Evening star., 1934-02-02
BANKERS PUSHING
INVESTMENT CODE
Association Head Outlines
Fair Practice Rules for
N. R. A. Adoption.
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, February 2.-Robert
e. Christie. jr.. president of the In
vestment Bankers Association of
America, announced today that the
board of governors of the association
would meet in Chicago February 10
and II to consider the fair practice
rules for the investment banking code
Definite and substantial progress, u
said Mr.. Christie, has been made on
the rules of fair practice, on which
a specially selected Drafting Commit
tee has been continuously at work for
more than two months. When ap-
proved, the fair practice rules will be-
come part of the investment bank
ing code and should go a long way
toward rounding out the N. r. A. S
comprehensive plan for investment
banking in the scheme of business re-
covery.
While at this stage I cannot state
the proposed fair practice rules de-
nitely, because the Drafting Commit
tee has not yet fully decided certain
points to be recommended, I should
like to present at this time some Of
the important questions involved and
the objectives sought.
Periodic Reports Favored.
"One proposal is that underwriters
require iSSuerS of securities that are
publicly offered to provide adequate
periodic financial statements This
question seeks to determine just what
such financial statements should con-
tain in order that investors may have
adequate and continuous information,
as we'll as practical ways of making
such information available to in
vestors. 1t is also proposed to insist
that certain proved safeguards for in
vestors be included in all security Of
ferings
Sinking funds for future bond is
sues are another important question
that is receiving careful study. The
objective is that whenever indebted
ness shall be created in the form of
obligations to be distributed to the in
vestlng public, an appropriate form of
sinking fund or other suitable pro-
vision for debt retirement, in whole or
in part, be established in order to
safeguard the interests of investors.
The purpose of registration of Sc
eurlty dealers under the National Code
Committee would be, of course. to
add still further effectiveness to the
administration and enforcement of the
code.
One-Price Business Urged.
THE various questions relative to
fair practice rules governing the Gus
tomary machinery used in underWrit-
Ing and distributing new securities.
commonly referred to as the syndi-
cate, have perhaps their greatest in
terest in the proposals to eliminate
all concessions and to make invest
ment banking a one-price business.
The fair practice provisions def
mtely contemplate the necessity for
correct nomenclature.
The falr practice provisions will
probably go to greater length in some
important respects on the subject of
disclosure than does the securities act.
This applies to the relations between
investors and investment bankers the
relations between investment bankers
themselves and their relations with is
suers OF securities. The purpose. of
course, Is to assure full information
to investors and ethical dealings be-
tween dealers themselves as well as
between dealers and investors"