Evening star. [volume] (Washington, D.C.) 1854-1972, 1955-03-22
SEC Chief Rules Out
Illegal Practices
In Stock Price Rise
By Cecil Holland

SEE CnalrmaA Halpn II
Dernmler today discounted any
manipulation or illegal practices
as factors In rising stock market
prices over the last several
months. He agreed. however
there has been an increase in
speculative activities.
Mr.. Demmler testified before
the Senate Banking and Cur
rency Committee as the commit
tees stock market investigation
beset with pickering, tottered TO-
ward an end.
The SEC chairman also had o
word of warning for prospective
investors in a rash of uranium
stocks and said such issues have
given the commission "a lot oi
concern"
Mr.. Demmler was questioned
by Senator Payne, Republican
of Maine about uranium stool
offerings after he had empha-
sized, in a prepared statement
that the commissions disci.
plinary power over securities II
no substitute for investors in.
telligence and self-control II
buying stocks.
Full Disclosure Requested
Mr.. Demmler pointed out that
the commission requires full
disclosure by those issuing stocks
and added:
1.-THE difficulty is people don't
read what is offered to them"
The Offering circulars he ex-
planned, give basic data and II
an investor would take the trou-
Bile to read them "he will know
what he is getting into"
Mr.. Demmler testified that the
commission requires on uranium
stocks, as in any security offei-
ing, that fun disclosure be made
on what the stock is for and the
status of the issuers. He said
the commission has followed up
on some uranium stock offerings
and learned that the proceeds,
after expenses, were not enor<h
to provide for working any
claims. In addition, Mr.. Dem
mler added, many offerings pro-
vide for options to promoters
and similar conditions that affect
the securities.
When people don't pay any
attention to disclosure state
ments." he said, they run the
risk of loss"
Questioned by Capehart.
Mr.. Demmler's statement ruiz
ing out in effect illegal practices
as factors in the price rises was
made in response to questions
by Senator Capehart of Indiana,
ranking Republican member of
the committee.
Senator Capehart has MAIN
tanned a running feud with Sem
ator Fulbright, Democrat, of Ar
kansas, the committee chairman,
but no outburst of consequence
occurred during Mr.. Demmler's
testimony.
Senator Fulbright has insist.
ed the inquiry is "a friendly
study" while Senator Capehart
has charged that it was designed
to harass the Eisenhower admin
istration and business. The in
vestigation is scheduled to recess
after tomorrow testimony by
Bernard Baruch, noted New York
financier.
Mr.. Demmler agreed with
Senator Fulbright that the COM
mittee's inquiry into economic
conditions is in the public in
terest."
Bank statement C1te0
Senator Fulbright cited the
annual statement of the Federal
Reserve Bank of New York as
saying there had been wide
speculative activity in the stock
markets and asked Mr.. Demmler
If there had been any increase
In speculative activities in the
last 10 months.
IT think there has been" Mr..
Demmler replied.
Senator Fulbright then dryly
commented that the bank is
"quite a reputable outfit" and
usually is considered reliable
and not antagonistic to our
capitalistic system"
In his prepared statement
Mr.. Demmler labeled as a
popular fallacy" that any secu-
rity listed with the commission,
either for sale as a new issue or
for listing on an exchange
has the commissions approval.
Nothing could be further from
the TRUTH" Mr.. Demmler said.
Merely Enforces Rules
Mr.. Demmler said the commits
sion possesses neither the power
nor responsibility to impose direct
controls on price movements,
While the SEC is charged with
enforcing rules relating to the
margin requirements, he ex-
planned, these rules are pre-
scribed by the Federal Reserve
system
The SEC chairman touched
on a matter that has agitated
the investigation the stock
market tips broadcast by Walter
Winchell. He said the Securi-
ties Exchange Act, having linn
tied operation in this area,
would not appear to include a
news report as such" and added:
AT this time and pending
continuing study, I have no leg
islation to suggest on that sub
ject."