The Washington times., 1931-04-24
WAR ON STOCK
FRAUDS URGED
BY WHITNEY
Head of New York Exchange
Warns That SWindIers Are
Taking Millions From Public

PHILADELPHIA, April "a.
Richard Whitney, president Of
the New York Stock Exchange,
addressing the Philadelphia
Chamber Of Commerce at noon
here today, said that the depres-
sion had turned peoples thoughts
not only to problems of i'm
mediate relief, but to questioning
whether certain current business
practices are sound. He COM
mented:
"In the lives Of nations as i'm
the lives of individuals periods
Of self-examinatiOn are useful
Time to Consider
"The present inactivity Of
business has given us time to
consider certain evils which
have existed for many years
and. in addition, time to think
seriously about q number Of
questionable practices which
passed unnOticed in the days
Of prosperity.
Declaring his interest as head
Of the stock exchange primarily
must lie in the correction Of
evils existent in security matters,
he continued:
1--WE have all been aware for
many years Of the evils con-
mected with the sale Of fraudu-
lent securities and with the
fraudulent sale Of genuine
securities. For convenience, I
win use the term security
frauds in referring to both
types of this evil because, in
the last analysis, both are
based upon misrepresentation
and both accomplish the same
result.
Method Immaterial
''Tt is immaterial, as see it,
whether the Misrepresentation
has to do with the existence Of
O company or with its past
earnings and future prospects.
In either case, the ignorant or
unwary are led to part with
good money for paper which
is practically worthless or
nearly So"
Asserting that frauds of one
kind or another have existed al
ways, mentioning among the older
ones the gold-brick and fake-lot
sales and crediting the postal au-
thorities for cleaning up many
of these, he warned:
I'm the last few years there
has been no outstanding type of
security fraud and the public
has been lulled into believing
thta fraud in connection with
securities has become negligible.
We talk and read today about
racketS and racketeers and, In
the popular imagination, this
newer and more dramatic evil
has taken the place of the
earlier types of fraud.
Impression False
"This general impression is
absolutely false. Security
frauds are as rampant today as
they have been at anytime in
the past, and the loss they are
causing to the people Of the
United States annually aggre-
gates hundreds Of millions of
dollars. The methods are less
OstentatiOus.
''Tipster sheets, with the ap-
pearanca of genuine financial
newspapers, have replaced the
flashy salesmen of years ago,
but the method and purpose is
Gtfll the same and the evil is
Just as great, il not greater. II
you talk to men who are active
In suppreSsing security frauds,
you will hear, over and over
again, the same sad story Of
money stolen from pOOr people
by the sale of worthless securi-
ties.
'"The officials who are charged
with enforcing our anti-fraud
statutes, the active men i'm the
Better Business Bure us
throughout the United States
and all thoughtful people in the
security business can testify to
the fact that fraudulent securi-
ties are being issued and sold
to the public day after day