Evening star., 1955-07-10
By STERLING r. GREEN
Assoeiated Press star Writar

By STERLING II. GREEN
Assoeiated Press star Writer
The Government is about to
administer q sobering jolt to the
uranium penny stock binge.
Within q week or so, officials
Indicated yesterday. the worried
Securities and Exchange Com
mission win announce o tighten
ing Of its small issues" regula-
ton. The hope is to curb on
racketeering promoters without
hampering the legitimate ones
too much.
SEC, whose best efforts cannot
protect people who ask to get
stung, says that asking q few
common-sense questions is still
the best protection against the
"pushers" and fast-talkers who
are riding high on the Vests
atomic gold-rush.
Nevertheless, proposed new
rules for domestic shares are In
the works. At SECS request,
the State Department is opening
delicate negotiations with Can
ada in an effort to restore re-
straints on the promotion of oil,
metal and uranium stocks across
the border.
May Be Lengthy
The international talks may
take quite a while. Relations
were strained in 1853 when an
agreement clamping controls on
mail and phone selling of cheap
issues from Ontario broke down.
Meantime, however, a Senate
Banking subcommittee headed
by Senator Lehman, Democrat o1
New York. plans to go ahead
with a summer investigation
New York has tightened its own
securities statutes, and Utah has
gained a reputation for being
tough" on intra-state stock
promotions.
There's also q movement
spanked by Representative Ben
nett. Republican Of Michigan. to
repeal by act of Congress SECS
small-issues rule - Regulation
A"-which some consider the
chief loophole for fraud.
That may not get far, because
1t would penalize-along with the
racketeers-the vastly larger
number of Small but legitimate
concerns in every industry which
Regulation A" was designed tc
help.
But the proposal is evidence o1
the growing concern felt in Con.
gress and the administration ovel
a market so disorderly thai
stock certificates, in some West.
ern towns, have been given away
by grocery stores like soar
coupons.
Mulcted of Millions
SEC knows that American!
have been mulcted Of millions
in one fabulous case, of an esti'
mated $5 million in a single
Canadian promotion - but ha'
little authority to punish frauds
until after they have been com,
mitted. Also, SEC has no wish
or desire to block legitimate in.
vestment, however speculative, 81
long as the investor knows wha'
he's buying.
The SEC has expanded it
staff at Denver, where most O.
the hundreds of new mining ane
exploration issues are filed, ant
opened an Office in Salt Lake
City to have "a policeman OF
the beat"-the beat being tht
Colorado Plateau area where th'
continent-wide uranium hunt il
concentrated.
SECS sole function is to Civ,
buyers a fair idea of wha
they're getting. be it q blue
chip certainty or a piece of ranl
speculation. The agency require
promoters to disclose fully tn,
financial facts of their enter
prises in registering stock
issuance proposals.
Must Furnish Prospectus
For issues under 100000
standard in the penny uranium
field, registration is not required
But under Regulation A" .
small promoter is obliged to Sc
forth certain essential facts il
his stock prospectus, furnish +.
prospectus to everyone who i
solicited by mail, and furnish
copy to the SEC.
An adept pitchman, however
can get his customer half-hooke,
by telephone. And the true suck
er, unfamiliar with financia
terms and forms, frequently fail
to read or understand the fin
print when it reaches him.
After months of quiet investi
cation and thousands of cues
tionaires, SEC found that q com
mon trick among stock salesme]
who set themselves up as min
ing companies is to pocket a larg
part of the proceeds-in fanc,
salaries to officers. lawyers fees
trick underwriters commission
and leave little or nothing TO
exploration. development an
production.
The company. all too OTTER
lN.Al