Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-02-10
War Upon Stock Frauds


| of the various State blue sky laws and
similar measures relating to the sale
of securities. Mr.. Craig has been sue
cessively it's second vice president and
its vice president and was elected presi-
dent last Fall at the annual meeting in
Salt Lake City. 49,.
AS a securities commissioner he made
study of the blue sky laws through
out the country. These laws, he ex-
plains, have for their purpose the pro-
| lection of the public against imposition
and the prevention of the sale or 1ssu-
ance of securities that are unsound,
worthless or fraudulent.
| Blue sky" legislation does not pro-
pose," he has said, that any admins
trative body should attempt to remove
or eliminate the ordinary risks or haz-
ness which contains the elements OF
speculation If such business is justly
and fairly conceived and honestly con-
Quoted"
The name "blue sky" was derived
from the use of certain language which
was employed in case presented to the
United States Supreme Court involving
the constitutionality of legislation of
this character. It was said that this
legislation was aimed at securities issued
against speculative schemes which have
no more basis than so many feet OF blue
sky"
Kansas Was Pioneer.
Since the first law of this group was
enacted and tested in Kansas in 1911 the
following States have adopted similar
legislation: Alabama, Arizona, Arkansas,
California, Connecticut, Florida, Georgia,
Maine, Maryland, Massachusetts,, Michi-
gan, Minnesota, Mississippi. Missouri,
Montana, Nebraska, New Hampshire,
New Jersey, New Mexico, North Caro-
lima, North Dakota, Ohio. Oklahoma,
Oregon, Pennsylvania, Rhode Island,
South Carolina, South Dakota, Tennes-
see. Texas, Utah, Vermont, Virginia.
Washington, West Virginia, Wisconsin
and Wyoming.
The provisions of these laws vary
widely, and hardly two States have
identical statutes. The more successful
of them, according to Mr.. Craig, pro-
vide for the registration of all issues
and stock-selling concerns and the adj
ministration of the law by special
bureau empowered to investigate and
bring prosecutions.
In New York the Martin act which is
aimed at securities frauds, Is intended
|, to be enforced by the States attorney
general. While it confers great powers
of investigation, and has worked well
in some cases, 1t has been widely criti-
cized, particularly by officials in other
States, who maintain that New York
offers refuge for swindlers whose
operations are Nationwide.
The seriousness of the problem pre-
scented by the tipster sheet and long
distance operator vas emphasized in
the replies received by MFR. Craig from
inquiries directed to administrators of
blue sky laws in his recent survey.
Donald M. Pomeroy, head OF the Sc
curities division of the Department Of
Commerce In Minnesota, replied. for In
stance, that "the big majority of frauds
that are perpetrated here originate out
side of the State of Minnesota and are
the result Of postal. telegraph or tele-
phone selling. This trouble comes large
ly from States having no securities law
calling for registration OF dealers and
issues, or from States where their secu-
rites act Is not as effective as the one
In force In Minnesota.
Urges Mutual Action.
1--WE believe that more effective legis-
lation in several of the States would
help a great deal in eliminating the
frauds that are now being perpetrated
through the use OF the mails. telegraph
and telephone"
The people of Wisconsin also are be-
ing mulcted by tipster sheet swindlers,
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