New-York tribune., 1920-01-07
Adverse Report by Smiths
Commission of Bankers
Termed Prayer for ssWall
St. to Continue Pillage"
No Remedy Seen Now
Prosecutor Sets Annual Loss
Here by Fraudulent Stock
Deals at S4OO,OO 900

tRe WaJor'Sy report by Governor
Smiths commission of bankers. which
advised recently against blue sky.
law legislation as curb against Wild
cat stock operators, was criticized YES
terdsy by Edwin P. Kilroe, Assistant
District Attorney and head of the Dis
trict Attorneys Bureau of Commercial
Frauds. In report on nine months of
the bureaus work, Mr.. Kilroe says:
SIT (the commissions report) is a
prayer to allow the predatory Wall
Street interests to continue their
pillage without let or hindrance.
trust that the Governor will not be de-
ceived or the Legislature misled by
their appeal"
Mr.. Kilroe's report, turned over to
Mr.. Swami yesterday. estimates the an
nual losses as result of frauduIens
stock and bond operations here at
S4oo,0o0.ooo, and recommends drastic
Blue Sky" legislation as a curb to
fraudulent stock operations.
''As the law now stands" reads the
report, 1.-The District Attorney is al
most powerless to suppress or remedy
the abuses revealed in this investiga-
ton"
Report Ready for Use
The report will be used to urge the
Legislature to put through "blue sky"
legislation which will come before it
during the session which opens to-day.
"The investing public Is without pro-
lection; there is no way of knowing
whether or not securities offered for
sale are good" says the report of Mr.
Kilroe. "Since the war the business of
selling worthless stocks has grown to
enormous proportions. The evil has
now reached such proportions that the
productive integrity of the nation is
menaced: it is becoming a national
scandal.
To follow the recommendations of
the majority report would be a step
backward and would leave the public
unprotected and at the mercy of the
Wall Street sniper; it would accelerate
discomfort at the unfair distribution
OF wealth and add to the progress of
Bolshevlsm and socialism will throw
cloak of protection around the So
called promoters and Underwriters
who. by superior cunning and lack of
conscience. rather than by honest labor
and production, are annually extract
lag vast sums of money from the in
YES. ing public
in the majority report the commit
zee overlooked two of the greatest evils
n Wall Street.-The bucket shop and
he lack of protection for collateral put
p DF investors. | cannot agree with
he committee when they say that the
blue sky laws have worked unsatis-
sactorily in other states. The majority
Of the committee advances the same
arguments against blue sky law in
this state that have been advanced
against every progressive piece of leg
is:atlon advocated here. There
IS no reason why blue sky law will
not work satisfactorily in New York"
Other Abuses Revealed
Among the abuses of Wall Street
condemned by Mr.. Kilroe were the
bucket shops and the unrestricted is
sSe of large blocks of stock for little
tangible consideration. The unscru-
pulous promoters and swindlers who
were driven from thirty-eight states
that have blue sky" laws are -four
ishing in New York City, says Mr..
Kilroe.
The recommendations contained in
the minority report of the Governors
committee should be enacted into leg
islation, says Mr.. Kilroe. He urges the
following action:
Licensing of stock exchanges, which
should be put under government con-
troll; licensing of brokers and dealers
in stocks, bonds and investment securi-
market from the streets as public
Assistant District Attorney Kilroe
also recommends that brokers and
stock dealers be required to keep a
record Of the collateral deposited with
them and details on the hypothecation
of collateral.
He proposes a Federal blue sky law
whose provisions would be- similar to
those Of this state, thus preventing
crooked dealers in other states from
doing BUSINESS here by mail, telephone
Or telegraph, unless the provisions of
the Federal statutes have been COM
piled with.