New-York tribune., 1921-05-15
Official Cognizance Taken
of Huge Losses TO In
nocesla investors Here
by Passage of New Law
Makes Possible
Prosecution Basis
Attorney General Empow-
cred to Make Inquiries; ;
Hope TO Halt Frauds
q TEW YORK STATE has de-
~ clared war on the predatory
* promoter.

- 4
~ clared war on the predatory
\ promoter.
oficial eognizance Of the fact that
millions of dollars in good hard cash
of the citizens fthe commonwealth
find their way every year into the
hands of stock iobbing. swindling
operators who deal mainly in worth
less paper and false promises, has
been taken by the Legislature in the
enactment of the Martin law, just
signed by Governor Miller. which
puts real teeth into the statute, ac-
cording to its sponsors.
The state has always had plenty of
legsl machinery for prosecuting swim
dlitgs promoters once the evidence could
he found upon which to base positive
acsion. But here was the fly in the
ointment Of the guardians OF the in
Ysstnent public's wallet. for it was
found to be extremely difficult to obtain
the necessary proofs to make possible
conviction even where everything
pointed 20 gait.
The Martin law, now effective, is a
statute which is in the nature of an
amendment to the general business in
relation to fraudulent practices in re
sreet to stocks, bonds and other secuci-
ties. and it's Importance lies in the fast
that it empowers the Attorney General
Of the safe o conduc an investigation
in eases where 1t is suspected an effort
Is being made to defraud the public
through security offerings. Such an
Investigation can be made as thorough
as the Attorney Generals Office may de-
sire and on the findings of the inves-
tgation legal action can be based,
Basis for ActiO1t
The Martin act specifically says in
this connection: whenever it shall ap-
rear to the Attorney General either
upon complaint or otherwise, that in
the issuance, sale promotion, negotia
tion, advertisement or distribution of
any stocks, bond, notes, evidences of
interest or Indebtedness or other Sc
eurities within this state, hereinafter
called securities, any person, partner
snip. corporation, company or asslcia
ten is employing or about to employ
any device, scheme or artifice to de-
4IdH0 OI IOI SOOdkIAlAE u1OUGy OK prop
erty by means of any false pretense,
representation or promise that any
son, partnership corporation. company
or association is making or attempting
TO make IN this state fictitious or pre-
tended purchases or sales of securities,
or IS engaged in or about to engage in
any practice or transaction in or
course. OF business relating to the pur-
chase or sale of securities which is
fraudulent or in violation OF the penal
law, all of which devices, schemes. ar
tiices, fictitious or pretended pur-
chases or sales of securities, prac-
uees, transactions and courses of bust
ness are hereinafter referred to as
fraudulent practices, and he believes
1t to be in the public interest that an
investigation De made, he may in his
discretion either require or permit
such person, partnership, corporation,
or association to file with him state
ment IN writing under oath or other
wise as to all the facts, and circum-
stances; concerning the subject matter
which he believes it is to the public
interest to investigate. and for that
purpose may prescribe forms upon
~n1eh such statements shall be made.
lhe attorney General may also re-
quire such other data and information
~ ne may deem relevant and NAV
make sueh special and independent in
vestigations as he may deem neces-
safy IN connection with the matter.
Inc Attorney General, his deputy or
other officer designated by him is en-
powered to subpoena witnesses, comnel
eheir attendance, examine them under
oatn before him or a magistrate and
feqalre the production of any books or
papers which he deems relevant or
material to the inquiry. If a person
suop@naed to attend such inquiry fails
70 obey the command of a subpoena
Without reasonable cause, or if q per-
son IN attendance upon such inquiry
snail without reasonable cause refuse
70 De sworn or to be examined or to
answer question CIR 10 produce a book
OF paper when ordered so to do by the
encer conducting such inquiry, he
snail be guilty Of a misdemeanor."
Porer to Prosecute
The act further provides that when
Ene Attorney General believes that the
evidence indicates fraudulent under
taxing, he may bring action against
the person or firm under investigation.
will be noted that the new law
makes possible investigation of 'fwash
safes OF securities, bucketing of .or-
gers and other practices frowned upon
py the authorities. Charges have been
made IN various quarters that q large
part nj -