In the Matter of Reynolds & Co.

39 S.E.C. 902 (1960)

From our private database of 46,100+ case briefs, written and edited by humans—never with AI.

In the Matter of Reynolds & Co.

Securities and Exchange Commission
39 S.E.C. 902 (1960)

  • Written by Sharon Feldman, JD


Reynolds & Co. (defendant) was a registered broker-dealer and a member of the National Association of Securities Dealers (NASD) and the New York Stock Exchange. Patrick Coleman (defendant), a salesman in Reynolds’s Carmel office, had trading discretion over four customer accounts. Coleman did not obtain required written authorizations from two customers, effected transactions without the required initialing and approval of a partner, and overtraded the four accounts. William Rice (defendant), Reynolds’s West Coast managing partner and San Francisco branch manager, knew that Coleman traded without approvals. Rice directed that written authorizations be obtained but did not direct monitoring of Coleman’s accounts or initial or approve transactions. Rice and Carmel co-manager Wilfred Aldous (defendant) agreed that trading volumes were unimportant if the accounts were making money. All four accounts sustained losses while generating commissions. In Reynolds’s Chicago office, an employee made unauthorized customer trades and forged customers’ names for over a year. Branch manager Robert Whittaker, employee Elmer Stefany, and partner John White (defendants) knew of circumstances that should have resulted in detection of the misconduct. In Berkeley, assistant manager Wesley Roland (defendant) and other employees made false and misleading statements to induce customers to purchase speculative stocks despite Reynolds’s policy against encouraging speculative investments. Roland failed to tell customers that he was selling his shares and withheld execution of customer buy orders until conduct by Reynolds employees caused the market price to rise. Manager Wilson Dodd (defendant) knew about the speculative-stock recommendations, did not examine the sales literature, and allowed Roland to negotiate trades with other dealers directly by telephone. In Minneapolis, a salesman was given checks drawn on customers’ accounts, permitting misappropriation of customer funds. The Securities and Exchange Commission (plaintiff) instituted proceedings to determine whether to revoke Reynolds’s broker-dealer registration; suspend or expel Reynolds from membership in the NASD or national securities exchanges; and find that Rice, White, Whitaker, Dodd, Aldous, Roland, Stefany, and Coleman (the named individuals) were a cause of any revocation, suspension, or expulsion order.

Rule of Law


Holding and Reasoning ()

What to do next…

  1. Unlock this case brief with a free (no-commitment) trial membership of Quimbee.

    You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 745,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.

    Unlock this case briefRead our student testimonials
  2. Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.

    Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.

    Learn about our approachRead more about Quimbee

Here's why 745,000 law students have relied on our case briefs:

  • Written by law professors and practitioners, not other law students. 46,100 briefs, keyed to 987 casebooks. Top-notch customer support.
  • The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
  • Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
  • Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.

Access this case brief for FREE

With a 7-day free trial membership
Here's why 745,000 law students have relied on our case briefs:
  • Reliable - written by law professors and practitioners, not other law students
  • The right length and amount of information - includes the facts, issue, rule of law, holding and reasoning, and any concurrences and dissents
  • Access in your class - works on your mobile and tablet
  • 46,100 briefs - keyed to 987 casebooks
  • Uniform format for every case brief
  • Written in plain English - not in legalese and not just repeating the court's language
  • Massive library of related video lessons - and practice questions
  • Top-notch customer support

Access this case brief for FREE

With a 7-day free trial membership