The evening times. [volume] (Grand Forks, N.D.) 1906-1914, 1909-06-17

pIiCe OI IHe SeCuflLleS lnVOlVeQ. we
do not think that it is wrong to agree
to sell something that one does not
now possess, but expects to obtain
later. Short sellers endeavor to select
times when prices seem high in order
to sell. and times when prices seem
low in order to buy, their action in
both cases serving to lessen advances
and diminish declines of price. In
other words, short-selling tends to
produce steadiness in prices, which is
an advantage to the community. No
other means of restraining unwar-
ranted marljng up and down of prices
has been Suggested to u.s." The COM
mittee here calls attention to the New
York law of 1912 which declared void
all short sales, and to the law of 1858
repeating the act of 1912 and legaliz-
ing short sales.
Manipulation of prices is divided by
the committee into two classes: first,
that which is resorted to for the pur-
pose of making market for issues Of
new securities, and second that which
is designated to serve merely specu-
latiye purposes in the endeavor to
make profit as the result of fluctua-
tions which have been planned in ad-
vance. The report then says:
"The first kind of manipulation has
certain advantages, and when not ac-
companied by matched orders is un-
Objectionable per Sc. 1t Is essential
to the organization and carrying
through of important enterprises such
as large corporations, that the organ
izers should be able to raise the money
necessary to complete them. This
can be done only by the sale of Sc
curities.
Manipulation.
"The second kind Of manipulation
is undoubtedly open to serious criti-
cism. 1t has for its object either the
creation of high prices for particular
stocks. in order to draw in the public
as buyers and to unload upon them
the holdings of the operators, or to
depress the. prices and induce the pub
lie to sell. There have been instances
Of gross and unjustifiable manipula-
tion of securities, as in the case Of
American ice stock. While we have
been unable to discover any complete
remedy short of abolishing the stock
exchange itself, we are convinced that
the exchange can prevent the worst
forms of this evil by exercising its
influence and authority over the men,
bers to prevent them. When continu-
ed manipulation exists it is patent to
experienced observers"
Severe condemnation of matched
orders" is expressed. I'VE refer" the
tions engineered by some manipulation,
who sends number of orders simul-
taneously to different brokers, some to
buy and some to sell. Since they are
legal and binding. we find difficulty
in suggesting legislative remedy. But
where the activities of two or more
brokers in certain securities become so
extreme as to Indicate manipulation
rather than genuine transactions, the
officers of the exchange would be re-
miss unless they exercised their in
fluence and authority upon such men,
bers in way to cause them to desist
from such suspicious and undesirable
activity.
Market Corners.
"The subject of corners in the stock
market has engaged our attention. The
stock exchange might properly adopt a
rule providing that the governors shall
have power to decide when a corner
exists and to fix settlement price,
so as to relieve innocent persons from
the injury or ruin which may result
therefrom. The mere existence of
such rule would tend to prevent
corners"
The board of governors of the stock
exchange should improve present con-
\. wi %~ f1s1 40
brokers, according to the committee.
1t is suggested that the books of men,
hers of the exchange should be sub
ject to periodic examination under
rules to be prescribed by the exchange.
1t is declared further that when a
broker sells a customers securities
for his own benefit: he should be held
guilty of larceny and a statute to that
effect is recommended. 1t is set forth
also that rules should be made to pre-
vent dealing for any clerk or subordi-
nate employe of bank or other
moneyed corporation. More stringent
requirements for the listing of securi-
ties on the stock exchange are advo-
Gated. among them that the exchange
should exact statement showing how
much of the stock of the company has
been issued for cash and also showing
what commission has been paid to the
promoters. The unlisted department.
except for temporary issues, should
be abolished. says the committee. It
is in the unlisted department that
stocks OF certain companies which
have not supplied all information de-
sired by the exchange are traded in.
The passage of statute is advocated
providing that in case any purchase or
sale by a broker was not actual and
bona fide. the customer shall recover
three times the amount of the loss he
sustained thereby Preservation of
the sheets of the exchange clearing
house for six years is recommended.
1t is also recommended that trading
on the exchange be done on the basis
of a reasonably small unit. say 100
shares of stock and that bidder for
more than 100 shares be required to
accept offers in the 100 share units.
This, 1t is held, would tend to prevent
matched orders.
The committee does not favor the
incorporation of the stock exchange
holding that under existing condi-
tions. being voluntary organization.
it has almost unlimited power over