The New York herald., 1921-01-24
STATE CONTROL OF
BOND SALES URGED
Bill to BE introduced in AS
cembly To-day Is Aimed at
Blue Sky Enterprises.
MAY STIR UP TROUBLE
Drastic Provisions Expected to
Bring Quick Protests-Stock
History Called For.
MAY STIR UP TROUBLE

Special Despatch to THE NEW YORK HEkALD.
New York Herald Bureau.
Albany, Jan. 23.
State regulation Of the sale of stocks
or bonds Of corporations and industries
is proposed in bill drawn by Assem-
blyman Belts. to be presented to the
Legislature tomorrow. 1t prescribes
new securities act. and its provisions
are so drastic and sweeping that 1t is
sure to stir up big protest from finan-
cial institutions throughout the State.
One of the provisions that Is consid-
cred almost certain to start trouble In
financial quarters in New York makes
it necessary for the State to accept the
opinion OF the New York Stock Ex-
change as to the qualification of securi-
ties in which It deals. 1t is regarded as
certain that the Consolidated, Produce.
Cotton and other exchanges will be
quick to protest II the proposed meas
ure gives the Stock Exchange the pref
erence.
1.-THE shares of stocks or bonds of
corporation. domestic or foreign, here
after issued or proposed to be issued,
shall not be offered to the public In
this State for subscription. purchase or
acquisition in any manner until there
has been filed with the Secretary Of
State a verified statement containing
information as follows:" the proposed
bill provides in it's opening preamble.
There follows a series of regulations
with which the corporation must COM
ply before its stock can be offered for
sale. This includes a detailed state
ment regarding the history Of the cor
poration and Its financial affairs de-
scriptions of the corporations assets.
holdings and properties; exactly what
product has come from the corporations
property, and in fact all the info ,ation
which one would like to have i ne were
to invest in a stock enterprise.
Then come the exceptions. 1t is pro-
vided that the article shall not apply to
state and Federal securities. the stocks
of corporations controlled by govern
mental agencies, such as the Public Ser
vice Commission; the stocks OF State
and national banks and several other
classes of institutions and the shares OF
stocks or bonds listed on the New York
Stock Exchange, or shares of stock or
bonds Of corporations the senior securi-
ties Of which have been previously
listed"
This definition apparently would give
the directors Of the Stock Exchange the
right to pass on securities which might
be put out Tor PUBIC tradlng, put Wouiu
compel the curb market to deal in the
securities of corporations licensed by the
State. The same restriction would apply
to the other exchanges.
The bill would set up hard and fast
rules for dealing in stocks and bonds.
evidently with the purpose of protecting
the public from blue sky enterprises
| Violation OF any OF the provisions would
be made misdemeanor with heavy
| penalties attached.
| 1t Is further provided that after July
l next any person in the business OF
stock or bond trading must have State
license. issued by the Secretary of State
Only the officers, directors or members
of the partnership could sell stock under
the provision laid down. This would
make it impossible for a brokerage firm
to open branch offices wherever they
wished without State authority.