Montana oil and mining journal. [volume] (Great Falls, Mont.) 1931-1953, 1936-11-07
Montanan Urges SEC Head
to Adjust law to Conform
to Needs Of This Industry
BY CARL J. TRAUERAEAN Mining Engineer
President Of Mining Association Of Montana
American Minins

IN THE BEGINNING, allow me 70 make
general statement 70 the effect tnat
those who desire 20 iegiliEnately finance
meritorious primary mining Ven l sss.~s -
il the consensus Of opinion that the federai
securities act Of 1888 Is good law: WodA-
able law and that It viii IN time be 2 as
tinct benefit in raising money lot mlIA.ss
ventures through the sale Of securllea -. -
the public protecting this public ana me
mine owner alike from the ieoparos thAI
nave preyed on both In the past
roveyer 70 bring about this utopian STATE
Of affairs two things are necessary; FIRST
The Jaw must be somewhat modified and
second. It must be strictly enforced
At this time the Law, so far as ptt "a -
mining COMPANIES are concerned, seems 70 &c
defeating the very purpose for Nhlcn ~ 49, 49,,
enacted. It has .strangled the efforts OF me
legitimate promoter, In most eases, ah1 S,,,n
unvittingly. allowing the old leoparos. Win
probably some change Of spots 20 ply tne
Old game OF fleecing the public and ~ eN-
ing the mine owner, who himself 70 ~
noter. TO retain q large interest IN securities
IN companies whose stock has been ''watereo.
far beyond a point OF reasonable future mime
developments.
Does Not FIT Mining
The federal securities act Of 1888, IN tine
crfninn of many, was not framed 20 cover
the financing OF primary mining companies ..
many other types Of primary companies. n
great many Of US realized tnat eohsenslo..
when tine law was being debated in the mouse
and senate committee rooms. Its REQUIREMENTS
and responsibilities plainly show that u was
enacted rather to regulate tne sac u,s "a Il
curities in 8 going concern that desired 70
raise money to expand It's operations OF ts
fund an already OUTSTANDING issue o. -
curities. Representatives OF me last nA iaS
CATEGORY had their honest Hobbies st the sem
Ate and house committee hearings 20 ehtninAse
anything that would hamper their ieel tlnAys
future financing operations put the SINAI ~
MINING operators did not have the money "
make the trip to washington to appear pc
fore these committees and present their afbu-
ments to modify the law
represent the small mining operators
Of Montana Of which the membership Of
eur state mining association Is simest
,vhoTly composed. In Montana ! do NOT
know Of q single primary MINING com
rouv that has financed itself, iegitimatelyI
through the sale OF securities 80 the PeDNO
since the 1888 law was enacted. am SC
lively in touch with mining opeEAtions
most western states and, 50 far as
know none Of them can boast OF ree-
ord much better than Montana. s.,a
That is a rather discouraging ana Dol9
statement to make, but thnK tine b''OA
may easily be obtained.
Evade Answering Questions
We usually have found the securities sn \.
Exchange commission, Of which Mr.. Lanols y
the head willing to cooperate with u.s. put
in q number Of cases where we are In oo1pt
as to what Is necessary, under the law 70 Llls
a security issue with them, they have eVAoeo
snswerin9 the questions we asked them or
they have delayed such answers. can easlly
see the reason for this They do not want
TO go on record in interpreting soIne % 'n Az
lsr as i vas enacted. FOR this DO not CEN
sure them, as they are only commission 70
administer and enforce the law ana , n ,os,.se
interpret It. However win so into that Phase
a little more In detail In few minutes
Can Prove Statement
But the Securities and Excnanee eonnnliss
sion can I believe prove the bold statement
made about lack Of sale Of securities We
ask them to compile two lists Inc IrsS ,t ~
should give the total amount o. securi rules
registered for sale by primary mining COM
panies up until April /. 1885 and the amount
OF such securities actually sold to the puDnc;
The second list should consist OF the total
amount OF securities filed for sale by primary
mining companies claiming exemption unoef
the 500 900 per year clause up 70 ApIh =
1895; and against that should be totalleo tne
amount of such securities actuahy iesi'iAiiAss
- Roth sSlS Of these lists should tell a story In
the first list, I will venture 70 state thht mo-
over IS percent Of the securities have peeh
sold and in the second case not over 70 per
cent And I think I am very nign IN my 60
Inmates in both cases I personally NOV ..
the case OF one company, wnich mas Dsen -. p.
actual producer for four years, wnicn We
enc ~ the first companies to register uhoeL
the new act in the fall OF 1855 20 sen so ul
f95 600 of capital stock. Its OFFICERS are mn
est men with good connections VINO k nhoM
mining and who know financing. In 1nLeo
long years this company mas not SOY 80 80
Sa 200 Of stock to the public, or hlts 49,
ter than percent; although ts oAA ixis
Rave left no stone unturned to finance their
proposition -.... Aha
again repeat, that TO overcome sno
obstaeIes enumerated the law mast pc
Sgrfher modified and then strictly en-
fcrced II primary mining ventures are 70
he Financed By public participation. -.
First, in regard to modifieanons o. , Vic
matter 10 INCORPORATE company out ~ -
not a simple easy and inexpensive rnabtet "
make out SEC registration staten laaas Ss
e1ied by a company that desires 20 eone
under the 100000 per year e9empeion az -
make out these statements usually tsh Ss VI
services Of an engineer, lawyer ana aeeout ~
ant and: that triumvirate Is not Workhs lol
small pay as the engineer and accompany So
liable under the act and tney osuais Oi thsS,
charge for a defense or responsibility iuna
that they may need in the future
7 bonor and respect the honest and capable
mining enEineers on the SEC staff, most OF
whom I know personally. They now are Son.
pilinE the new forms that must oe llneo ,. w
Al registering or exempt-filing Of securities
for MINING companies Most OF these enel-
neers have had experience IN opeIA.ins s
proven or well financed unproven mines anu
most Of them have had experience n maAiI t
ORGANIZATIONS for principals who desire 70
purchase mines. Therefore, they naturally -
conservative. Being an engineer. / know thes
conservative feeling. Few OF them nave nag
experience operating q primary mining VEN
ture and stin fewer, II any OF them, haFe
had experience financing such q venture
Make Forms Simple
We ask the engineers Of the SEC, there
FORE 20 make the registration and filing forms
for primary companies as simple as tney e., cAn
Ne made, so that a prospective stockholoer
vviil have enough information TO know NOT
whether he is In sure thing" as now MANY
such ventures are sure things. but rather
whether he Is going to get an honest run
FOR MS money" That Is all any stoeknoloer
should ask from a primary mining venture.
50 much for the filing with the SEC. we
win say that the registration or exempt-fning
becomes effective, which means that the SEC
has found no objections 70 the statements
filed Il does not mean that the SEC has ap-
proved or disapproved the venture OF the
securities involved. Anyhow, we are now az
Are stage where we are allowed TO legitimate
~ sell stock in interstate commerce providing
We ear find anybody TO buy IT, That is where
the 1888 act again creates Stumbling block.
IN xplte Of the fact that some parts OF
sfe west are rich; primary mining ventures
sasuml1Y have 10 be financed IN the larger d
namclal eenterg tu the east. midwest o. south.
IN gueh financial censers there are q number
81 brokers vino formerly iegitimately financed
ameh mainEns ventures. Our mine owner. With
hir REGISTRATION IN hts hand, not being known
Ia these financial centern. usually goes 70 Cne