Evening star., 1934-06-22
CHANGES PRAISED
IN NSECUR|T|ESACT
u. S. Chamber Summarizes
important Features of
Amendments.
BY EDWARD C. STONE.

amendments recently passed by Con-
gress, lifting the serious danger of
heavy liabilities and penalties on
officers, directors and underwriters of
big corporation issues of new secu-
rites, have been splendidly sum-
married by the United States Cham
Der of Commerce These important
amendments greatly ease the situ-
alton and are expected to bring
steady flow of new issues into the
investment markets. The tonlng
down of some of the more drastic
regulations in the original securities
act is summed up as follows:
Quicker Action Required.
Any action against a director, off,
Ger or underwater must be brought
within year instead of 2 years
after the discovery of an untrue
statement or an omission, and in
any event, within years instead of
10 years after the security was first
offered to the public.
An underwriters liability is limited
to the amount of securities which he,
personally, underworld.
The standard of care which must
be exercised by directors, officers, or
underwriters, has been changed from
that "of a person occupying
fiduciary relationship" to that of "a
prudent man in the management of
his own property" The most COM
plicated and difficult questions to
answer, and the ones where mistakes
or omissions are most likely to occur,
are those relating to balance-sheet
earnings, property accounts, ct cetera,
where the officers, directors, or under
writers must rely upon the work of
an expert. Under the amended act,
the director, officer, or underwater,
who can sustain the burden of prov
ing that he did not have reasonable
ground to believe that an error or
omission has been made by the ex-
pert, is exempted from liability.
Limit Put on Damages.
The recovery of damages against
q director, officer or underwater has
been, in effect, limited to the actual
damage caused by the untrue state
ment or by the omission of a material
fact; as the officer, director, or under
writer is now given an opportunity to
show that alleged damages were in fact
due to other causes. This is the most
important change in the liability Sec
ton. Additional provisions have also
been inserted to discourage strike
suits.
In section the exempted classes
of securities, for which registration
is not required, have been increased
from eight to eleven.
ANY purchaser of a security between
its issue and the appearance Of finan-
cial statements covering at least II
months after the issue does not have
to show reliance upon the registration
statement, but any one who purchases
after the appearance of such financial
statements is presumed to have de-
pended on the financial statements
and must. in order to recover dam
ages by reason of the registration
statement. show his reliance upon
that statement.
Administration in New Hands.
An important amendment to sec
tion 19 (a) reads as follows:
mo provision of this title imposing
any liability shall apply TO any act
done or omitted in good faith in con-
formity with any rule or regulation
of the commission, Notwithstanding
that such rule or regulation may, after
such act or omission be amended or
rescinded or be determined by judi
cial or other authority to be invalid
for any reason"
The administration of the amended
securities act has been transferred
from the Federal Trade Commission
to a new commission, to be appointed
by the President, to execute the pro-
visions of the securities act of 1888
and the stock exchange act of 1884.
Controller Grants Request.
AS result of negotiations with the
office of Controller of the Currency
OConnor by a committee represent
ing the former Woodridge-Langdon
Savings g. Commercial Bank. COM
posed of w. B. Putnam and John L..
Knopp, former directors; E. L. Norris
former vice president-cashier and
later conservator, and John l., Fowler,
attorney for the bank. Mr.. Norris has
been appointed receiver for the pur-
pose of liquidating its remaining
assets. succeeding Carter B. Keene,
who has resigned.
The bank made very urgent re-
quest some time ago that a former
Official personally acquainted with the
borrowers, be assigned to the ADJUST
ment work. Carter B. Keene, who has
been looking after the banks inter-
ests, is receiver for the United States
Savings Bank, which is soon to pay
IS per cent dividend to depositors.
Cleaned in Financial District.
Bruce Baird, trust officer of the
National Savings & Trust Co., has
returned to his duties at the bank
after a business trip to Italy.
Maurice Otterback, chairman of the
board Of the AnacoStia Bank, is re-
ported as doing well following an op-
Grafton for appendicitis.
The First National Bank OF Balti-
more has declared the regular quar-
terly dividend of so cents a share,
payable July 2, to stock of record
June %.
Member banks in the Dayton, Ohio,
Clearing House Association. will re-
duce interest rates on savings and
time deposits from to 2 per cent, ef-
fective July /.
The New York Trust Co. has de-
clared the regular quarterly dividend
of SIPS a share, payable June 30
Today's Trading on Exchange.
Issues on the Washington Stock Ex-
change today we're strong and higher.
Capital Traction moved up to Is on
small lot sales, while Potomac Electric
Power 512 per cent preferred jumped
from Ill to l111a. q and closed at
1117s. The same corporations 6 per
cent preferred figured in two sales,
moving at 1l117. Peoples Drug Stores
preferred scored a new high for the
year. selling at 108 against the last
previous transfer at 1862.
Loan Dividend Declared.
Directors of the Washington Indus