Evening star., 1933-05-28
ROOSEVELT SIGNS
BILL ON SECURITIES
Measure Calls for Closer
Scrutiny of Issues Of
fered Public.
By the Associated Press,

By the Associated Press.
President Roosevelt put the protec-
tive arm of the Government about Sc
curity investors yesterday to guard
against fraudulent issues that have to-
tailed the estimated sum of $4,000, ,000,-
900 in the last 10 years.
The legislation requiring full public
ity of new security issues to show the
public all pertinent data relating to
the paper, was signed by the President
with statement that it was aimed ito
correct some of the evils which have
been so glaringly revealed in the prl-
vate exploitation OF the public's
| money"
Members of the Federal Trade Com
| mission who will administer the new
act were at the White House signing
and Immediately set to work to prepare
regulations to put the law into effect.
Senator Robinson of Arkansas, the
Democratic leader; Representative Ray
burn, Democrat, of Texas, and Senator
Fletcher, Democrat, of Florida, who
guided the legislation through Con-
gress, also were beside the President
when he signed the bill.
Roosevelt Makes Statement.
"If the country is to flourish" said
| Mr.. Roosevelt, capital must be in
vested in enterprise. But those who
seek to draw upon other peoples money
must be wholly candid regarding the
facts on which the investors judgment
is asked.
ITO that end, this bill requires the
publicity necessary for sound invest
| ment 1t is, of course. no insurance
| against errors of judgment. That is
the function of no government 1t
! does give assurance, however, that,
within the limit of its powers, the Fed
eral Government will insist upon knowl-
edge Of the facts on which alone judg-
ment can be based.
"The new law also will safeguard
against the abuses of high pressure
salesmanship in security f1otations. 1t
will require full disclosure Of all the
private interests on the part of those
who seek to sell securities to the pub
lie"
The law requires that both domestic
and foreign issues be registered with the
Federal Trade Commission for 20 days
before they are advertised or sold. The
commission can issue stop order
against any security if it found fraud
or Misrepresentation was involved.
The legislation also carries the pro-
posal of Senator johnson, Republican,
of California, setting up a corporation
of foreign security holders to help
American investors in defaulted foreign
bonds recover as much as possible OF
| their money.
Federal Trade Statement.
The Federal Trade Commission is
sued statement asserting:
1T will be the aim and purpose OF
the Federal Trade Commission under
the authority of the act to prevent
| further exploitation of the public by
the sale of fraudulent and worthless Sc
curities through Misrepresentation, to
place adequate and true information
before investors, and to protect honest
enterprise seeking capital by honest
representations against the competltlon
afforded by securities offered through
crooked promotion and mSrepreSenta-
, ton.
statistics indicate that the sale OF
worthless securities through misrepre-
sentation and fraud has amounted TO
the colossal sum of SIS 900, 100000 dur
ing the last 10 years. This means Sou
for every man, woman and child IN tne
United States"
The commission also believes the
data to be made available unoer the
new law will permit more accurate
study of economic trends. 1t warned
that the fact that description OF the
security and of the concern issuing the
security is filed with the commission Is
in no sense and must not be regarded
as an Endorsement or approval OF the
security or the concern by the COM
! mission
Puts Seller on Guard.
Other features of the securities bill
are:
| It places the seller as well as the
buyer on guard and imposes heavy
penalties for willful Misrepresentation
and fraud
Detailed data are required as to the
| financial condition Of the company,
past issues and other facts concerning
! the soundness of the security.
Such information filed with the reg
istration statement shall be made
available to the public under such
regulations as the commission may pre-
scribe and copies thereof, photostatic or
| otherwise, shall be furnished to every
applicant at such reasonable charge as
| the commission may prescribe.
The Trade Commission could issue a
stop order against any security II 1t
found fraud or Misrepresentation was
involved and signers could be relieved
of civil liability only If they could show
reasonable care was exercised in prepa-
ration of prospectuses and that they
| had no knowledge of any false or erro-
neous material in them.