The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-07-09
COMMISSION Is
POLICEMAN OF
STOCK BUSINESS
State Securities Board on
Guard Against Fraud
in Sales.
Continued From Page One

CONTINUED From Page One
vigil over security sales and to sepa-
rate the wheat from the chaff
The Indiana Securities Commits
sion is the guide-post for the secur-
ities business in this state. To
Chester Rilsnd Montgomery. secur-
tiles commissioner. falls the duty of
administering this act. To help him
he has an enlarged staff. as COM
pared with two years ago. and an
assistant from the attorney gen.
erals Office.
The commission policies the secur-
!tv business through the simple ex-
pedlef1t Of A license and registration
system. Every security traded in
within the confines Of the state must
be- registered and every person or
corporation involved in the sale of
securities to the public must be
licensed.
However. there are securities
which are not subject to registra-
ton under the act. These issues.
known as 'eXempts," comprise Fed
ersl government and municipal obli-
cations. issues listed on the New York
Stock Exchange. New York Curb
Exchange. Chicago Board of Trade
ana Chicago Stock Exchange. ne
gotisble notes of less than one-year
maturity, and certain bonds and
stocks. the earnings records of
which have established them as es-
sentially sound issues.
Books Are Kept Open
Dealers in securities. which means
under the act, every person other
than an agent who engages either
for all or part of his time directly
or through an agent in the business
Of selling any securities for the
purpose Of reselling them to the
public. must receive a license to do
business in the state
Any agent. or salesman. must also
receive a license. Moreover. he can
not he licensed on his own applics-
ton. The request must come
through the firm which has en-
ployed him.
Banking institutions. Of course.
do large business in United
States government and municipal
securities. They are not compelled
10 have a license when dealing in
such exempt securities. When
bank is dealing IN other than ex-
empt issues. however. It does come
under the jurisdiction of the Sc
Curities Commission under certain
conditions.
BY this simple system OF license
and registration the Comm Ssion Is
enabled TO maintain a watchful eye
on the whole sphere Of security
business I'm the state. The books OF
al dealers must be kept open and
available for inspection at any time.
Euterprising scheme Nipped
Sometimes the mere knowledge
that the commission is "on TIE job
can prevent the introduction of an
unhealthy stock transaction. For
instance. not so long ago in La
Porte. an enterprislng stock pro-
motor Concocted an interesting
scheme to replenish his slim wal
let and. at the same time, remain
within the law.
~TI,i- y1rOp,OfOr aor1eorad On tho
scene with a contraption which
would revolutionize the world" In
his quiet campaign to acquire funds
to finance the machine, he utilized
an intelligent method. Instead of
Offering stock at the outset, he de-
Clared he was willing to give poten-
tial investors notes of less than a
years duration for any money they
placed with him.
When the notes became due. he
further proposed. the persons could
either redeem them or take stock.
The scheme was nipped in the bud
with a word from the commission
and the promoter left. oStensibly for
other parts.
Similar 10 u. ). System
The KY Co. mythical enter
prise introduced in A preceding ar
tIcle. must conform to certain regu-
lstionS If its securities are to be sold
to the public An application for
registration must be filed and evil
dence submitted. In the event that
the application is approved. this
does not mean that the commission
Is placing its guarantee on the pro-
posed issue as an investment.
This method approval is only
slightly differe' from that Of the
Securities and .xChange COmnls-
sion at Washington. the Federal
watchdog Of the security business.
The SEC passes upon all issues
which will be sold in interstate COM
merCe: the Indiana commission is
concerned with the issues which are
sold within the state.
The main difference between the
two agencies is that the state COM
mission by its system of registration
saws yes or mo" to a proposed
issue, while the Federal body insists
upon truth in connection with r