The New York herald., 1922-03-09
CITY BAR OBJECTS
TO BLUE SKY LAWS
viii Not End Bucket Shop
Swindles. States. Pro
test to Albany.
ONLY INCREASE EVIL
Enforcement of Martin Law
by AttOrney-General,
Is Advocated.
HAS NECESSARY TEETH
No Prosecution Yet Started
Under Measure Enacted
Last Year.
HAS NECESSARY TEETH

-, UT buckctIng. raudulent Sc
'nrity promotions and other forms OF
stock swindling with which the money
market recently has been afflicted
! docs not lie in the proposed new blue
aky laws pending before the Legis-
lature, according 10 protest sent TO
Albany yesterday by the committee on
the amendment OF the law of the
Association Of tho Bar OF the City Of
New York. The pending measures can
result only in a greater evil by placing
an additional and unnecessary burden
upon financing business, the commit
toe declared
Instead of enacting new laws, the
committee recommended that "the
State of New York in this hour OF
financial crisis should give a fair trial
TO the statute which it enacted last
year Nthe Martin law), supplemented
by activities of local district at
torncys." That law. it is pointed out,
conferred broad powers upon the At
'orncy- General, with or without COM
plant, to make thorough inveatga-
ton to require the production Of
books; 10 take action; 70 obtain in
iunctive relief. and to prosecute Grim
rally."
The position or the Bar Association
supports that Of the New York Stock
Exchange and large number Of other
brokers', investment bankers and fin-
anciers, who prior to opposing the pend
ing measures had urged the Attorney
General to exercise the powers given
him under the Martin law. So far as
Is known no prosecution by the Attorney
General has grown out of the Martin
law, despite the widespread swndlng
activities which lately have been shown
10 exist Attorney General Newton has
explained that his depar artment has not
been provided with the money TO carry
out the law.
Two Blue Sky Laws.
There are two proposed blue sky laws
pending in the Legislature. one intro
duced by Senator Duggan and Assem-
blyman Betts. and the other introduced
by Senator Katln. Both measures pro-
vide for supervision over securities to
prevent fraudulent issues, the Duggan
bill being the more drastic. After point
ing out the handicap on legitimate busi-
ness involved and the inability OF such
laws to prevent crookedness, the Bar
Associations committee says
"As a matter or fact. on this subject
Of statistical detail, the State will al
ways flnd itself in a dilemma. that. Ia
order 20 enact law which win prevent
sw.ndler from cheating fool--as-
uming that any such law other thar
~ outright penal law, can be devised
Inv as to prevent capitalists from in
vestiug their money: and conversely. if
tha LEGISLATURE would enact law which
would encourage the employment Of
capital. such a law cannot be OF the
transccndent nature as would protect
fools against their folly"
New York Is Financial Center.
The committees protest further points
out
THE United States. II not the whole
world. looks TO New York State for
apital for the development OF national
resources. industries and Inventions
New York state has become great
financial center Of the world. The
maintenance OF the high surtaxes in
connection with the Federal income tax
reduces to minimum the amount OF
capital available for development Capt.
tal is sensitive. The capitalist who Is
urged TO loan large sums of money for
development will not invest his money
in New York II such investment Is
made burd ensome. while other countries
and States afford more favorable OPP
portunites. Any law which places op.
pressve burdens on those who are
asked to invest their capital tends TO
drive capital from the State enacting
such law into other countries and
States. New York should be scrupu-
lously careful. in attempting a remedy
for an alleged evil. not thereby TO
create greater evil.
"A blue sky law does not apply 70
Exchange transactions. 1t is not de.
signed 70 protect spectators against
unwise gambling In securities It's sole
purpose Is to legislate so as to protect
gullible individuals from the deliberate
fraud OF swindlers in the actual sale OF
worthless securities. Thus II does not
even apply TO the so-called bucket
shop evil. which consists IN the fall
ure to carry out orders in legitimate