Evening star., 1952-12-06
Criticism Of Probers
In Handling 5Cases
Challenged by SEC

Congressional investigators and
the Securities and Exchange Com
mission were in sharp disagree
ment today over a report saying
the commissions performance in
at least five cases has been "far
from satisfactory"
The report was issued yesterday
by House Commerce Subcommit-
tee on a year-long investigation
Of the SEC-the first since the
agency was created in 1884.
In one case the House inveSti-
gators said what they found re-
Ivealed "a shocking story of errors,
indifference and evasion" on the
part Of the commission. This in
volved stock registration state
ment filed by the Kaiser Frazer
Corp. The subcommittee said the
SEC, in handling it, was "either
asleep at the switch or deliberately
ignored the facts available to
them"
Tucker Losses Cited.
The report also said:
/. Loss by the investing public
in the Tucker Corp, formed after
the war to manufacture q radi-
cally new type of automobile,
might have been averted if the
SEC had "acted more expeditiously
i'm it's investigation of the alleged
violations of the Securities Act"
2. The SEC failed, in at least
one case, to enforce its rules re-
quiring the filing of certified an
nual reports by brokers and deal
ers. 1t cited as an example of
the commissions 'laxity and in
efficiency in this respect the case
of Richard c. Badger Co. of Salt
Lake City, Utah. The report said
that soon after MIR. Badgers death
it was disclosed that customers
securities totaling about $648.000I
had been embezzled.
3. The subcommittee believes
opportunities exist for former
SEC personnel to exercise i'm
proper influence and to receive
preferential treatment from the
commission.
SEC Quickly Disagrees.
Several hours after the report
was released, the commission
issued a statement saying:
1--WE disagree with the subcom-
mittee'S criticism of the cases
cited. If the committee were to
make public the entire record re-
lating to the cases which they
criticized, We believe that record
would support our handling Of
these cases."
The commission said it had no
opportunity to study the report
before it was released. and, there
fore. could not make. a detailed
comment at this time.
From hurried reading of the
summary and portions of the text
of the report" the commissions
statement said, g. it appears
that while the subcommittee
praises the overall functioning of
the SEC, it apparently takes usI
to task. as least in part, in the
handling of five selected cases.
Only these cases are mentioned,
despite the fact that the sub
committee has called upon us
to compile data on 742 cases and
information relating to numerous
other matters"
Would Continue Probe.
Representative Heller, Demo-
crat, of New York, the Subcom-
mittee chairman. released the re-
port at a news conference at
which he emphasized that the
overall investigation should be
continued in the new Congress.
"The Securities and Exchange
Commission, on the whole" he
said in a statement, "has done a
pretty good job of protecting the
investors and the public against
the malpractices which existed in
the financial and securities market
prior to 1884. Nevertheless,
we feel that a further look into
the work of this agency would be
desirable and would have a
wholesome effect"
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