Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1921-12-14
Maine's, "Blue Sky Law M..,i
With General Approval Il

Maine's, "Blue Sky" Law M..
With General Approval
i Hon. Fred F. Lawrence of Ska.
hogan. State bank commission.s V'
his annual report, just filed viii
Governor and Council, declare s 4,
fthe so called Blue Sky" law {.
present form, designed to pro,s,s
investor by a rigid investigate,
provaI.
AT the same time, however ~
the State seeks thus to protec, N
own citizens, It's extremely uh.,J
! corporation laws permit the o.
cation of promotions by the vbo.U
sale to prey upon investor. in 9th.
! states said Commissioner Iawrs,,.U
I'VE are engaged in unseemly CONN.,
/ tition to attract promoters tbror,
the widely advertised liberality Of m
] corporation laws, the only apna,,,y
justification being the resulting rsr2
| enue.
Corporations organized uns.y
! Maine laws are not required to s&
| financial statements or other inform
| alton of material value. and so Ions n
they pay their relatively triar&
! franchise taxes and confine their A.,
tivities to other states no Maine dy
fetal has any control over them.
THE corporate franchise is so val
liable a privilege and its abusiy
| fraught with such power for harI
to the public, that it's Issuance shor
be safeguarded much more carefully
One of the most serious problem
confronting Blue Sky officials
that transactions through the mail,
and advertising In out-of-the stat
newspapers cannot be stopped !
States which encourage 'hy- y-night1
concerns with liberal incorporate,
laws, refusing to permit the sale
their own citizens Of stock whic,
they authorize for the purpose
sale elsewhere, are obstructing viii
one hand what they seek to advanc1
with the other.
1T would be difficult to point n
any statute Of such far-reac hing m&
portance as the so called blue ski
law which is as little understood ann
as much misrepresented. Yet ID
fundamental character and practies
workings are comparatively simplty
I'm 1913 the legislature OF Maind
recognizing that the investor an
Spectator were at a disadvantage IL
transactions with security vendW%
enacted a statute requiring the regs{
tration of all such dealers, with Ger y
tain exemptions, the official yeste
with the registering power being ID
bank commissioner. The first stat
ute proved to be of comparative
limited value for the purpose in view
as the sole inquiry under 1t related
the good repute' of the dealer.
such repute were established,
commissioner was required TO graz
registration, regardless of the nau'
of the securities offered.
"In 1919 the statute was radicals
broadened in its scope, and duties an
responsibilities placed upon the com
missioner, the nature of which an
little understood by the general pub
lie, and too often misinterpreted
those with whom the department ha
to deal.
"The dealer is now required TO al
Tentatively satisfy the commssiors
not only of his good repute, but as
of the following distinct conditions
"First-That his proposed plan
business is not unfair, unjust or
equitable.
"Second-That he intends to hon
estly and fairly conduct his bushes
with disclosure of pertinent facts SUI
ficient to enable intending purchs1
ers to form a judgment of the natuf
and value of the securities, and viii
out intent to deceive or defraud.
"Third-That the securities oferv
are not such as in the opinion OF
commissioner will work fraud uP
the purchasers.
I'm other words, where prior
1919 dealers showing good repu
were entitled to register and ~
| whatever they desired without
striction, they are now required
! submit every security in which th
desire to deal to the analysis oil
| department. with the exception OF
| licences of debt running less u
nine months, securities legal for pD
chase by savings banks. notes
cured by mortgage of Maine
estate and shares of loan and bun
ing associations.
Notwithstanding the clear IA
guage of the statute, much mS
prehension as to the principles up
| which the commissioner process
| constantly disclosed. The most
.quent miscopception is the ro''
that an attempt is made TO foreca7
| the future of the enterprise PEN
the security.
| Fortunately, the law is susceFf
BILE of no such construction. NO
curity is barred because it is spe
iative or admitted because OF lts
| parent investment status. Purenas
must form their own judgment VI
prospects OF the enterprise. ana
prove failure have only thems'
to blame. It is the security. tnas
the stock or bond, and not the CIV
! prise. which the department nv
gates. The distinction is lupy
mental and is noted because Oh
promoters criticism that Inc