Omaha daily bee. (Omaha [Neb.]) 187?-1922, 1919-02-21
Blue skY IIaw.

Blue Sky Law.
l am a member of the Nebraska
| legislature and have been seen and
written TO by many responsible bus
mess men asking me to use my i'm
huence and vote to defeat Senate
File No. 116, introduced by Senator
! Cordial, which / enclose, This bill,
as you no doubt know, deals with
the sale Of all classes of securities.
both by individuals and corpora
tions. | am not a lawyer and con-
sequently would like the opinion of a
lawyer who would give me an un-
biased and frank opinion what they
think of this law so as / would
know intelligently how to vote. /
know that The Bee would not en-
ploy anyone that was not competent
and trustworthy, and, therefore, |
would greatly appreciate an answer
to this letter through the columns
of your paper without in any man
ner making known my identity. X.
Without in any manner
committing the editor of this paper
to the opinion herein expressed, /
have no hesitancy in stating that
consider the bill referred to as a
most vicious piece of legislation.
This bill II passed will work a gem
eral upheaval in practically every
business institution of any magni-
tude in this state. 1t is not a bill
primarily to prevent fraud or de-
ceit, but is bill intended to Gust
from the control of corporations, CO.
partnerships and other business in
situations the management of their
affairs by the people intrusted to
have charge of the same, and to
vest the Nebraska State Railway
commission with power to govern
the internal management of these
various business institutions. II
this bill should pass, the autocracy
that existed in Russia prior to the
revolution would be extremely mild
in comparison, insofar as the gov
eminent regulating private affairs
are concerned / have not the
space to 20 into minute detail with
reference to the various features of
this bill that are subject to attack. |
Let me, however, just call your at
tention to few of them.
First-The bill will take away the
right to regulate the payment of
dividends and lodge that power in
the Nebraska State Railway com |
mission.
Second-The company desiring to
purchase property and to issue stock |
in payment therefor first has to get
the consent OF. the commission as TO |
the market value Of the property |
purchased before any stock can be |
issued; therefore, takingsthe control
entirely away from the managing
officers of the corporation or other
business institution.
Third-If an individual desires to
sell his holdings and the expense IN
doing so exceeds the cost OF z per
cent of the sale price, he has to get
the consent of the Nebraska state
Railway commission.
Tourth-No stock or security can |
be sold for less than par value un-
less with the express approval of /
the commission. All stock must be
paid for in money or in property at
lis actual market value, and the
commission determines the market
value. 1t is questionable whether or
not services might be considered
property for the purposes OF issuing
stock in payment thereof.
Fifth-There is no limit to the
expense TO ba incurred by the COM
mission, and which must be paid by
the applicant.
Sixth-The bill attempts to make
1t impossible to issue preferred
stock without granting it the right
Ia vote. Notwithstanding that II is
d debatable question in this state
whether or not a stakeholder canr2t
waive the right of voting for the
snecial privileges otherwise granted
to preferred stock.
Seventh-The commission can re-
fuse to grant a permit to negotiate
or transfer stock in corporation
if in its mind the company has not
sufficient met assets" on which 10
base the issue. 80
Fighth-Under the terms OF this
bill a corporation, o-partnershlp OF
other business institution may be
sued in any county of the state
where stock sales have been held.
Ninth-The financial affairs OF
every corporation in Nebraska may
become the private property OF the
state at large, and particularly TO
the business competitor of the cor
poration under consideration, Tor
the reason that the bill PROVIDES
that the names and addresses ana
amount of stock held by each per-
son must be included in a financial
statement filed with the commission,
In other words, without going
further into detail and stating the
many other valid objections that
might be made to it, / would say
that in my opinion that the passage |
of this bill would do the utmost
harm in curtailing legitimate indus
trial enterprises and investments
therein. and especially in this period
when there is great work of recon-
struction to be done. Arbitrary re-
strictions, that in no manner would
give protection to the public against
fraud and deceit, should not be en-
couraged, much less placed upon the
statute books Of this state.