Montana oil and mining journal. [volume] (Great Falls, Mont.) 1931-1953, 1940-08-17
LIBERALIZED RULES
tcontinued from rage oBel


turned into the corporation absorbs
so much OF the $4,000 that there
is not enough remaining to finance
development work.
A proposed new form called AO1.
intended to eliminate confusion in
mine financing has not yet been
released. he said. He said that the
commission now plans to make
broad modification Of the general
rules and requirements. intended
to simplify the procedure for all
types OF industry.
Much of the time OF the Com
mission has been spent in writing
new forms. he said. 1T is diff
cult to provide a form that Is salts
factory for the mining industry,
because various other branches inn
mediately ask for similar forms.
The new form will allow the pros
pectus to be a selling medium, he
said. 1t will contain all the basic
information but will be more
coherent with a premium on clarity
He described the use Of Rule 202
which requires the filing of a pros
pectus with the commission, in
which prospectus some II questions
must be answered. One require
ment under this rule is that all
promotion stock must be escrowed
until the company earns a profit.
Another form commonly used is
Rule 21O under which the offerer
must comply with the blue sky
laws of each state in which the
III ~
all printed literature and written
must be filed with
the commission.
The proposed new form, exempt
ing issues under 100000 is ex-
pected to meet the requirements of
the mining industry, he said. and
since it requires no examination by
the commission, the burden will be
thrown back on the issuer who will
be subject to the postal regulations
and when complaint is filed, the |
issuer VIII be subject to prosecution |
for apparent fraud.
Mr.. Lewis warned mining men |
against the front money racket" |
against which the commission has |
been waging war. Persons who |
NCA luAAlAES Win the OElt4
have in the past received letters
from brokers" who offer to sell
their securities for them. They re-
luire the payment of various fees
for the preparation of sales copy,
Tor legal fees and other devices. the
fees" running from 500 to $500
n many whatever the
rattle will bear. The brokers" in
TACT do not try to sell the stock
Ind the issuer is the loser.
Mining men have, for some
been particularly suscep-
ible to this sort of fraud" he
tated, warning all those present to
heck up carefully on any brokers
Who may solicit the handling of
heir securities. He urged mining l.
nen to avail themselves of the help
fforded by the regional offices of
he commission in Denver and Sc
tile.
Mr.. Lewis address was followed
y discussion, led by o. /. DeSchon
I Great Falls.
My discussion starts where Mr..
,ewis left Off" said DeSchon. The ,
commission has been very consider
te and has extended itself on be- ,
alf OF the mining industry. Mon
ana men who understand mining ,
nd are sympathetic with the prob }
sms of mine financing have been !
ngaged to work out forms which !
re simple enough for use by the /
liners, yet fair to investors. But
fter all the fonms are worked out :
, that mining men can conform I
, the rules, the fact still remains !
lat there Dis no mine financing. :
THE trouble is that the rules 1
the commission were made to fit :
lie methods of financing in the :
rye financial centers. Just as the )
age-hour act was built around the :
veat-shop conditions of the con- !
ssted eastern Industrial centers, !
nd therefore difficult of applica- 4
on to the mines of the west. so is 9
lie method of financing under rules +
the SEC pretty much foreign to h
ethods of Financing primary min 4
e ventures.
Underwriters are the basis OF
nancing in the east and there is .
} such thing in the financing of .
uC uUA- ] n
t mining man who would contact n
/ investor seeking opportunity to r
1t his money into a mining ven 4
re is unable to contact capital. a
e is not allowed to advertise in
e trade papers or otherwise. II
. goes back to New York he can d
It interest legitimate brokers, who B
mot afford to handle small pri-
airy mining ventures, for apparent
asons. What is he to do?
THAT is the answer to the fact 4
at mining men have been most
eQuent victims of the Front b
oney racket" They have no al
rnative."
The speaker said that mine IL
ncing has been driven into the d
Justification OF ''bootIegging. THE &
dustry had hoped that the securi-
g act would drive out the unde-
'ables, rather than make boot
ygers" out of honest men who n