South Bend news-times. (South Bend, Ind.) 1913-1938, 1920-08-18
'MONSTROSITY" Is
TERM APPLIED TO
BLUE SKY JOKERS
Business Man Says Goodrich
Measure Is Ideal For
Stock Swindlers.
Special 70 The News-Times.

Special 20 The Ncws-Timcs.
INDIANAPOLIS. Aug 1.-THE
Blue SKY law passed by the recent
special session OF the legislature is
termed a 'mOns;rOsity' and one that
will suit "the statesmen OF question
able securities" by O.. r. Olwin. secre-
tary-manager OF the Indianapolis
Better Business bureau in a report
To his organization. The passage OF
SUCH n law was urged by Gov. Good
rich in his message to the assembly
and the administration forces threw
their weight behind the measure.
When persons really interested in
obtaining a law that would protect
the public from questionable securi-
ties learned that 70. like the cura-
tive tax measure, was full Of jOkers.
they recalled that the governor him
self had been interested from time
70 time in the promotion OF stock en-
terprises through his Winchester
bank.
Backed by Ad. Clubs.
The Better business bureau is part
of the vigilance branch OF the Associ-
ated Advertising Clubs of the World
and is designed 10 see that fake prop
ositsons are not foisted on the people.
Thus his analysts OF the law bears
the weight Of a powerful organiza-
ton behind IL.
I'm the opinion OF the bureau man
ager." Mr.. Olwin's report says. this
IS not such a Blue, Sky law as the
people OF Indiana have been de
manding, nor such a law as they had
a right 10 expect their representatives
in the senate and house TO give them.
To our mind IL is an ideal stock
salesmen's Blue Sky law.
The bill as II passed the 1919
legislature and first passed the house
at this special session by vote OF 81
10 o. was very good and designed 10
protect the public. However, the
amendments made in the senate and
accepted by the house transforms II
into a monstrosity so far as a really
effective law is concerned.
The first amendment struck out
the words principal or agent I'm sec
ton ore and inserted the word us
2ler) making this and succeeding
sections apply only 20 the (issuer)
who may undertake by advertise
ment circular. prospectus, through
agents or other public or general
offering attempt 10 dispose Of securi-
ties, amenable 20 this law.
Issues Outside of State.
Here is how this may work. Let
us call the (issuer) the COme-on
Motor corporation. with home office
in Illinois. II they for themselves or
through agents attempt TO sell stock
in this state they will come under the
Jurisdiction OF the Blue Sky commits
sion However TO get around this
law they make a secret contract Win
Jones & Co.. Indianapolis stock
statesmen, TO underwrite their entire
issue OF 81 900, 900 at S6.25 per share
OF $1,000 par value. Jones & Co.
thus purchase this stock for their
own account and proceed 10 sell II IN
this state at $3.50 per share. II Is
their stock and they have "A right TO
DISPOSE OF Il and advertise II for sale
under their own name. The issuer
does not enter the state at all and
therefore does not come under the
Jurisdiction Of the commission. Jones
& CO. dispose OF the stock 20 the cit-
zeus al 100 per cent gross pront ana
there is no information Sled with the
secretary OF state in regard % the
CoueLon Motor corporation.
The next amendment which
worked havoc with this bill was that
witch struck out all Of paragraph O.
OF section one and other parts of the
bill recurring the filing OF copies or
all contracts Of agreements between
the is4uer and underwriters OF such
securities. etc. and all contracts rela-
tive 10 the sale 81 disposition OF
stock. together with copies OF the
minutes Of directors or stockholders
relative to or affecting the issue OF
such securities.
This provision vas the very meat
of the bill az 70 passed the house aud
would have done II ore than all tho
rest az the bill put together 20 pro
tect the public from the sale of
questionable securities.
But the stock lesman does not
want publicity IN such matters and
this part was stricken from the bill
Any Deal Possible.
without the provision requiring
the fling OF copies of all contracts
and minutes relative 10 the dispose
ton OF the stock, most any sort OF a
deal may he put over without the
knowledge OF the investing public.
Another amendment struck out
all OF section 90 which made sales
consurnr mated IN violation Of the pro-
visions or this act vOidable providing
that request for the return Of the
money was made in writing within
one wear Is there any good reason
why a sale made I'm violation of the
law should not be volda ble22 is
there not every reason why such n
sale should be voidab'e? But. those
opposed 10 a real Blue Sky law did
Mt want such contracts 20 be even
zoidable and this section went out.
The salesman OF questionable Sc
curities prefers TO work under Blue
Sky law II such a law Is TO his liking.
as nc uses the fact that the state has
n Blue Sky law 20 h0nSr his sales.
We believe that the Indiana ,aw Will
suit him. 'Te will. 3d.. erect say.
You know Indiana has ono ~ tho
IN n n "a
state in the union The commission
even I-asses upon the moral and ousi-
ness qualifications Of agents. II this
stock were rot all right, You may hot
we wouldn't be allowed 10 sell the
stock"