Evening star., 1934-06-06
ROOSEVELT SIGNS
|. STOCKS MEASURE
Appointments to Commits
sion Expected to Wait on
End of Session.
BY the Associated Press.

BY the Associated Press.
President Roosevelt today signed
into law the Fletcher -Rayburn bill
to tighten Federal regulation of stock
exchanges and to relax somewhat the
requirements Of the securities act.
Here are the major provisions of the
stock market control law:
A new commission of five members.
to be appointed by the President and
confirmed by the Senate, will regulate
the exchanges and administer the Sc
curities act of 1888.
Members Of the commission, to be
known as the Securities and Exchange
Commission, will serve for $4,000 a
year.
Delays Appointments.
1t was said the President has given
no consideration whatever to mem
bership Of the commission. He has
received so or 60 names for study.
These have been placed in a folder.
and he said today that in all prob
ability he would not reach a decision
until after Congress adjourns.
All securities, exchanges must regis
ter with the commission and subject
themselves to its regulation, unless
exempted because of the limited busi-
ness transacted on them.
Regulations to govern the extension
of credit for margins will be laid down
by the Federal Reserve Board. The
law sets a standard. which the board
does not need to follow. limiting credit
tn nf
price OF security. or 100 per cent
Of its lowest price for the preceding
three years. provided 1t is not more
than IS per cent of current market
price.
Borrowers Limited.
Brokers must borrow from Federal
Reserve member banks or non-member
banks which comply with Reserve
| Board regulations, and under board
supervision, but in no case more than
20 times the capital they employ In
their business.
Manipulative practices on the ex-
| changes are prohibited and the COM
mission will have power to regulate
| legitimate operations such as short
| selling, which have potentialites OF
abuse
Regulations will be made by the
commission to prevent floor traolng
| by exchange members, with certain
exceptions, and to curb as FAR as
practical the combination OF broker
| and dealer functions.
| Corporations, to register their stocks
! on the exchanges. must file with the
| exchanges and the commission COM
plete data on their organization and
| financial structure. The commission
will have authority to require regular
annual audits and quarterly state
ments from the corporations.
Proxies Regulated.
The use Of proxies will be subject
to regulation by the commission.
| Officers, directors and owners OF
! more than 10 per cent of the stock OF
a corporation will be required to re-
port to the commission their holdings
| in its securities and file monthly
! statements of any changes.
The law goes into effect July l. but
the margin section does not become
operative until october l, and will not
| apply TO existing accounts until July
| l, 1897.
Penalties for violations run up to
500 fine or jail for two years, for
individuals, and s500,000 for ex-
changes.
Act MOdifc atiOnS.
Notifications of the liabilities un-
der the securities act provide that:
Purchasers must prove reliance on
untrue registration statement to COL
lect damages after an operations
statement covering II months has
been issued.
Underwriters. officers or directors
are not liable for mistakes of experts
if they prove they had no reason to
believe the statements we're untrue.
Underwriters are responsible only
for that part Of an issue they handle.
Plaintiffs may be required by court
to post bond to cover expenses o. suit.