7163 L Prevention of Fraud in/omotion or HEARING BEFOR SUBCOMMITTEE INSURANCE AND BANKS OF THE COMMEE ON THE DISTRICT OF COLUMBIA SEVENTY-FIRST CONGRESS THIRD SESSION ON S. 1332 A bill to prevent fraudulent practices in the promotion or sale of to provide punishment for the fraudu- lent or unauthorized sale of the same AND S. 3491 A bill to prevent fraud in the promotion or sale of stock, bonds, ter persons selling stocks, bonds, or other securi- ties; and to provide punishment for the PREVENTION OF FRAUD IN PROMOTION OR SALE OF SECURITIES FRIDAY, JANUARY 16, 1931 UNITED STATES SENATE, SUBCOMMITTEE ON INSURANCE AND BANKS, Washington, D. C. The subcommittee met, pursuant to call in the committee room of the Committee on the District of Columbia, Capitol, at 10 o'clock a. m., Senator John J. Blaine, chairman, presiding. Present: Senators Blaine (chairman), Kean, and Glass. Mr. O. H. Brinkman, special counsel to the subcommittee. The committee had under consideration S. 1332 and S. 3491, which are here printed in full, as follows: [S. 1332, Seventy-first Congress, first session] A BILL To prevent fraudulent practices in the promotion or sale of stocks, bonds, and other securities sold or offered for sale within the District of Columbia; to register persons selling stocks, bonds, or other securities; and to provide punishment for the fraudulent or unauthorized sale of the same Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, DEFINITIONS SECTION 1. (a) When used in this act the following terms shall, unless the text otherwise indientes, have the following respective meanings; (1) "Security" shall include any note, stock, Treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation, certificate of interest in a profit-sharing agreement, certificate of interest in an oil, gas, or mining lease, collateral trust certificate, preorganization certificate, preorganization subscription, any transferable share, investment contract, or beneficial interest in title to property, profits, or earnings or any other instrument commonly known as a security. 66 66 (2) "Person" shall include a natural person, a corporation created under the laws of the United States or of any State, country, sovereignty, or political subdivision thereof, a partnership, an association, a joint-stock company, a trust, and any unincorporated organization. As used herein the term trust " shall be deemed to include a common-law trust, but shall not include a trust created or appointed under or by virtue of a last will and testament, or by a court of law or equity, or any public charitable trust. 66 (3) "Sale" or "sell" shall include every disposition, or attempt to dispose, of a security or interest in a security for value. Any security given or delivered with, or as a bonus on account of, any purchase of securities or any other thing, shall be conclusively presumed to constitute a part of the subject of such purchase and to have been sold for value. "Sale" or sell" shall also include an exchange, an attempt to sell, an option of sale, a solicitation of a sale, a subscription or an offer to sell, directly or by an agent, or a circular, letter, advertisement, or otherwise. The offering of securities by any person in conjunction with a registered dealer by use of advertisement, circular, or pamphlet, shall not be deemed to be a sale, provided such person does not otherwise 1 |