Questions on Meese’s Stock Profits Heard

Atty. Gen. Edwin Meese III’s investment manager allocated stock-trading profits to Meese’s brokerage accounts under a procedure that a senator said today raises questions of “possible financial favors or gifts” to the Cabinet member.

In a report by its Democratic majority staff, the Senate Subcommittee on Oversight of Government Management said stock trader W. Franklyn Chinn pooled Meese’s money with that of several other customers in 1985 and 1986 and, after completing stock trades, assigned profits or losses to the attorney general’s account.

The report said it appears that in seven instances, Chinn allocated stock trades to Meese’s account in amounts exceeding the balance available in the account to pay for those trades.

Chinn turned a profit of nearly $40,000 for Meese on a $50,000 investment in just 23 stock trades over a 19-month span, the report said.

Chinn “wasn’t investing Mr. Meese’s money as much as he was assigning profits and losses to the accounts of Mr. Meese and his other clients at his own discretion,” Sen. Carl Levin (D-Mich.), the subcommittee’s chairman, said in a letter to the Office of Government Ethics.

Retroactive Assignment

Chinn’s “assignment of stock transactions retroactively to those accounts appears to have no relationship to the amount of money in those accounts,” Levin continued.

“Because he did not allocate winners and losers to his clients’ accounts until after the fact, he was effectively able to assign greater benefits to some--including apparently Mr. Meese on numerous occasions.”

The procedure “raises questions about possible financial favors or gifts, about possible conflict of interest, (and) about the judgment of the attorney general in being involved in a partnership with a director of a company (Wedtech Corp.) which Mr. Meese had directly assisted when he was working in the White House as counselor to the President,” Levin said.

Levin asked the ethics office for a formal finding as to whether Meese has complied with federal regulations governing gifts and loans to public officials and whether he has violated an executive order prohibiting the appearance of a conflict of interest.

The report said that in one instance, Chinn bought and sold 5,000 shares of a new stock issue in Oliver Stores Inc. worth $30,000 on Feb. 11, 1986.

It wasn’t until the next day, however, that Chinn instructed Imperial Trust Co. where one of Meese’s accounts was established, that 2,000 of the shares were to be recorded for Meese’s account. The transaction gave Meese a profit of more than $1,700.