Evening star., 1933-02-09
NEW AUDIT POLICY
WINNING APPROVAL
Stock Exchange Finds Sup
port for Plan Of Independ.
ent Reports.

NEW YORK, February 9.-The
campaign of the New York Stock Ex-
change for more frequent and detailed
reports, by independent auditors, Is said
in sources close to the Exchange to be
meeting with gratifying response on
the part of corporate arrangements.
Richard Whitney, president Of the
Exchange announced last week that
the committee on the stock list had
begun an investigation OF the scope Of
the independent audits which listed
companies are having made, and in
some quarters close to the Exchange. it
is felt that this may lead to the adop-
tion OF regulations by the Exchange
laying down certain uniform accounting
practices.
Rules Amended.
The latest Stock Exchange move is
the third important action to be taken
SO far this year by the Exchange. Last
month, the Exchange amended its rules,
making 1t compulsory for all companies
which plan to list stocks or bonds for
trading to furnish. independently audit
ed statements. This ruling it is now
forecast, will be extended to apply to all
companies with securities listed on the
Exchange-not only those which apply
IN future for new or additional listings,
but also those which already have
securities on the big board"
ABOUT two weeks ago, the Exchange
cracked the whip over several Of its
members who had violated a new ruling
1oroldd1ng the payment of gratuities to
employees OF other brokers, without first
cd
were suspended, their punishment
ranging from one month to three wears
Last year number Of important
changes were announced by the Ex-
change, each move taken for the avowed
purpose OF furnishing stronger safe
guards for investors.
On February 18, 1892, the exchange
mace 1t mandatory for all brokers to
obtain the special written consent of
owners OF stocks before their securities
could be loaned by brokers for short
selling purposes. 1t was found that a
number of customers who had left
tnelr securities in the custody of brokers
were reluctant to give their consent. A
small percentage was said to have re-
1uSeo Sucn consent altogether.
On June % the exchange placed a
ban on the sale by its members of So
SoASo PoShdBCo VI SECURITIES, Sucl units
of 20 to Is separate stocks, without
first obtaining the special permission of
the exchange. The exchange explained
that 1t had investigated the sale Of
packages and had found In q great ma
jority OF cases that the loading charge
representing the profit to the broker
handling the sale-was unduly large
and consequently unfair to the buyer.
The exchange is now involved in a suit
over this ruling. A decision has not yet
been rendered.
Last Fall the exchange put thumbs
down on pool participation by any
member in a stock in which he also
served as a specialist. The exchange
explained that participation in a pool
by specialists gave the pool an unfair
advantage in handling the market for
pool stocks.
Near the end Of the year the ex-
change passed its regulation forbidding
the giving of gratuities to employees of
other brokers, banks, financial services
and the like without first obtaining the
consent Of their employers.
In addition, the exchange has main
tanned close vigil over brokers letters.
Shortly after the Maine election the
exchange warned its members against
sending out letters to customers which
might smack Of political bias or run
the danger Of spreading false rumors.