Evening star., 1933-06-11

drove Congress to the enactment o1
the law at this time after having fol
many years consistently sidetrackec
blue sky" bills of one type and an
other.
According to figures cited in the con-
| gressional debates, about $4,000, ,00O,-
| 900 of new securities have been Offered
| in the United States since the Worlc
War. Representative Rayburn told the
| House that fully half of S25 ,000, ,00o,-
000 worth of securities foated during
this period have been proved to be
worthless" The Federal Trade Com
mission in its statement on May q used
this same figure, asserting that the
sale of worthless securities through mis-
| representation and fraud has amounted
to the collosal sum of $4,000, ,000,0 ,0oO
during the last 10 years" Senator
Duncan U. Fletcher of Florida. chair
man of the Senate Banking and Cur
rency Committee, in reporting the bill
contented himself with the statement
that investors have suffered losses OF
that amount during the last 10 years
Law Patterned After British.
The new law is patterned after the
British companies act. According tc
its sponsors, it is mild compared with
the British act, which controls incor-
porations as we'll as registration.
The essential feature of the law is
found in section s. This declares that
unless a registration statement is In
effect as to a security 1t shall be un-
lawful for any person, directly or In
directly, to sell or offer to buy such
security through the mails or any means
of transportation or communication IN
y1f fo
security through the mails or in inter-
state commerce.
1t Is further made unlawful to send
a prospectus through the mails or in
interstate commerce unless the pres
pectus meets the requirements of the
act. It is unlawful also to send a
security through the mails or in inter-
state commerce unless accompanied or
preceded by prospectus which con-
forms to the requirements
The act is predicated upon the power
Of Congress under the Constitution over
interstate commerce. 1t is specifically
provided that it Goes not affect the
jurisdiction of any State securities COM
mission.
The term security" is defined as
meaning any note stock, treasury stock,
bond, debenture, evidence of indebted
ness, certificate of interest or partici-
patton in any proft-sharing agreement,
collateral trust certificate, pre-organ-
izatior certificate or subscription, trans
ferrable share, investment contract, vot-
ing trust certificate, certificate of in
terest in property, tangible or intan-
gible. or, in general, any instrument
commonly known as a security or any
certificate or interest or participation
for, receipt for or warrant or right to
subscribe to or purchase any of the
foregoing.
Exempted Securities Listed.
Exempted securities include the fol-
lowing classes:
/. Any security which, prior to or
within so days after the enactment of
the law, has been sold by the issuer or
offered to the public. The exemption
is not applicable to new offerings of
the same security after the 60 days
have elapsed.
2. Any security issued or guaranteed
by the Federal, State or local govern
ments or by corporation created by
the Federal Government or by national
banks or banks supervised under State
laws or by a Federal Reserve bank.
8. Any note, draft, bill of exchange
or bankers acceptance which arises out
of a current transaction or the pro-