The New York herald., 1922-10-26
CONSOLIDATED BANS
AID TO SHADY DEALS
Exchange Makes New Rul-
ING to Protect Public in
Promotions.
BROKERS GET WARNING
Members Must Give Full
Data of Any Concerns
Floating Stock.
HOPE TO HALT FAILURES
Resolution Follows Efforts of
New York Herald to Reveal
Financial Crooks.
HOPE TO HALT FAILURES

The Consolidated Stock Exchange
announced yesterday that its govern
ing committee had adopted a new
rule under which any member par
ticipating in the sale of securities of a
promotion will be required to place
full information regarding the opera
ton before the recently created busi-
ness welfare committee of the ex-
change.
The failure OF any member to make
such detailed returns shall be con-
strued as a violation of section 3 OF
article 13 of the constitution, which is
directed against acts detrimental to
the interests or welfare of the ex-
change" and carries the penalty of
suspension Or expulsion.
This action is in line with the policy
of the Consolidated Stock Exchange to
do everything In it's power to safeguard
further the interests Of that part of the
investing public dealing with its mem
bers,' said w. S. Silkworth, president.
Every promotion in which any mem
ber is engaged or proposes to engage
will be carefully scrutinizcd by the busi-
ness welfare committee, which will re-
port to the board of governors.
Board to Issue warnings.
I'm case the participation OF a mem
Der in a promotion Is regarded as unde-
sirable he will be so informed by the
board. This does not mean that the ex-
change will give approval or disapproval
to any promotion officially. 1t is not
felt that this rule will work any hardship
upon our members"
The action is a reform following an
unprecedented series of bankruptcies of
members and of complaints against
many such members before the District
Attorney. The new rule is born also of
the wide publicity given by newspapers
TO the failures of those members and
their business methods before failure.
A notable part of that publicity was
series OF special articles published by
THE NEW YORK HERALD showing the
manner In which the Consolidated Stock
Exchange permitted Its members to do
business and a recital of some of the
disastrous results of those methods. One
prominent defect pointed out by THE
NEW YORK HERALD was Just such a lack
or close scrutiny as the exchange now
undertakes to provide.
Resolution Is Adopted.
resolution adopted by the board of
governors at its last meeting, follows:
Resolved that on and after November
1, 1922. any member OF the exchange
then engaged OF intending to engage in
promoting the sale to the public of
stocks. bonds, notes. certificates. &C.,
of any company whose securities are
not traded in on this board, or who Is
or who plans to partici-
pate. directly or indirectly. in an under
writing OF any such securities shall
submit to the secretary OF the exchange
in writing the following information:
Il. A complete statement Of the com
pany as required by the Consolidated
Stock Exchange in considering appli-
cations for listirg of securities
"2. The underwriting price of-said Sc
curities.
'3. Names Of other brokers or pro-
moters handling said securities.
"a. Number of shares taken over or
to be taken over by such mem.
ber OF the exchange.
IS. Commission allowed or to be al
lowed on sales Of such securities.
IS. How such securities are being Of
fered or are to be offered to the public
(copies of advertisements and all litera-
ture. form letters. &c.)
~. If any application has been made
to list said securities on any exchange
Of so. on what exchange and status
of application). and be it further
Resolved that the secretary OF the
exchange shall submit all such informa-
tion to the committee on business well
fare of the Consolidated Stock Exchange
for it's consideration. Any member fall
ing to report to the secretary. as di-
rected In these resolutions. shall be re-
ported to the board OF governors for
an act detrimental to the
interests or welfare of the exchange"