Evening star., 1933-11-03
FACTORS OUTLINED
IN SECURITIES ACT
Lands Names Five Groups
{ on Whom Liability Can
Be Imposed.
BY EDWARD c. STONE.

BY EDWARD c. STONE.
DR.. James M. Lands, former Harvard
Law School professor and now mem
Der of the Federal Trade Commission,
who assisted in drafting the securities
act of 1888. told the New York State
Society of Certified Public Accountants
the other day that, broadly speaking.
the persons upon whom liability may
be imposed can be divided into five
These are the issuer; the directors of
the company, whether or not they nave
signed the registration statement the
chief officials of the company, experts,
such as accountants. engineers. apprals-
ers and any persons whose profession
gives authority to a statement made
by him, and the underwriters of the
issue. :,
Omissions in order to be ground
for liability must. in the language of
the statute be omissions OF facts re-
uuired to BE- stated in the registration
statement. not misleading.
Discussing materiality of facts Dr..
Lands said that facts become material
for the purpose Of omission ana mis-.
statement when, as a consequence OF
such omissions and misstatements, nom
existent values are attributed to
security
To pretend that the questions of liza
bility are insignificant is wrong, DR..
Lands said, but "as equally vicious is
the practice. unfortunately too common.
of conjuring up bcgey men to frighten
those who may wish to seek new
financing through public issues. Not
only does it discourage operation under
the act, but the bar when later faced
with the task of defending those who
may. nevertheless. register under the act.
will be forced to do one of those volte-
faces so humillating to the legal profes-
sion.
IF recent history teaches us any
thing" DR.. Lands continued: 1t dis
associated with security f1otations are
not induced 10 refrain from material
non disclosures by fear either of the
very real liability for compensatory dam
ages at common law or fear of prosecu-
ton under the criminal law. True, my
good friends tell me of reformed in
yestment profession that refuses to take
secret profits or refuses to manipulate
a market to unload its own securlt-e -es
under the excuse of maintaining the
distribution or refuses to engage in
processes that we're too current during
the boom times of another era. But the
evidence of even a sudden conversion is
lacking, wholly irrespective of its perma
nency"
Regular Dividends Voted for 1884.
Earl w Sapp. general of the New
England Mutual Life Insurance Co. re-
ports that the directors have voted to
continue the present dividend scale for
the year 1884. The directors also voted
to authorize interest on trust funds left
with the company and on dividends left
on deposit at the rate of Ala per cent
for the coming year This action, of
course. was taken after very careful
consideration of the company's finances
and of the general business outlook. 1t
is considered in insurance circles as a
special tribute to the firms faith in the
future and the belief that economic
conditions are going to grow steadily
better next year. Mr.. Sapp and his
Washington associates share the cheer
full views so clearly manifested by the
heads of the Company.
The annual distribution" President
George Willard Smith explained, al
though called a dividend, is in no way
stock corporations. In mutual life
insurance company the so-called divi-
dend is merely return 10 the policy
holder of such portion of his annual
premium as has not been required to
meet the years policy claims. expenses
and reserves.
Actuarial and investment calcula-
tions warrant a continuation OF the
present dividend scale for the coming
year: therefore. the company and its di-
rectors consider it their duty as trustees
of the funds of this mutual company
to continue the present scale for the
year 1884"
The New England Mutual was char
tered by Massachusetts in 1885 and has.
westhered seven depressions in its long
business life.
20 National Banks Chartered.
In the final II days of October. u
national banks were issued licenses 10
resume business, after completing re-
organization plans. or were granted
charters for new banks to take over
the business of old institutions. j. F. I. |
O'Connor, controller OF the currency
stated.
Frozen deposits of the 20 institutions
which opened or reopened. amounted
to S3e.3 900, and unrestricted de- |
posits totaled S4.490,000. The addi- |
tions of these 20 brought total number
of licensed national banks in the
United States on November / to 5.067. |
with aggregate deposits of s17,061,-
7O1 900.
During the same II days of Octo-
ber. q national banks received ap-
nroval for their reorganization plans
These 81 had S14.013000 frozen and
S1.662 900 unrestricted deposits. At
the close of october there were 1926
national banks in the country. with
1896 1903 900 frozen and s29. 9.232,0O0 un-
restricted deposits. which. although un-
licensed. had had their reorganization
plans approved.
Booker Lauds Bankers Farley
Y. E. Booker, jr, head OF the Wash
ington investment firm CT Y. E. Booker
e. Co.. has returned from the annual
convention of the Investment Bankers
Association Just held at Hot Springs,
Va. He is enthusiastic over the annual
meeting.
The attendance was unusually large
and the delegates watched every SeS-
sion very closely. During the meeting
a great many suggestions were made
for bringing the investment business
back to a more satisfactory basis as
the country emergeS from the depres-
sion.
The subject of new issues was given |
special attention. some of the main
addresses being made on city, county
and State financing. The railroad
situation so far as bonds are concerned, |
also got its share of convention at
tention. Discussion of the securities act
of 1888 was one of the high lights of
the meeting, as had been promised in
the advance program.
Paul V. KeYser. Washington attorney,