The Calumet news. [volume] (Calumet, Mich.) 1907-1938, 1913-05-17
FIND FLAW IN
BLUE SKY LAW
Banker Declares Act Does Not
Cover Sales by Mail

Lansing. Mich, May ls-The blue SIX
law enacted a, the Ht, leeislatv
session To outlaw wild cai securIuc
and 60 regulate the sale of an kind
OF bonds. stock and Other nyestmeu
rapcr with the idea of prohibiting th
sale % ISSUES or dou0uH value, is de
clared lay bankers anj some others 1,
be entirely madequat, for the pan
poses Tor whios it Is Intended Th0
Irolnt ont that while Tho law viii hol,
strictly accountable Michigan banker
aud brokers whose business is nor
tIostrictod 10 buying ana selling in.
/ NoStm'n. securities. nonresident deaf
. els ana what may be termed itineraur
/ and Ay-by-night securities brokers auo
/ salesmen, can continue To- sell cats and
dogs ami he beyond tie reach Of tH,
law That is So long as they du not
sell, or offer for sale. is~lrS which an,
TalTably fraudulent as defined ay Ga,
i .ostofiCc regulations
/ The new blue sky act saws that uo
: issue Of bonds or othe~ securities can
be put upon the market. in Michigan
until approved BY the state securities
commission, composed OF the state
/ banking commissioner tho state treas
urcr ana the attornov-gonoral and
brokers must paw AN auual license f."
Of $50 and must comply with some
ether conditions.
Zig Loophole Discovered.
So Car as ascertalne1 bond and Sc
curity dealers whose standing ana re-
sponsi5iiity are unquostioned do not
object 10 any Of the conditions. What
ttoy 10 criticize are the omissions
which leaves the door stil wide open
for another class Of dealers 10 continue
doing, without legal let or hiudrance,
specific things which the trainers of
the act contemplated should he sup
pressed by it,
For instance, bankers who have OK
amined the new act say there is moth
ing in il 10 prevent tho selling by cor
rosponicnce through the mails. from
POINTS outside Michigan. of a brand Of
securities the commission might reject
Suppose the commission disapproves =
particular brand, This win mean that
FOR q Michigan banker or broker or
for bond salesman 10 attempt Ia sell
any Of the disapproved brand will rem
der him liable 10 the penalties of Ia"
law The brand in question may have
q speculative value only That is, pcr-
haps it will in time prove To have .
Tangible value. ana then again perhaps
not. II NAV not have even a faint If
fraud, yet the Michigan securities com
mission. looking solely 10 the Interests
az investors. decides that il is q brand
that better not hc sold in the state.
Being barred from selling his brand
through q Michigan office. on by sales.
men, in Michigan, the owner of the
brand can open an once in an a'ioin-
ing state and procee To- do business
in Michigan on the mail order plan.
An hc needs do is to secure = list a.
prospects" and then by letter ana cir
all sorts 81 alluring representative of
what the prospective" dividends ar" GO
ing Ia ne, So long az ne does not in
fringe on the uoStnnice regulations \
brand that the securities commission
might disapprovc wouldn't perhaps, II"
81 character 10 Justify the postoiIic"
in denying the owner ~
the privilege Of irving to SCI 1t by us
ng the mails.
Nav Use Mails Exclusively.
An Ctticcr Of ore OF the largest banks
II the state said Yesterday that he has
heard some brokers talk of Withdraw
inc all Of their ealrsmcn from Mich
igun aud continuing to do business
here. hat from headquarters in an
other STATE. using the mails exclusive.
L.. Unless the postof'ic" department
viii agree 10 cooperate with Mich
gan - enforce the new law il Is ap
parent, say bankers, that more or less
scaly socurtios viii continue To be solo
IN Michigan to uniformed investors.
Another omission but one of lesser
importance that bankers say they note
IN the new act is this: An investor
owns bonds Of foreign corporation
which ne bought before tho law was
enacted In the course OF q few years
he desires To sell these bonds. Finan-
Cial conditions may impel him To do So.
Perhaps the corporation, If II rs an in
Gustrial one is incorporated in anOth-
or state. and is not i'm as good shape
as when the bonds were issued. For
this or some other reason the corpor-
alton declines to give the Michigan Sc
curitics commission the Information
which the commission must have To
the resale of the bonds. The
owner 81 the bonds asks a broker To
try To sell them for him. The broker
must reply: Sorry. but I can't do itI
a. hant InNipo rnEeplf liable Won