The Washington times., 1924-04-23
STOCK RAIDERS.
SH0OLDSTUDY
5. COMP AN|ES
Stock Exchange Makes No
Effort to Ascertain Value
Of Shares Listed.
BY. w. s. COUSINS.A
Copyright, 1924, by Cosmopolitan
News Service.l

NEW YORK, April g.. The Con.
goleum incident on the New
York Stock Exchange this week,
punctuated by drop Of II points
In that stock between the markets
close Saturday and Mondays open
Ing again emphasizes the necessity
of scrutinizing most thoroughly the
financial status Of companies which
apply for stock listings ON the big
board.
This is not an attempt to criticise
the conduct and operation Of that
or any. other company, shares Of
which have had a hectic career on
the exchange since listing few
weeks ago. The Stock Exchange
makes no effort to ascertain the
value Of shares listed, nor to cir.
cumscribe activities Of persons who
"take a position" on any stock.
But investors have right to- be
lieve that stocks listed on Ameri.
cas- most important market should
represent solid and substantial
companies whose real values are
not subject to violent fluctuations
overnight.
Traders who are not in the habit
of Investigating carefully the finan.
cial condition Of companies in whose
stocks they deal, should be particu.
1arly conservative in their attitude
toward 'unseasoned" stocks, THIS
need not necessarily refer to un.
seasoned companies. for many con.
Germs have had a long and sue.
cessful record before listing stocks
on the exchange; some never apply
Tor listing. But, unfortunately for
some traders, there is almost a.
market" for new stocks, and some
times initial prices are established
Tar beyond real values. Margin
channels with profe ssional specu.
lators quite often come to grief.
The listing committee of the New
York Stock Exchange has pre-.
scrfbed a code of rigid requirements
for companies seeking a marker
place for their stocks. Not only
are financial records Of applica-
lions delved into by expert account
ants, and the history Of applicants
checked by competent authorities,
but committee vote is also nec-
essary for admission to the list.
They are required to report the
character and output for the pre-
ceding five years: to estimate the
character and amount of products
for the current year; to submit
earnings statements for, the pre-
ceding five years, with income and
balance sheets for at least one
year. This decidedly excludes stocks
of prospects,, no matter how favor.
able their outlook or substantial
their financial backing.
In order to maintain their rela.
tionships with the Stock Exchange.
the companies are required mot to
dispose of an integral asset in any
subsidiary, owned or controlled
company-unless for retirement
and cancellation without notice to
the Stock Exchange" to publish,
yearly and submit to stockholders
at least fifteen days in advance Of
annual meeting, q statement of
financial condition, q consolidated
income account covering the prevf.
Gus fiscal year, and a balance sheet
showing assets and Liabilities at, the
years end, to maintain physical
facilities for recording and trans.
ferfing stock. etc.
The Stock Exchange is always
ready to cooperate with prospec-
taive investors seeking information,
and corporations refusing it should
be put on the black list.