The times dispatch. [volume] (Richmond, Va.) 1903-1914, 1912-02-19
WILDCAT STOCKS.
WILL Be BARRED
Milstead-Old Bill Would Protect
Public From Fraudulent
Concerns.
EXAMINE THEIR ACCOUNTS
Permits to Do Business to Be
Issued Only by State Bank
Examiner.
EXAMINE THEIR ACCOUNTS

lnasmuch as L. w. Milstead. mem
Der or the House OF Delegates from
Newport News, has apparently pilored
his bill for the protection of the pub
lie against fraudulent and valueless
stocks in wildcat compa nies over the
shoals of committees and prior read
inSs and has conducted It we'll on its
journey toward final pa ssaye. an eX-
PLANTATION of It's provisions will DC OF
interest to the public. Curtis l.. Old.
OF Norfolk county. is co-patron with
Mr.. Milstead. The latter saw the meas
urc through its second reading and en-
sroesment on Friday.
All corporations or partnerships or
associations (othor than state and mn
tional banks. trust companies. real es-
tate mortgage companies dealing cN-
clusively in real estate mortgage notes
building and loan associations and cor
| porations not organized for protD.
whose charter and methods CT doing
business Indicate that its capital is
impaired or that 1t is unsafe and jeo-
pardizes the interests of its stock
holders or investors In stocks or bonds
offered by it for sale. are to be known
as investment companies. Those or
ganized in other States are known as
foreign Investment companies.
Must DivuISc Plnns.
Before attempting to sell any stocks
or bonds other than the bonds of the
United States or of Virginia or OF some
municipality in this State, or notes Sc
cured by mortgage on real estate in
Virginia. the concern must file certain
documents with the State Bank EN-
amnor. These must include full de-
tails of the plan upon which, 1t intends
to do business. copies OF its contracts
bonds and other Instruments which
1t proposes To sell, itcmized accounts
of its financial condition. and any other
information which the examiner shall
require. The papers are to be filed
under oath.
Foreign Investment companies must
also file their written consent, ire
rocahlc, that action may be begun
against them In any county or city in
the State where ca use OF action may
arise or where the plalntiff resides. by
serving process on the State Bank EN-
aminer, who Is to this extent the stat
utory agent in Virginia
Examiner Decides on Liccnnc.
These statements are to be eXaIulpcd
by the banking official. and If he deems
It advisable he is TO make a detailed
examination OF such investment COM
pany's affairs. at It's expense. If he
finds that 1t is solvent, that It's plans
and contracts provide q fair, lust and
equitable plan for the transaction OF
business, and In his judgment they
promise fair return on the stocks Of
icred for sale, he is TO issue a state
ment. This shall rccitc that the com
pany has complied with the provisions
of the act by filing It's detailed state
mcnt. which IS in the office OF the State
Bank Examiner for public inspection.
and that 1t is permitted to do business
In this state. But this declaration
snail also recite in bold type, that tho
examiner In no wise recommends the
securities To be offered for sale.
II the bank examiner finds that the
charter or articles OF incorporation.
plnn of business or proposed contract
contain any provision that Is unfair,
unjust, inequitable or oppressive to
any class OF contributor or If con-
WINGED that it does not intend TO do an
honest business nor promise fair re-
turn on The investment then he shall
notify the company OF his findings, aud
1t shall transact no business In this
State until it makes such changes as
he shall demand.
Public Mny Inspect.
Annual reports are TO be flied with
the bank examiner, and agents must
register with him. Double entry &c
counts must be kept and trial balances
be taken at least once a month. AN
books and accounts must be open 10
public inspection during business hours
The bank examiner may make exami-
nations at any time he may sec nj
If lie finds anything radically wrong.
he is to report at once TO the Attorney
General who must apply Immediately
to the Circuit Court of the city OF
Richmond for n receiver.
Heavy penalties are applied to per-
sons who break the law. In all cases
appeals are allowed to the State Cor
poration Commission and then to the
supreme Court
Mr.. AIilstead has learned that Of so;..e
500 applications in Kansas since the
law went into effect, the state Bank
Commissioner has granted only forty
nine permits 10 do business. Rather
than apply after tho nrst year, wild
eat concerns have kept out of the
state, at is said. The effect of the law
is said to have been that only honest
concerns dealing in stocks now desire
TO make the application.