program; (2) that a further loss of $1,550,000. was expected in the ship loan portfolio.
With respect to the first of these particulars, Walter Jones interposes his good faith reliance on the February 6, 1969 letter from Deputy Commissioner Wessner which informed him and the Midland Board of Directors that the proxy materials previously prepared by Jones were an adequate and fair disclosure of the Midland Bank's present financial condition and that no specific information concerning the reasons that prompted the recapitalization program need be disclosed to potential stockholders. Although his good faith reliance is not sufficient, as a matter of law, to exculpate Walter Jones from liability arising under the Securities Act, nonetheless it provides sufficient evidence as a matter of fact to negative fraudulent intent. This conclusion is given further support by the lack of concealment which surrounded the preparation of this proxy material and the serious questions concerning its sufficiency by some Midland Directors. If Walter Jones were involved in a clandestine attempt to dupe both the Midland Board and its stockholders concerning the sufficiency of the proxy disclosure, it does not seem reasonable to this Court that he would have caused the correspondence, concerning its sufficiency and the minutes of the Board meeting at which he defended the adequacy of the proxy materials, to be sent both to the New Jersey Department of Banking and the F.D.I.C.
As to the second leg of the failure to disclose with respect to the recapitalization issue, i.e., that another $1,550,000. in losses was expected in the ship loan files, there is no evidence in the record from which the Court can conclusively infer that Walter Jones had such knowledge in February 1969. To be sure, Jones testified that he threw in the towel with respect to the collectability of the K & M loans after the second workout conference failed in Athens in February of 1969. It was Robert Hamilton who claimed more specific knowledge concerning these anticipated ship loan losses but he failed to detail his specific fears when pressed to do so by Walter Jones at the February 17, 1969 Board meeting. Because this attempt by Jones to elicit specific information from Hamilton, which would demand the revision of the January prospectus, may easily be judged a good faith effort by him to obtain knowledge both for himself and the Board that would obligate them to further disclosure, this Court is unable to say beyond a reasonable doubt that Jones possessed the requisite knowledge to formulate fraudulent intent with regard to the recapitalization issue. This knowledge of material facts, essential to adequate disclosure, must be clear and not equivocal for this Court to conclude that Walter Jones is guilty of Securities fraud and for this reason a judgment of acquittal will also be entered for Walter Jones on Counts 9, 10, 11, 12, 13, 14, 15 and 16 of the indictment.
Having come to this conclusion, however, I think it necessary to say with Judge Learned Hand, in United States v. Weissman, 219 F.2d 837, 841 (2nd Cir. 1955), that I should not be understood to commend the conduct found here which Walter Jones himself described as "irregular". The propriety of that conduct may be one thing, whether it is sufficient to demonstrate guilt beyond a reasonable doubt under the strict standard applicable in criminal cases is another. For this reason, Walter Jones cannot be convicted of the crimes charged in the indictment.
This Opinion shall constitute the Court's findings of fact and conclusions of law, as well as its order entering a judgment of acquittal for Walter H. Jones and Peter Moraites.