Evening star., 1934-05-08
US. Control of Industry Seen
In Stock Market Control Bill
Report, Representing Vie,cs of Com
merciol and Industrial Groups, Sub
mitS Series of amendments.

broad in its terms that it covers the
whole process of distribution of all
new issues of securities which are
essential to provide capital for in
dustry This is a section which has
consistently been criticized by in
dustry as one of the insurmountable
barriers to the free flow of private
capital into investment in produc-
tive industry. This flow of capital is
essential to a consummation of the
recovery program and this section
puts it in the power of the commits
sion, through unwise regulations, to
obstruct the flow of capital and
prevent the accomplishment of the
entire congressional program.
1T is important to emphasize that
more than 100000 corporations do not
now have their securities listed on
any exchange. In providing by this
section for the commission to exert
controls with respect to corporations
whose securities are sold through deal
ers and brokers, often on very linn
tied local market. condition would
be created which would be most dis
turbing to business.
AS a substitute for section Is as
worded the following is suggested:
The commission is directed to
make a study of transactions in over
the-counter markets and the practices
of dealers and brokers engaged in
trading in securities in such markets
and report the results Of its study and
its recommendations to the Congress
on or before January 3. 1886
The outline attacks provisions in
4 the bill dealing with restrictions on
borrowings by member brokers and
dealers and suggests changes in sec
ton II, which provides restrictions on
floor trading by members. preferring
in part the House bill language in
this connection.
/ In section u are included registra-
| ton requireme nts for securities listed.
! The outline insists that some of these
requirements impose an unfair burden
on industry and should be amended
1T is essential that any power Of
the commission TO control industry
through the general power to require
additional information be eliminated.
May Require Reports.
This section purportS to deal only
with the requirements that an issuer
must comply with if a security is to
be listed on an exchange But it
should be considered in the light of
the evident intention of the bill to
force listing, and in the light of
the power given to the commission in
the over-the-counter market section
to establish similar requirements by
| regulation for all unlisted securities
This section II is one of the portions
of the Senate measure to which in
dustry is making strong objection"
The exchange commission, under
section 13. may require every issuer
of a security registered on ma
tional securities exchange to file pc
riodical and other reports.
This section" it is stated, gives
the commission broad powers to inter-
fere with industry and impose heavy
burdens on all corporations with listed
securities. This entire section should
be rewritten"
The outline criticizes the provision
dealing with the publicity given to
information filed with the exchange
commission, holding that this makes
available information to business
competitors which may be used to the
detriment of the corporations provid-
ing the information,
Section 30, which deals with penal
ties for law violations. should be
amerded. it is said, with all reference
to rule or regulation" stricken from
the bill. violations of rules and reg
ulations should not be made a GRIM
inal offense when such broad powers
to make regulations are delegated to
the commission. In effect. the COM
mission is given power to write a
criminal CODE
"The penalties in this section are
too severe and should be properly
modified