Evening star., 1934-03-20

than the purchase and the carrying
of securities have been left completely
to such rules and regulations as the
Federal Reserve Board may adopt.
And to make certain that the bill
can have no def1ationary effects, the
margin requirements have been made
expressly not applicable until January,
1889, to undermargined accounts now
carried by either banks or brokers.
The bill looks only to the future
it lets the dead past bury its dead.
To meet the third evil. the bill
will compel the management Of cor
porations to reveal to the public whose
funds they have invited for invest
ment decent minimum OF informa-
ton concerning the condition of these
corporations owned by the investing
public together with a continuing
revelation of the number of shares of
stock of the corporation held by the
directors, officers and principal stock
holders This accomplishes a reform
for which the better stock exchanges
themselves, with limited and made
quate powers have worked compare
lively unsuccessfully for years. The
securities act has accomplished this
result with regard to new issues. This
bill extends the investors protection
by assuring him that on securities al
ready issued which the stock ex-
changes constantly offer for sale to
him this decent minimum of informa-
ton will be given him through regular
reports Of the corporation to the ex-
changes and to the commission, which
reports will be available to the public.
Reveal Own Interest.
BY a section which has been we'll
nicknamed the anti-Wiggin act" di-
rectors, officers and other insiders will
have to turn over to their corporations
profits they make on short-term
speculations on inside information in
the securities of those corporations.
BY a further provision, managements
and others soliciting proxies for cor
porate meetings to control corpora
tions will have to reveal to stock
holders through the commission their
own interests in the corporation and
the real purposes for which they in
tend to use the public's proxies.
The revised bill which 1 introduced
this afternoon is the product of as
honest and searching preliminary
preparation as has ever been accorded
a legislative measure. Certainly it
does not embody any spirit of dog
matism. Hearings on the first draft
of the bill introduced nearly three
weeks ago have been held for at least
two weeks of that intervening time.
All the resources Of the stock ex-
changes were exhausted to assure that
by oral argument and written brief
committees and by innumerable rep
resentations made to individual mem
bers OF Congress and those working
on the drafting of the bill every pos
sible criticism of that draft was
brought home. With all these criti-
cisms, legitimate and illegitimate,
carefully noted. representatives of the
Treasury and OF the staff Of the Fed
eral Reserve Board, of the Senate
Committee on Banking and Currency
and other craftsmen of the bill have
worked day and night for over a
week through innumerable joint re-
drafts to work out the revised bill
which 1 introduced this afternoon.
They have had the help and criticism
of we'll known Wall street lawyers, OF
rival bills proposed by the stock ex-
change groups, Of the investigators
of the Twentieth Century Fund and
of all the banking and economic ad-
viSers at the Governments command.
The open -mindedness with which the
revision has been done is illustrated
by the treatment Of the subject OF
segregation of the functions of brokers
and dealers. The original bill pro-
vided for their comparatively complete
segregation. With the principle of
that provision, as with the principle
of the divorce of commercial banks
and their investment affiliates, no one
can fairly disagree. Brokers and
dealers and underwriters no more
than other men can serve two mas
ters. 1t was brought home to the
committee, however, that at the pres
ent low ebb of the underwriting and
dealing business no choice was really
offered to the combined broker dealers
at the present time but to choose
being brokers, with possible inter-
ference with the flotation of new
issues through the present dealer
system.
Segregation Postponed.
For that reason the revised bill puts
off the problem Of the ultimate segre-
CATION of brokers and dealers until