The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1934-02-21
BY JOHN w. LOVE
Scripps-Howard staff Writer

]
To start rebuilding the public S
confidence in an essential business,
the nations investment dealers are
today discussing their proposed
trade practice rules under the in
veStment bankers code.
In meetings in twenty-siX cities
the elaborate rules suggested by the
code committee are being made
public. They represent the invest
ment dealers effort at self-govern-
ment of much criticised business,
and if they work as they are in
tended to, the purpose of the secur-
tiles act would largely be accom-
plished within the trade itself.
The meetings which started Mon
day are being held in New York,
Chicago, Baltimore, Buffalo, Cincin-
natl, Cleveland, Denver Indianapo-
lis, Pittsburgh and seventeen other
cities. All investment dealers have
been asked to attend the meetings
whether or not they belong to the
Investment Bankers Association of
America.
Those investment dealers are the
men who buy from corporations the
stocks and bonds which represent
the ownership or the debt of these
corporations. The dealers then sell
them to the public. Their business
also includes very often the resale
of those securities for people who
decide to get their money out of
them but an investment banker is
not necessarily a broker who be-
longs to stock exchange.
These investment bankers possess
the machinery by which capital is
raised for large industry in this
country, and because their machin-
cry has not been working lately the
manufacture of the heavy stuff like
rails and generators has been al
most shut down, leaving millions
out of work. When capital is not
being supplied in a steady stream,
the makers of the things which cap
ltal buys are idle.
Various Views Given
The debate is going to be inter-
esting this week because an import
ant group among the investment
bankers believe that the main rea-
son their machinery has not been
working is not 10 be found in the
securities act, but in the paralysis
of public confidence in securities.
To restore it they say the invest
ment dealers must adopt rules
which are even strictor, in some re-
SpectS, than those in the securi-
lies act.
Another group believes the rules
are too stiff. Practically all the
dealers who have seen the rules
say they are likely to slow down the
securities business, but some of
them think this is the best way to
restore it to health. BY reaSsuring
the public of fair treatment they
believe the supply of capital will in
the end be greater than it was.
More capital, they think, will go
into legitimate things and less into
things which enrich only individ-
ualS and not the community. An
important provision is the one for
publicity on the amount of money
the issuer of the security receives.
All this is not to be confused with
the Fletcher-Rayburn bill for the
regulation of stock trading.
The rules most likely to interest
investors are those for publicity on
all earlier sales to preferred lists
and the prices charged, those re-
quiring uniform prices on all sales
to the public, rules calling for the
most elaborate systems of account
ing in the com Janies on which
securities are Sod, as part of the
careful investigation the sellers of
these securities must make, and the
regulations on "over the counter"
transactions.
Stops High Pressure Sales
Other rules provide for the con-
troll of commissions and all selling
expenses, regulate the statesmen to
keep them from high pressure"
methods, protect the members of
syndicates from themselves being
pushed into selling campaigns too
quickly ca fruitful cause of high
pressure" selling) Or from having to
compete with cut-price methods.
The public is to be protected all
around from a too-vigorous COM
petition.
The draft of the rules is twenty
five closely printed pages. 1t closes
with the boundaries of the sixteen
districts into which the investment
business of the country is to be
divided for purposes of administer
ing the rules.
For the first time the investment
business is going to admit publicly
that there is a ground floor and
is OOioC to fell if these rules are