The sun., 1919-02-18
CANADA TO GUARD
BOND PURCHASERS
Dealers Association Plans
Legislation to Thwart
Security Frauds.
FL0TATION ORGY NEAR
Provinces Uneasy Over Cues
ton Of Protection for
Investors.
FLOTATION ORGY NEAR

roughly to the Investment
Bankers Association OF America, in its
investigation Of ways and means to pro-
mote legislation for the protection OF
investors has completed, II was learned
yesterday. tentative survey OF the ex-
istiLg legislative demands for further
protection in various Canadian prov
inces. From this survey and from the
special financial circumstances which
exist at present the following concluA
siona are drawn:
lowing to the introduction TO security
buying of hundreds of thousands of
Canadians through Victory Loan Invest
ments the way Is opened for many new
ventures-with strange securities.
An ORGY of fiotatlons Is probable,
with many offerings Of a dangerous or
highly speculative nature.
Vendors OF dangerous or worthless
securities will seek to induce the unin-
formed to part with Victory bonds bear
ing a relatively low interest in return
for shares which are promised to yield
a much higher rate.
Tho money of all classes should be
conserved for essential purposes, as the
next few years will be serious testing
timc for Canadian finance.
Supervision IL Necessary.
Supervision of new issues will be
necessary in some form. an elementary
principle being. 1t would seem, the reg
istrstion Of vendors OF securities
Full provision should be made for
publicity and oversight of promises made
by vendors. so long as securities are not
offered as carrying the stamp of Gov
eminent approval, which, of course, can
not be protection against mismanage-
ment-
Existing precautionary laws should
be enforced and companies opera ting
from outside Canada should be made
subject TO laws against fraud and
fraudulent promises"
Canadian authorities agree the state
Of the public mind is uneasy on the i'm
portant question of protecting the in
weston. Manitoba, Saskatchewan and
Alberta have laws in operation for this
purpose, the main principle OF which Is
the licensing OF vendors OF securities and
the supervision of new securities them
selves. 1t is understood that the gov
eminent OF Ontario is now engaged In
the preparation OF legislation on the
same subject.
While the bond dealers committee has
adopted nothing in detail regarding
needed legislation, c. II. Burgess, chair
man of the committee, has brought up
for consideration the tentative proposal
that the Dominion Government should
appoint a commission to examine all
projects before the sale Of securities is
permitted. The head Office could be in
Ottawa. with n branch In eich of the
provinces.
Under this proposal every dealer
would be required to register with the
commission and every company issuing
stock or securities for public sale should
| furnish full particulars and all informa
ton desired by the commission. The
commission would have authority tc
reject an application. No Offering b,
| advertising, circular or letter from Other
| countries would be allowed without Sc
| curing like permission. The commission
| would have power to make a persona
| investigation at the company's expens,
! and to examine statements and to publish
| statements in their own manner will
| comment Speculative securities woulc
be so marked on all literature. Thi
would include those which yield or prom
Use 10 yield. say, more than per cent
or make representation that they viii
! be twice their value within two years
imprisonment for infringement of tn
| regulations.
Blue sky Law Inquiry.
The bond dealers committee Ia inves
tigating also the terms and operation O
the blue sky law Of the State OF Mime
sofa. This law provides IN part that n
investment company or dealer shall SCI
any securities subject to the provision
of the act until he or It Is registere
with the Securities Commission and hs
furnished such Securities Commission
with the full information required of 1,
Provision is made for the authorization
of agents. who must be registered wit
the commission. Copies of all pros
pectuses. circulars and, advertisement
used in any sale or promotion of securi
ties covered by the act must be re
lce!ved by the Securities Commission a
least twerlty-four hours before any sal
or offering of the security covered by tn
advertisement shall be made.
Great Britain. which up to recer
months was completely satisfied by tn
companies consolidation act of 1908, (
now disturbed by the anxiety which ex
lists there on the subject of protecting tn
investor. according to Canadian author
tiles. who cite a portion of the repoi
OF the British Trade Commission to tn
Government. "In order to check an
outburst of speculation" this report sait
land prevent the inception OF enter
prises OF an unessential character it wi
also be necessary to exercise some dl:
erection as to tho purpose for which III
money IL required"
On the other ] sndf~mahy British an
Canadian authorities hold that the con
panies consolidation act Of 1905 is a
sufficient, and one of them discussin
that act said: The purpose is not I
regulate or supervise the actions
directors OF companies, but to afford II
investing public a means of ascertainin
the true inwardness OF fotations, and
means OF annual statements and report
OF the directors and auditors to disclo:
to the shareholders from time TO tin
the methods by which the affairs OF II
} company are conducted. This legisls
ton has been adopted In the province
Of Ontario. British Columbia, Saska tch'
: wan and Alberta.
, Company law is complicated and tecl
; meal Each additional piece OF legislS
: ton adds TO the complications and tecl
, nicalities Legislation which puts II
; control OF a company in the hands of q
shareholders, the persons vitality int
= ested in it's success, and calls upon the
] to exercise an intelligent and interestt
control, is moro likely to protect Il
. general public than restrictions ar
E penalties, which add technicalities easl
= evaded by corporal ton lawyers"
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