Evening star. [volume] (Washington, D.C.) 1854-1972, 1912-02-09
AID FOR INVESTORS
Commissioners Want ''BIue
Sky" Law Passed.
EARLY ACTION REQUESTED
Would Regulate Sale of Stocks Not
Listed on Exchanges.
HAS WORKED WELL IN KANSAS
Measures Passage Would Add to
Duties of Superintendent
of Insurance.

/ Similar in it's general provisions to the
| blue sky law of Kansas. a bill to pro-
| tect investors in stocks, bonds and other
! securities in the District was forwarded
! today to the chairmen Of the Senate and
| House District committees by the Com
| missieners, with request that Congress
take early and favorable action thereon.
I The object of the bill is to regulate the
selling offering for sale or negotiating for
sale of stocks bonds and other securities
of partnerships, companies or corpora
| lions which are not listed on the New
York Stock Exchange or the Washington
Stock Exchange, and whose affairs are
not supervised by federal or local au-
thorities.
/ The bill seeks to preclude such con-
Germs as deal in mining stocks without
value, or stocks without any real value in
enterprises organized solely with intent
to procure money by falsely promising
large returns, and, though ostensibly is
sued to promote the concerns to be float
ed or organized, are really only for the
profit of the promoters.
Bill Carefully Prepared.
For several weeks the preparation Of
the bill has been matter to which the
commissioners have given considerable
attention. Need of the proposed legisla-
ZION was suggested to Commissioner Ru-
dolph by George Gall" secretary of the
Retail Merchants Association, last fall.
Corporation Counsel Thomas was in
structed TO prepare the measure.
Although the legislation proposed is
81
kansas is the only state in the Union
that has adopted blue sky law. The
law has been in operation there for two
years and is said to have worked sue
cessfuly. 1t is believed that other states
Will follow Kansas lead
The bill transmitted by the Commits
sioners to Congress contains an adap-
tation Of the British corporation acts.
in reference to the issuance of pros
pectuses and the liability of directors
and promoters. Concerning this fea-
ture the law, as proposed, does not
require the issuance Of prospectus.
prospectus is issued by requiring the
same to be registered with the super
intendent of insurance. 1t purports to
make every prospectus contain a re-
liable statement Of the affairs OF the
company.
If enacted into law the bill will in
crease the duties of the District SUI
perintendent of insurance. Section IL
constitutes this official attorney in
fact of every foreign corporation SUBJ
ject to the provisions OF the act. In
section IL the superintendent of in
surance, his deputy or agent, is given
authority to summon witnesses and to
provide the necessary machinery for
obtaining testimony and the punish
| ment Of willful, corrupt and false
swearing.
License Would Be Required.
Section Z makes the sale Of stocks,
bonds. or other securities null and void
unless a revocable license be obtained
from the superintendent of insurance,
provides for fees to be paid and the reyo-
cation of the license after affording an
opportunity for a hearing.
Several penalties are provided for viola
tons of the act, the bill providing that
prosecutions shall be brought in Police
Court.
The paragraphs providing punishment
for offenses are the following:
Section 15. Any person who shall
knowingly receive any commission or
compensation for selling. offering for sale
or negotiating any stocks. bonds or Sc
curities of any. copartnership. company
or association. local or foreign corpora
ton required to be licensed under this
act without the previous grant of such
license, or who shall knowingly receive
any such commission or compensation
after the revocation Of such license shall
be punished by fine Of not less than
$40 nor more than $40.
Section 16. Any person who shall
knowingly and willfully issue, publish
or circulate any prospectus or part
thereof which has not been previously
| registered with the superintendent of
insurance upon conviction thereof shall
be punished by fine of not less than
$50 nor more than 800. or by imprison-
ment for not more than six months.
section II. Any person who shall
SELL offer or negotiate for sale any
| stocks, bonds or other securities what
soever not excepted from the provisions
| of this act, without application having
first been made for registration and
license and without license having
been obtained as required by this act
from the superintendent Of insurance,
or who shall knowingly sell. offer or
negotiate any such stocks, bonds or
license, shall be punished by fine of
not less than $3.50 and by Imprisonment
of not less than six, months nor more
than one year..
Exemptions Are. Noted.
Exemptions from the application Of the
law are specifically named in the cases
of United States bonds. bonds Of the Dis
trict Of Columbia, stocks. shares, bonds,
or securities regularly listed on the New
York Stock Exchange or on the Wash
ington Stock Exchange. and stocks,
shares, bonds and securities Of the ex-
copied corporations or companies herein
named, an dnotes secured by deed Of
trust or mortgage on real estate located
in the District of Columbia.
Corporations not organized for profit.
title and title insurance companies local
building associations, local street rail-
way. electric light and power corpora
tions. local gas companies. local tele>
phone companies, savings banks. trust
| companies, guaranty and surety COM
| panies which are, or may hereafter be,
under the supervision of the controller of
| the currency: national banks, telegraph