Evening star., 1934-05-06
OBJECTIONS USED
T0A|DSTOCKB BILL
Senate Leaders Capitalize
on Arguments Against
1888 Securities Act.
BY the Associated Press.

BY the Associated Press.
The objections of big business tc
last years truth in securities" act
were capitalized yesterday by Senate
administration leaders to assure quick
enactment of this years stock ex-
change control bill.
For months business leaders have
complained, individually and through
their trade organizations, that the Sc
we're penalties which the former pro-
vides for the issuers Of faulty securi-
ties was an impediment to recovery
Conservative Votes Expected.
Pending in the Senate are amend
ments to the stock exchange bill in
tended to decrease materially the
severity of the securities act and ex-
pected to attract conservative votes
which would push the former through
virtually unchanged.
AS enacted, the securities act gives
one who buys or sells securities on
the strength of misleading informa-
ton the right to recover damages to
the extent of the full difference be-
tween the price at which he bought
or sold and the subsequent extreme
prices of the issue in question.
Under the amendments, offered by
Chairman Fletcher of the Senate
Banking Committee, and said to have
White House backing. the extent Of
damages that could be recovered would
tal ~ ho onf1Io1 lnScpC n.
Cured.
Shift Responsibility.
The securities act places the burden
of proof of good faith upon the issuer.
The amendments would shift this to
the plaintiff. In addition. the Fletcher
amendments would transfer admins
tration of the securities act to the
special commission which would be
created by the Senate stock exchange
control bill to administer it.
The plea of industrial leaders for
modification of the securities law has
severity of its penalties was not only
stopping the issuance OF bad securl-
ties but of honest and sound securities
as well.
Directors of corporations, they ar
gued, were issuing no securities at all
rather than run the risk of innocently
violating the securities act. This,
they said, was preventing flotation OF
corporate loans which would help
recovery.
Business Leaders Supported.
Conservatives of both Houses of
Congress have joined with the
business leaders in demanding modi-
fication. They have also opposed
many provisions of the stock ex-
change control bill, and while eventual
passage of the latter has never been
in doubt administration leaders. by
offering the two together, believe the
market control bill can be enacted
almost as it stands.
The latter bill was approved by
the House Friday by an overwhelming
vote, which was expected to influence
some uncertain ballots in the Senate.
Although in the main the House and
Senate bills are similar, they differ
in several details.
The Senate bill would create new
commission to administer other pro-
visions than those on margins; the
House measure would vest such con-
troll with the Trade Commission. The
Senate bill mentions no figure in
connection with minimum margins;
the House measure would express it
as the opinion of Congress that the
minimum established for normal
times should be As per cent.
Looking forward to passage Of the
Senate bill with few changes, leaders
saw an opportunity for trading in
these differences. One compromise
already under discussion would have
the House yield on its trade commits
sion administration and the Senate
adopt the Houses As per cent stipu-
lation.