Pullman herald. [volume] (Pullman, W.T. [Wash.]) 1888-1989, 1912-05-10
PROTECTING INVESTORS

The occasional failure Of com
panies organized for the ostensible
purpose of doing a legitimate bust
ness dependent for it's success upon
the cooperation of individual invest
ors of capital, requires that the peo-
pie look about for means Of protect
ing the investors from unjust or un-
necessary losses These failures may
be brought about by either of two
causes: Dishonest or inudicious
methods followed by the promoters
of the company. Whichever one of
these may be the cause in any par
tcular instance. it is highly fitting
that the government take some ac-
ton looking toward the prevention
of injury to the man who is induced
to invest his money in such enter
prises.
This state has recorded many such
failures in which unwary investors
have been trapped through one or
the other Weaknesses in organization.
Every state in the Union records
them, and there is "A growing move
ment on foot to adopt preventive leg
islation. \ little more than a year
ago the state of Kansas placed such a
Measure on its statute books under
the title, Regulation and Super
vision of Investment Companies in
Kansas. Good reports and bad
come from Kansas regarding the
working of the law. an extract from
which is given below:
Section 2. Before offering or at
tempting to sell any stocks bonds or
other securities OF any kind or char
| acter other than those specifically ex-
empted in section of this act to any
person or persons or transacting any
business whatever in this state, ex-
cepting that of preparing the docu-
ments hereinafter required. every
such investment company, domestic
or foreign, shall file in the office of
the bank commissioner of this state
together with filing fee of $3.50,
the following documents, to-wit: A
statement showing in full detail the
plan upon which it proposes to trans
act business; a copy of all contracts
bonds or other Instruments which Il
proposes to make with or sell 10 it's
contributors. a statement which shall
show the name and location Of the
investment company and an itemized
account of its actual financial condi-
ton, and the amount of its property
and liabilities, and such other infor-
nation touching its affairs as said
bank commissioner may require If
such investment company shall be a
co-partnership or an unincorporated
association, it shall also file with the
bank commissioner a copy of its
articles Of co-partnership or associa-
ton, and all other papers pertaining
to its organization under the laws Of
Kansas it shall also file with the
bank commissioner a copy of its ar
tiCles of incorporation. constitution
bylaws, and all other papers pertain
ing to its organization. If 1t shall be
an investment company organized
territory or government Incorporate
ed or unincorporated it shall also
file with the said bank commi ssioner
a copy Of the laws Of such state. ter
ritory or government under which It
exists or is Incorporated, and also
copy of its charter articles OF incor-
poration, constitution and bylaws,
and all amendments thereof which
have been made, and all other papers
pertaining to its incorporation.
The law further provides that the
legality Of such corporation shall de-
pend upon the finding Of the bank
commissioner regarding the legiti-
macy Of the plans Of business, the
sOlyeDcy Of the company. and the
soundness and equity Of the general
business plan, 1t provides also that
strict account shall be kept OF the
operation of the company, such ac-
count being always open TO the IN
spectiOn of investors and the consti-
tuted government authorities the
latter being empowered at any time
to declare such company in violation
of legal requirements If found to be
jeopardizing the investments OF the |