Jasper County Democrat, Volume 23, Number 41, Rensselaer, Jasper County, 18 August 1920 — JIE SKY JOKERS ARE POINTED OUT [ARTICLE]

JIE SKY JOKERS ARE POINTED OUT

Secretary of Better Business Bureau Calls Goodrich Measure “Monstrosity” and Says it 13 Ideal for Stock Salesmen. AFFORDS PUBLIC NO PROTECTION Indianapolis, Ind. —The blue" sky law passed by the recent special session of the legislature is termed a "monstrosity” and one that will suit "the salesman of questionable securities” by G. F. Olwin, secretary-mana-ger of the Indianapolis Better Business Bureau in a report made to his organization. The passage of such a law was urged by Governor Goodrich In his message to the assembly and the administration forces threw thqir weight behind the measure. When persons really interested in obtaining a law that would protect the public from "questionable securities” learned that it, like the curative tax measure, was full of jokers, they recalled that the governor himself has been interested from time to time in the promotion of stock enterprises through his Winchester bank. Ideal for Stock Salesmen. "In the opinion of the bureau manager,” Mr. Olwin’s report says, “this is not such a blue sky law as the people of Indiana have been demanding, nor such a law as they had a right to expect their representatives in the senate and house to give them. To our mind it is an ideal stock salesmen’s blue sky law. “The first amendment struck out the words ‘principal or agent,’ in Section 1 and inserted the word ‘issuer’ making this and succeeding sections apply only to the ‘lssuer 1 who may undertake by advertisement, clrcu‘ar, prospectus, through agents or other public, or general offering’ atempt to dispose of securities, amenable to this law. "Here is how this may work. Let vs call the ‘issuer’ the Come-on-Motor । >rporation with home office in Illinois. If they, for themselves or through agents, attempt to s6ll stock this state they will come under the -isdlctlon of the blue sky commison. However, to get around this I w they make a secret contract with ‘Jones & Co.,’ Indianapolis, stock salesmen, to ‘underwrite’ their entire issue of $1,000,000 at $6.25 per share of $lO par value. Jones & Co., thus purchase this stock for their own account and proceed to sell it in this state at $12.50 per share. It is their stock and they have a right to dispose of it and advertise It for sale under their own name. The ‘issuer’ does not enter the state at all and therefore does not come under the jurisdiction of the commission. Jones & Co., dispose of the stock to the citizens at 100 per cent, gross profit and there is no information filed with the Secretary of State in regard to the Come-on Motor Corporation.

Eliminate Meat of Bill. “The next amendment which worked havoc with this bill was that which struck out all of paragraph ‘G’ of Section 1 and other parts of the bill requiring the filing of copies of ‘all contracts of agreements between the Issuer and underwriters of such securities,’ etc., and all contracts relative to the sale or disposition of stock, together with copies of the minutes of directors or stockholders relating to or affecting the Issue of such securities. “This provision was the very meat of the bill as it passed the house and would have done more than all the rest of the bill put together to protect the public from the sale of questionable securities. But the stock salesman does not want publicity in such matters and this was stricken from the bill. “Without the provision requiring the filing of copies of all contracts and minutes relative to the disposition of stock, most any sort of a deal may be put over without the knowledge of the investing public.

Sales Are Not Voidable. “Another amendment struck out all of Section 20, which made sales, consummated in violation of the provisions of this act ‘voidable’ providing that request for the return of the money was made in writing within one year. Is there any good reason a made jg violation of the law should not be voidable? “The salesman of questionable securities prefers to work under a blue sky law if such a law is to his liking, as he uses the fact that the state has a blue sky law to boost bls sales. We believe that the Indiana law will suit him. He will in effect say, ‘You know Indiana has one of the most stringent blue sky laws of any State In the union. The commission even passes upon the moral find business qualifications of applicant*. If this stock were not all right, you may bet we wouldn’t be allowed to sell the ■tock.’ ”