It was a gimmick meant to prevent accidental opening of the cap when carried in a pocket. The mechanism had two components: a "tongue" under the clip which locked into the grooved section when it was pressed down by the pocket edge fabric. Thus it locks the top of the pen (Lox-Top).
It was integrated in the Chilton Long Island FP in the mid thirties.
Here is a pneumatic Chilton I have in celluloid resembling the Steel Quartz Waterman colors with Lox-Top:
Diagram from the patent from 1934 by Sypher
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