medium of electronic communication today—foist­ing
dishonor upon us in the guise of entertainment.
There is still another further weakening of our nation's morals, evident in the get-rich-quick promoter and his appeal to our greed for easy profits. This is so serious a problem that in the annual report of the New York Stock Exchange for 1959, G. Keith Funston, Presi­dent
of the Exchange, wrote, "The Exchange Community has waged a continuous fight against the dishonest element on the fringe of the securities business who pose a problem for the investing public and reflect on the responsible members of our industry."
It becomes evident that the Association of Stock Exchange Firms and particularly the Accounting Division can make a tremendous con­tribution
to the future of Wall Street by taking constructive steps in this area. It could be construed that only the reliance the Securities and Exchange Commission places upon the New York Stock Ex­change,
the National Association of Security Dealers, and other Na­tional
Securities Exchanges has saved the brokerage industry from more drastic regulation.
Consider the publicity that the last two embezzlements have re-cieved and imagine the difficulties of operation if the same type of
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