Evening star., 1925-10-23
LOST DOLLARS AnnL1oN \ YEAR
V-Plugging the Leak.
BY VI. B. LEIICk.

forces time is taken UP with check
ing the data in applications of legiti-
mate companies, leaving small mar
gin for chasing crooks. In many
States, though. a new bond qualities
automatically If it has been listed by
the New York Stock Exchange, which
scrutinizes all securities before letting
them be traded in on the exchange.
Legitimate companies sometimes re-
sent the red tape of getting qualified
under the laws of this or that State.
so bond bootlegging has sprung up.
The bootlegger may have a gilt-edse
offering, but its sale may be illegal in
the State If it hasn't qualified under
the State regulations. SO. for in
stance, house on the edge of Illinois
will take bonds approved in Illinois.
hurry them over into Indiana. sell
them there despite lack of India ma
approval, and then hurry back TO Ill-
nois.
Meanwhile. it is objected. a fraudu-
lent company may have had time in
this State or that to camouf1age bal
ance sheets and earnings statements,
get a permit and sell securities with
| reduced competition from legitimate
companies.
Maryland Model.
The fraud laws tend to use the
| States machinery for police work
rather than for clerical work. Action
| is taken only after suspicion is aroused.
| The theory relies largely on cooper
alton between honest business men
and the authorities. Maryland's Is a
| model for such laws. In Baltimore
bankers and others co-operated to
make it effective. If they heard of a
| suspect opening an office, they gave
| information. A policeman appeared
as the crook was moving in. He had
| a questionnaire. If the newcomer OBJ
jected the attorney general stood
back of the policeman. AS a result
| Washington for time was overrun
by fiy-by-nights from Baltimore.
| New York's Martin law, recently
amended, is an anti-fraud law. 1t
| does not provide for registratio or
licensing. Sellers of securities must
publish notices telling of securities
they are going to offer. This is a
simple check. When suspicion exists
the attorney general may ask for an
| injunction and the appointment of a
receiver. The Martin law is credited
with stopping some frauds which had
passed blue sky requirements.
Want Broker Control. sz
Sound conservative business as a
whole does not like regulation. I'm
pOftant banks nave Deen known 10
retire from the bond market in a
neighboring State which had a blue
sky law. There are other people
who favor regulation. District Attor
ney Joab H. Banton of New York
County comprising Manhattan) advo
Gates State control of brokers. A few
months ago he cited the failure of SO
brokerage firms of standing, within
three years. at a cost to their clients
of 500, ,000, 900, with further losses in a
hundred smaller failures. This loss
he said, was due to market rigging
and manipulations such as stock wash
ing, blind pools and rumor mongering
That, however, touches on the bucket
shop and it's allied evils, and is of
the track in this discussion. The
present object is to inform the in.
dividual who thinks of himself as an
investor, not as a speculator.
| What can he do for himself when
the wolves come prowling in Sleeps
clothing?
| Copyright. 1921
! TOmorrOw-"What to Ask"