Evening star., 1919-10-07
DRASTIC blue SKY
LAW AMENDMENT
Suggested by Federal Trade
Commission to House Ju-
dietary Committee.
IDENTIFIES PROMOTERS

To save the pubic $500, ,000. 900
year. in addition to the frauds re-
ported by the Post Oniee Department,
the Federal Trade Commission today
suggested to the House judiciary
committee a proposed amendment to
the blue sky, law. -
SIT pFsgtaas thai sEsysSys .persaa,.
urn, association or corporation OfEer-
ing for sale to the public in inter-
pthsr ssidshsss s mn, sdss1s b NJ 1 q
corporation sshall print On. ths front
pectuses, letters, literature, and in
the body of any advertisements de-
scribing or mentioning the securities
for sale. tn type larger than the type
otherwise used. the names of the pro-
moters and underwriters and the rate
bonuses received by those promoting,
consolidating. underwriting or SELL
ing said securities, and the net
amounts to be received from said
sale by the issuing entity, corpora
tion or association"
Legislation Explained.
Houston Thompson. a federal trade
commissioner, explained the need for
and advantages to be gained from
such legislation. The amendment in
cludes feature never before at
empted-publicatton OF the name of
the promoters and underwriters and
the amount of commission each re-
ceives. stf. -
III a man has a right to know under
the pure food law what ingredients a
package contains. and II -misrepre-
sentatfon can be punished criminally,
why should the purchaser Of securi-
ties not have the same right Of know
ing what is behind the security?" Mr..
Thompson asked. He admitted that
the Federal Trade Commission ex-
pected that the proposed amendment
would be fought bitterly by the finan-
cia1 interests, but said the COM
mission believed that the best finan-
cial interests recognize the need for
some such law and If they could sug-
gest more effective wording so much
the better.
Suggestion Of President.
The committee was invited by Mr.
Thompson to read the suggestion made
by the President in his message to
Congress on the, high cost of living.
and said in part:
The time has arrived when the ut
most publicity regarding the value of
stock or security to. the prospective
purchaser be given by the promoter
or underwater Offering the security
year approximately $500, ,00o, 900 will
be squandered in wildcat invest
ments and the public will ontinue
to purchase so-called legitimate
stocks already waterlogged by bo-
muses. and commissions.
10 nj nj =
him law that will require him to
approve Of q security. in advance Of
its sale.
THE. approval Of stock, even after
thorough investigation, might cause
erward turn out worthless or very
much deprecated. The investor
would take the officials sanction as a
governmental guarantee. and when
the stock turned out badly criticism
would fall upon the official and the
Administrations.
Burden on Seller. /
"A successful law should mt the
burden on the one Offering the Sc
curity for sale. That burden should
require the, underwater to bring to
the attention Of the purchaser.
through az u, the s... circulars. adver-
of the names Of the bro.
moters and underwriters, the rates
Of commission and bonuses received
for selling the security, and the net !
amount received by the corporation |
originally issuing the security. This
with other information.
should be filed with the secretarv
of the Treasury. or some other oficial |
Of the government, and at the post !
Offices in the capital cities Of the
states where the stock 10 sold.
ut is necessary to require mora |
than the simple filing of the informa
ton with the public Official, Great
Britain went this far some years ago.
and the act was not success There
must be the connecting link, the atdi-
tional requirement Of requiring the
publicity through the circulars and
win be put upon notice. No longer
viii securities be waterlogged with
bonuses. Failures Will I
necessarily be less and conseauently
for the sum total OF failures In this i
countryi due : to-, .wiidcatting" pr
wAteroygings securities has q certain
effnCE lfE6n thu N3Qf Of ltVinR.S