The West Virginian. [volume] (Fairmont, W. Va.) 1914-1974, 1915-01-19
Law If Passed viii Be Sub.
stantial Improvement
Over Old One.
CURE OBJECTIONS
ExEMPTs All BANKS FROM ITS.
OPERATIONS, AND NONE PRO.
Fit CORPORATIONS.

OF the legislature recently having
been declared unconstitutional by the
United States District Court for the
Northern District OF West Virginia,
the state auditor has prepared a new
blue sky bill which 1t Is believed
cures all the objections found by the
court and at the same Is a substantial.
Improvement in many respects upon
the former law.
The new bill exempts entirely from
its operation state and national
banks, building and loan associations
and corporations not organized for
profit, as well as all stocks and Sc.
curities-
"a When sold pursuant to the
order Of a court.
t2) When sales are confined to old
stockholders Of the issuing company.
S) When the issue is taken by
the i~ncorporatcrs only as bona fide
holders.
go When the issue is taken by
the stockholders, bo%ndholders or in.
c%orporators in connection with a mer
ger.
t5) When bona fde private hold.
ings are offered for sale.
It also exempts bona fde offers Of
sale to banks, bankers, brokers or
trust companies, who deal In the Sc.
curities offered.
The law almost entirely exemp.s
what may be termed the conserya.
tive business promotion, in that, IL
not more than eight per cent return
on the investment Is promised, and
the proposition is not fraudulent, moth
ing is required Of the promoter ex.
cept that II bonus stock has been Is.
sued a subscription blank showing
this fact must be used SO that each
purchaser will have proper notice OF
this feature, instead Of fits being hid:
den from him as might otherwise
be the case, and the auditor may re:
lquire such bonus stock to be placed
in escrow.
Stocks and securities for which
return In excess OF eight per cent is
promised are termed speculative Sc;
curities, and are subject to practical.
ly the same supervision as is proyid.
ed by the present act; that is, full
information in regard to such secur,-
ties must be fled with the auditor.
Only such advertising literature as Is
fled may be used in solicitation.
It, however. gives the auditor au.
thority to waive certain requirements
should the circumstances so justify.
Misrepresentation, fraud or reck.
less concealment In connection with
the promotion or sale Of stocks and
securities are made felonies.
A compliance with the law ipso fac
20 creates the auditor attorney.in.fac.
for service Of process fol, violations
thereof, SO that 1t Is made easier for
the victim to roach the violator.
Promotion expenses are limited to.
10 per cent of par value In the case
Of stocks, and 5 per cent in the case
OF bonds or other securities. This
provision will eliminate all schemes
devised for the making Of profits for
promoters at the expense OF invest:
ors. but will not interfere with iegiti.
mate promotions.
The auditor can refuse authority:
to sell only upon the ground Of fraud
in case the provisions OF the act have.
been complied with, and the appli:
cant is provided with appropriate
means for appeal from the auditors
decision.
The law provides that proper rec.
ords aid books of accounts shall be.
kept and open to the inspection OF
inventors, but does not require
double entry as did the old act.
It does not discriminate against for.
eign promoters.
It does away with the certificate
of authority width the auditor Is
making the promotion stand on its
own merits rather than on the
strength Of statement bearing the
seal Of the state. Il provides for an.
nual instead of semiannual financial
statements, but the auditor may, az
makes q felony Of fraud or misreps
resentation in connection with the
sale Of real estate located outside
of West Virginia, which Is not GOV.
cred I'm the present law.
II win be observed that this pro:
posed law Is In much less burden:
some form Of supervision than the
old law, and yetjit gives the investor
substantial protection.
Senate Committees.
On Privileges and Elections-Mar.
shall, chairman; White, Rosenbloom,
Billings, Mscrum coalter. STROLLER,
Lowe and Morton!
On the Judiciary-white. chair.
man; Goodykoontz, steed, Miller, Nc.
crum, Carter, Gregory; Blessing.
Marshall. Morton and aBeckYith.
r. M NEUTRALITY-SUSPICIOUS. cLatr