Montana oil and mining journal. [volume] (Great Falls, Mont.) 1931-1953, 1936-11-07

we believe it is the duty Of the SEE g
gress to make the changes.
So much for the notifications, now Tor en-
/ forcements. No law IL worth much Il not
strictly enforced and the man VINO = try-
ing 70 obey the Law is at strict otsac-
vantage with the man who is cheating and
Is not prosecuted therefore.
For example, we cite two merchants with
stores right across the street from each
| other. each handlins imported irish lace.
on which there is q customs duty. One pays
( the duty on his goods, the other does not
and is not called to account ior y; 1ou nay
] easily CLEAN what chance the uuty-pasing
merchant has against the other
Law BefnE Violated
/ So Il is with the securities act OF 1883. 1t
! Is difficult enough for a person 70 sen min
I ing stock when they have complied with All
the provisions Of the Law, without tryln8 70
/ compete with those who have not. SttM the
law Is today being violated and the vioAaters
usually sell much more stock than those
I know Of q firm Of western brokers, who
have made a study Of the law ana an sne
ruling OF the SEC, especially those that might
apply to the registration or exemption ~1nng
OF primary mining companies Their advise Is
eagerly sought. but 4 member OF that firm
states that five out OF every 10 VINO seek
advice have some fancy plan conc0cted
whereby they figure they can evade the law
instead OF complying with It. The brokers Try
to dissuade them from such schemes put
number Of them have gone ahead ANYHOW
Z A1~~~~N--~-~
the provisions Of the act.
Exemption Rufe
This Is especially true under the 100000
yearly exemption, which allows q company
Ia sell SIO0 200 Of stock per year without reg
isterine believe that this 100000 exemp.
ton ruling Is q good thing In some cases, nut
IN some cases it Is not and especially POI y
every IL months. Neither do think II TAR
plan to make such companies conform 20
the blue sky" securities laws OF eacn steve
IN which they try TO sell stock IN interstate
commerce. And especially do think inst 9
fully registered company should be exempt
from an individual state blue sky" laws.
Companies under the 100000 exemption
ruling must obey certain rulings, such as
limited commission allowed on the sale OF
stock, think IL is IS percent, and INSIDE or
promotion stock must be escrowed, ane NOT
sold. until the mine makes good. These IN
structions are not being followed IA atm
Der OF instances and there are going e be
many scandals among the 100000 exe1N
companies IN the next few years. know Of
one instance. and there probably are nasn-
Der OF others, where the public vas offered
stock ia a company ct . cents per snare
through q chain Of brokers, which netteo the
company's brokers 12h cents per share, which
already makes q commission OF 30 percent,
besides what the company's brokers TOOK
'O' 'A'H How Law was Evaded
Another strange incident Is that Of com
pany which filed for registration. The SEC
held up the REGISTRATION askinS Tor 1urtnex
OF material facts, etc. This went on Tor sew
eral months and the company could not
satisfy the SEC with it's answers or omission
Of answers I know Of at least one state
ment filed by that company that was untrue.
Later the company withdrew It's Tegistra-
ton and in the next two years sold 100000
OF stock per year through the 100000 ex-
emption ruling In case like that the $780,
600 exemption ruling is not GOOD thing,
but, as have said before. It is good thing
in some cases and the provisions OF It's ruiz
ings should be strictly enforced.
The next ease OF pon-enforcement Is
brazen one and a peculiar one; IN that BY
registering; the issner company's financing
was nearly ruined and gang Of clever crooks
made their capital on the fact that the IS
suer company had registered and issued
REGISTERED prospectus under the law.
Another Instance
There was 3 company which we VIII san
the "oid'' company, financed IN 1875, ana
which operated q profitable lead mine when
the price Of lead was around the s-cent
point. It shut down when lead dropped ana
has not since Fe-opened and viii not until
lead metal goes considerably higher. In 1882
producing gold mine and formed what we viz
can the new" company. There was con-
nection between the new ana ole COMPANIES
IN that its officers were she same, and tine
old company put up some Of the initial money
for the new company for which It was TO re-
ceive stock In the new company when tncor-
porated. The old company had about $500
stockholders and Its stock transfer books were
formerly kept by trust company In Boston
which now is defunet The stock books were
later taken By the mintns company bat prob
ably somebody IN the trust company, before
or after fte failure, gave or sold the List Of
stockholders Of the old company 20 raseals-