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SEC OFFERS RELIEF TO STATE RUNE FINANCE PRORLEMS
FEDERAL SECURITIES BOARD IS PREPARING MEN PLARS TO FIT NEEDS OF MINING COMPANIES A special registration form adapted to the needs of mine financing is being prepared by the Securities and Exchange commission at Wash ington, D. C, Montana miners were told Saturday at the nvd-winter meeting of the Mining association held in the New Finlen hotel at Butte. The announcement was made by Robert H. O Brien, former Butte resident who is a member of the legal staff of the federal securities commission and who was delegated to represent the commission at this meeting, following the voicing of violent criticism by western min ing men against the paralysis of public financing resulting from the securities act. The association w*» assured that the pose of the commission 1* to restore public confidence In Investments in public Issues by requiring Issuers to make full and com plete revelation of the facts of a corporate structure. Mr. O'Brien answered dozens of questions to which he revealed that the commission does not try to Interfere with the issuer's business; All that Is required is that be shall teU the whole truth about his properties and what he does with the money, and requires that at least 75 percent of all money raised shall go Into the treas ury of the company. After a company has filed 'Ils prospectus and registration statement It may issue any other prospectus or advertising matter. In cluding newspaper advertising, it may choose, the only requirement being that such adver tising shall be the truth and shall refer to the availability of the formal prospectus. Many persons are of the opinion that the only prospectus which may be used Is the federal form. Mr. O'Brien stated that the commission expects the issuer to present his securities to the public to as attractive a form as possible, after he has made the complete disclosure required by the com mission. Companies issuing less than J30.000 to one need not notify the commission. Those who issue less than $100.000 need only file a prospectus setting forth complete facts re garding the property ownership and cap italization and capital distribution. Those who Issue more than $100,000 must file a registration statement, together complete with a prospectus. The new forms which will be used ex clusively for mine financing will overcome the cumbersome requirements of forma pre pared to care for eastern corporations of the Wall street variety. Mr. O'Brien's paper, printed exclusively In the Journal, follows: The work of the Securities and Exchange commission which Is of primary Interest to you men is that which has to do with ad ministration of the securities act of 1933 and the securities exchange act of 1934, The fed eral congress, to passing this legislation, sought to prevent the continued practice of certain financial methods which had result ed to disaster to thousands of Investors and impairment of the confidence of the public to our financial Institutions The skepticism of the public extended without discrimina tion, to almost all enterprises, both good and bad. It was apparent that an enduring finan cial recovery could not be achieved unless the way were opened to rebuilding public confidence, and public confidence could not be rebuilt unless a source of reliance other and greater than that which had culminated to such bitter disappointment were created. The acts provided the means to bring about a restoration of public confidence, and al ready they have proved to be of Immeasur able benefit both to persons seeking to Invest their savings, and to business con cerns which deal frankly and fairly with those whom they invite to become associates In a common venture. Ask Foil Disclosure The primary objects sought to be attained by the acts are toll and fair disclosure of all the material facts surrounding the Issuance and offering for sale to the public of securi ties. and the preventing of fraudulent, de ceptive and unfair practices and methods In the sale of and dealing In securities. Neither act is prohibitory, any security may be of fered for sale to the pubUc » Its nature and character are clearly and accurately described. The acts assume the ability of the average Investor to act prudently and intelligently If he is furnished with a rea sonable amount of accurate and reliable information concerning the enterprise In which he is asked to participate. Registration The means of disclosure to a prospective Investor of the material facts relative to a new Issue of securities, proposed to be of fered for sale to the public, are the regis tration statement and the prospectus. The securities act requires that a registration statement shall be filed with the commission and have become effective before a public offering of securities by use of the mails as means of I. 8. O. may be made. Various forms (or registration of securities have been adopted by the commission, the appropriate form for a particular registration being de terminable either by the nature of the transaction or the type of security Involved. Each form contains a number of items which call for certain specific information, the same Information, with unimportant excep tions. to be Included in' the prospectus, but not necessarily in the same sequence 7 or order that It appears In answer to the In dividual Items of the registration statement. Prospectas The commission recognizes that the pros pectus Is essentially a sales documsnt. A copy 0 1 the final prospectus on file with the com mission must be delivered to each person to Whom an offer to sell, or sale of, the securi ties Is made. The act gives the purchaser a fight of action (or recovery of damages from those who have sold him securities without truthfully disclosing the material (acts. In addition, the act provides that the distribu tion and sale of securities In violation of the requirements as to registration and delivery of a prospectus may be stopped by Injunctive proceedings and may subject the violator to criminal prosecution. Valaes Not Considered However, tbe commission is not authorised to pass Judgment on the soundness or toves t value of securities, nor does the com mission guarantee the truth and accuracy •f the representations In a registration state ment. Those people concerned In the issuance of a security, with the exception of the issuer, ore not guarantors of the accuracy of the statements made or the information fur nished to the registration statement; in general, their responsibility Is to exercise due care that the statements made are ac curate, with due regard to the trust and reliance placed In them by Investors. The degree of care Is that which may reasonably be expected of persons In their relationship to tbs registrant, the degree of care re quired being that ordinarily exercised by a prudent man in supervision and management of his own affairs. Anything less would be useless. Should Assort Investors To contend that such a standard Is too strict amounts to a denial of the experience with all our law governing relations between individuals, and It would be better to forego ■storing Information unless definite sanctions I assuring tbe truth and accuracy of the in formation sought are set up. However, the aanetlon of public faith and confidence to tbe wisdom of legislation and the intelligence | of its administration la far more effective than the threat of any pain or penalty for BooeompUance with Its terms. It Is the object to the Securities and Exchange com. mission, and one which 1 believe is being •ttotoed. to prove to tbe people of this coun ts? that this legislation represents no start Amerlcan standards to fairness and honesty and that Us administration baa been, la being and wlU be conducted along Unes of sympathy | and co-operation. ling departure from accepted la .Net a "Wat Name Tbe acts do not make tbe onunisslon. as is vector. He still most rely on tala own Jude ■rent to tbe mérita to a given venture, but to forming bit opinion there Is available to Mm. by virtue to tba Information contained I pur-^---—-— to the registration statement and proepeetus, the material facte and feature* of that en terprise. Neither does this legislation pro hibit the conception and execution of any project. It recognizes the diverse tastes and Inclinations of human beings. The public, not the commission, determines whether It shall contribute Its money to the execution of any program. Require Fell Diaelosare I take It that the major Interest of this group Is In the requirements of the securities act of 1931. and the particular administrative methods and policies which the commission has so far developed to bring about compli ance with Its requirements, and. rather than a general discussion of registration under the act. I assume that you would prefer a some what detailed treatment of the registration of securities issues of mining companies While the same specific object la sought to be attained to registering any securities, namely, full and fair disclosure of the ma terial facts, the commission recognizes that the method employed to achieve this object must vary with the nature of the business engaged Jn by the issuer. Mining Is a business and Is. of course, treated as such by the Securities and Exchange commission. In the course of administration of the securities act of 1933, for a period of about two and one-half years, certain definite principles to be followed by an Issuer to registering mining securities have been estab lished by the commission. In the process of evolution of these principles, certain meth ods which have at least the dignity and standing of long and continued usage were found to involve features which may' at times seem to make difficult the ton and fair disclosure contemplated by the act. A literal statement In description of certain transactions between the corporation and the promoter often results to only a halftruth, and the purchaser Is not fully Informed either as to the precise nature of the trans action or Its Implications. The commission has gradually and carefully developed meth ods to be used by the registrant to reveal to a prospective purchaser the essential char acter of certain transactions. Again, you wlU observe that the effect is revelation, not pro hibition. The commission does not say "You may not do It:" It only says "You may do It but you must not misrepresent what you do." Stock Denations You are all acquainted with the common donating to the corporation practice portion of the stock received by the pro moter In consideration of the transfer of assets. The commission declared to an opin ion that the Inclusion of shares Issued and concurrently donated back to the Issuer as required by the purchase contract, were Improperly Included In the original cost of the property, even If the effect of such transaction under the applicable state law was to render such shares fully paid and non-assessable. The practice is not prohib ited: the method of representation of the effect of the transaction Is criticized. If, upon the execution of a purchase, the pur chaser Is out-of-pocket but 110 he may not represent that the article purchased cost him ' . ...... . __ b"* been donated back to the treasury. Prop erty held under lease and option may not be represented as an asset of the value of the purchase price specified In the lease and option agreement. If a portion of the pur chase price has been paid. It would seem such amount may be carried on the balance sheet as an asset with an appropriate foot note to disclose the precise nature of the ownership. In promotional enterprises, a foot note to the balance sheet showing the cost of the assets to the vendor of the properties should be included. The value of a lease capitalized Is best shown under "Intan gibles" but under certain circumstances, and. If properly labeled, might be acceptable un der "Fixed Assets.'' Capital Stock In connection with capital stock. It Is re quired that stock issued for cash, services, or property be shown separately. Treasury stock donated back is best shown as "unis sued" and deducted from authorized stock. It will, however, to some cases be acceptable If shown as "treasury stock" deducted from authorized stock, with the results shown as "net stock outstanding." The source of any class of surplus should be stated on the face of the balance sheet. Engineer's Report Many of you are primarily Interested to the role the expert plays to the registration of securities. In the presentation of facts sur rounding the Issuance of securities of a min ing company, the expression of opinion of a mining engineer relative to the properties Is of primary significance. Without minimizing the importance of other factors It may be said that the nature and character of the mining property itself are of fundamental importance to the Investor. There Is no spe cific requirement as to the extent of the In formation which must be given; the degree of development of the particular property shapes the limits of the requirement. The extent of the Information available varies from property to property. Liability ef Expert Section 7 of the securities act Imposes a definite responsibility upon the expert and provides for liability to a purchaser unless that responsibility Is faithfully discharged. This responsibility Is not unduly burdensome. An engineer or a mining expert who con ducts bis examination and report* his con clusions to accordance with sound and com $15. Another principle established In the same opinion Is that when stock, Issued to part payment for property, Is valued at par In the determining of the cost of such prowrty, such valuation Is false and misleading when all other sales of the same stock were at varying prices, all considerably below par In the same case, the commission ruled that "perspective value" does not afford a scien tific basis (or the actual valuation of prop erty at the time of Its acquisition by the reg istrant. Financial Statements Certain well-defined principles to connec tion with the preparatibn of the financial statements In a regtstrtatlon statement have been built up. As stated before, the Issuer may not Include in the figure given as cost of Its property, the par-value of stock which DRILLING CONTRACTS SOLICITED LATEST EQUIPMENT We G tut rant«« Our Work CASING FULLING CLEANOUT SERVICE Dependable We pull eating and plug wells un der State and Federal requirements Quick Action We have most complete equipment in Kevin-Sunburst Oil Field. GOOD USED CASINO POR SALE Can. Wire or Write BIG WEST OIL COMPANY « Or MONTANA OILMONT FKRD1G KEVIN manly accepted standard* ol hi* need have no fear ol un happy o a* a result ol his report betas lu nectlon with the distribution and sale ol in* securities. Happily, as «M e«P«cte4 the majority of report» submitted by m tn l a s an gtneers of this country to the oMtHWlpn reflect the skill and Inteartty for whisk that profession Is Justly renowned. The standards of skill and conduct pan •rally subscribed to by the men engaged to mining* engineering art not leaa tomtotog than the standards erected by th e aaajpjtte « act. However, the commission. un fortunately, confronted with expr eul aaa of in Kan been__ _ opinion of engineers, which, either to" In advertence and took of skill, or by Owl in. mislead the prospective Investor a* to the possibilities ol the venture. In these In stances. the commission ha* protected toe nubile either by Institution of stop-order pro ceedings under section 8 (d) of the act to registration' statement"*" ntelntorf thT^mtel representation* or by Injunctive proceedings fo ^Ttraln continued offering of the stock to restrain comm for aale. Method to Precede« At time* en engineer 1* employed to make an Investigation ol the physical assets of s particular venture lor the exclusive pur pose of Discing a value upon such a s ee ts: ZTrther time* as Is the case with mining prospects, to determine whether the avt dence available and open to observation It sufficient to warrant the expending of money In development of the prospect. Whether the examination is undertaken with a view to a fins? expression of the results of such ex amtoation in term* of dollars and cents with a view to expressing conclusions to gen. eral comments and recommendation», the de tails of the procedure followed In the course of the examination are the game. Fellows Recognised Norms An appraisal expert, whether he be en gaged in the examination of mining prep ertlra. real estate. Industrial planta or what not, Is presumed to adhere to well estab does ^ the'^englneertng profan" fl^fth" 2Srt»*to rènéct° the'Result* cf rt acoepted P at> Äl and «amination practice, murt. to the course of his examination, have followed accepted methods. The commission takes the view that valuations contained In such « „port even though In the final analysis th« represent merely informed Judgments, nevertheless are representations that these accepted methods hsve been accureteiy and fairly followed. If such accepted methods have not actually been followed the velue lions finally arrived at are In essence mU-! representatlons of fact, because they untruth fully describe the basis upon which judgment ha* T been exercised. The same may be told whether the valuation Is stated In a definite figure or as a matter of general descriptive comment. An engineer may "hot present a re port which has been prepared In neglect of fundamental principles of scientific method and In disregard of the standards he ex pressly or Impliedly purported to follow. Maintains High Standards Any action of the commission which has the effect of discouraging the preparation and dissemination of false and misleading engineers' reports on mining problems should, and I believe does, receive the approbation and commendation of a group such as yours. In Its Insistence that the recognized stand ards of the engineering profession be fol lowed In the drafting of reports to be used In connection with the distribution of securi ties to the public, the Securities and Exchange commission is allied with every mining asso ciation and mining society which has a* Its aim the maintenance of the high standards quite uniformly adhered to by engineer« 1 " America. In a real sense, and to a j.-ru« th» nhtprtfi of this and every other forward looking progressive mining group In this country are being furthered by the oc tivittes of the Securities and Exchange com mission. It may also be said that a voluntary association of mining men, such as your own, organized for the purpose of dissemination of technical knowledge and Improvement of ( technical practices makes a uaeful contrl but^n tow P srrf schlevement ol the re.tots | sought to be attained through the admlnls -1 tration of the securities act. ' tration of tne sec ucs act MANY HUNTERS HAD HOOD LUCK 684 BUCK DEER ANH 318 ELK RE PORTED KILLED THIS SEASON now be Big game license tan, ginning to pile up in the offices of the state fish and game department at Helena, indicate Montana nim rods had a successful season this year. Misapprehension has arisen in some localities as to the regulation requir ing tags to be returned to the game department on or before Jan. 1. Chief Deputy Chartrand said hunt where < ttie l, season g extends I imW March 1 should not send in their tags until and SSfi"p*' "" * Y "'° w ' Although conditions were not excep tionally good in the state this season, big game hunters had little trouble obtaining their venison. The tags re ceived to date by Chief Deputy Char trand show a kill of 684 buck deer and 318 elk. In order that the fish and game commission may make a thorough sur vey, all hunters, except those planning a trek to Park county, are asked to send in their game reports as quickly ible. as •nie fish and game department uses the Information on the cards in de termining the kill by counties, the con , and other features ig important to de ditlon of the ran; of big game him naming future Most of the hunters who already have returned their tags reported the range in either good or fair condition. te es POWDER RIVER MEN VICTIMS OF BOTULISM Arthur F. Decker and George derson of Powder River county died while enroute to Miles City recently, the victims of botulism. *] to have eaten cold pack Both men were ranchers, Becker be ing single and Anderson married. An were h. «■ Gold production in California In 1934 totaled 718,063.92 ounces of fine gold, valued at 625,131,238. „ . . ta "«• Tr«M«ire Slate News in Brief HtLENA —Mr s. Joha nn a L. Orowell. who rode behind an os team across the prairie to MISSOULA—flu*sr beet* sliced *t the Missoula factory of tbs Amalgama ted Sugar BILLINGS—-Land patent awards covering 3.54 »ere* to «a stern Montana an an nounced by Begtotor Harry W. Hill of the district land offlea, department of the In terior. Co this seaeon had a sugar eon tent of IS percent, said Manager MU B. Wilson recently. HAvag—The rear-old baby daughter of Mr and Mrs. Joe Erbacher fell Into a tub of hot water and was severely burned a tow days ago. , , . , . , . 1 » »cl«* "H«" accompanied by a parent i ° r suardlan. _ rank . . DILLON—if ra. prank A. Hazelbaker wire j of a former Beutenaat governor of tola *"te. has been named president of the Montana chapter of Pro America, a na optional organisation of republican women, i j I | , Point, «JJjUtoÄ-m« of «je membership partment of kindergarten-primary education of the National Education amoclatlon. ( _ BILLINGS—Billings postoffice retenue may j reach an all time peak this year, t was Indicated In an «-month report compiled by Postmaster Mearl L. Pagg. Every month dur | ma the year showed an Increase over corresponding month In 1834. ___ __ . . . .. . . MISSOULA-Inaugurated at the start of the fall quarter, the four-year course to medl cal technology at the Montana «ate wil verslty haa been granted provtglonal ap provaj by the American Society of Clinical pathologists, , . , __._. , craduate the largest number J* the history of the Institution, Principal Scott POLSON—A curfew shall ring at Poison, The city council has revived toe ordinance requiring that children be off toe streets by MISSOULA—A new variety of apples, be lieved to be more suited to culture to Mon tana than any now grown to this state, ! was displayed at the SBth annual meeting of the Montana Horticultural society at Pol son. MILES CITY—France! Peterson, member of the Washington school faculty, was ap the ■ BUTTE—Not long after Coach Harry Dahl berg won a state high school football cham pionship with his Butte high team be learned that his brothers, George A. and Al won the Puget sound class A league title with their Puyallup, Wash., high school foot ball team. BILLING»—Raymond Davis. 13, son of Mr. and Mrs. Homer Davis, fanners living near here, received a fractured skull when thrown from a truck to a farm lane recently. The youth, a Billings high school freshman, was riding behind the cab when the truck made a sudden left turn, Raymond being thrown to the road, striking his head on the gravel. ■Hie right rear truck wheel passed over hla body. BUTTE—Nest year, Butte high school will Pries has announced. He said Ô0 are expected to rec ^ e diPl«»»» J J n " ary ,Ji. n< i f 3 ?LiP June. The wevlous record number of grad uates was 347 in 1*34. __ _ „ ... . ._, HAVEE—Pleading guilty to a c ? 8 f* e , forgery. Prank Clark was sentenced to two year* In prison. Pat McGillis pleaded guilty to robbery anfl was sentenced to 18 months. Joe Parris pleaded *"«ty 'o damaging the JaB to which he was being held on assault charges and was aentenced to serve 18 mo nths. The assault charges were dismissed. BROADUS—When a weU caved In and bis team of horses plunged to the bottom, Fred Weatherspoon Jumped to safety. One aal Uft! was killed and the other was to the well 31 hours before It was rescued. Weather spoon was pulling a scraper, got too close to the pit. be said. MISSOULA—CCC workers In nearly two score camps scattered through western Mon tana and northern Idaho will not be iso lated by heavy snow this winter. The for est service engineering department has ar ranged to keep all roads to backwoods CCC camps open no matter bow deep the snow falls. niltog the well and the horses. C ? , ï^î? B th^i^i t tana State^college dent teams, the Montana State college «Äh/ÄÄÄa.MeZ Sft£k£TL*^fedSÄ?(^ partiCi " P*ted in the Judging rontests_^ , The . Montana State coUege team f o U nnmîSr win? sheep, and a number of minor win COLLEGE JUDGING TEAM PLACES 9TH! Members of the team are Edouard Deschamps, Missoula; Carl Hansen, Dillon: James Watson, Glasgow- Leon ard Eliason, Deer Lodge; Coach Ross vrille r of the college animal husbandry department, and Warren H a nna , 9m>> Wïiat the Man "Up Front Says About Lubrication 97 ■ .r . ~ -J a? ü u We've got to keep going at top speed to get out our orders... we can't risk any breakdowns in the plant,.. that's why we specify Socooy-Vacuum lub ricants for every requirement." Are you interested in facts which have convinced many hard-boiled buyers that Socooy-Vacuum's complete lino of lubricants Will keep machines run ning in good condition... will help out major plant coats and increase profits? If so, we urge yon to consult ut on your own specific lubrication problems. lit ] H6£ w SOCONY-VACUPM OIL CO., INC. Whit* Eagle Division 306 Strain BWg. Great Falts, Mo«. Phon« 6575-6576 Lubricants hnmJ Western Montana Woods Will Provide Many Christmas Trees Wheat Santa Cfatua baa« bis tilts i a Cferiatoaag tree in a wUb west St Nearest estimates, based on farmer production figures, are that the por tion of the Treasure state west of the continental divide will furnish in ex- ■ cess of 500,000 Christmas trees in the 1935 harvest, something more than half from privately owned lands and the : rest principally from region one na- < tlonaf forests. ; Largest of the known producers this. year is the Kootenai national forest, headquarters of which are at Libby One hundred thousand Christmas trees quan- 1 Bitter a short time befere grew in wester» Montana's forests. will be harvested there. Lesser titles are to be taken from the Root, Flathead. Cabinet and Lo Lo national forests, the total to be in the neighborhood of 300,000. trees are a legitimate product of the national forests, and it j MISSOULA JUDGE IS SELF-SLAYER SENT BULLET THROUGH MOUTH WHICH PENETRATED BRAIN The body of Judge Theodore Lentz, prominent western Montana jurist, was found in his chambers at Mis soula by Court Reporter Durwood Washington and Lyde Catlin. The body lay on a conch. In the right hand was clutched a .32 caliber au tomatic pistol. A bullet apparently had entered through the mouth, penetrating the | brain. 1 Near him and pasted on the wall was a note In which he attributed a highly nervous state to overwork and worry. No one in Missoula county courthouse heard the shot which ended his life. Judge Lentz was bom in Williamson county, Ill., Oct. 2, 1874. His parents were southerners. Coming to Montana in 1904, Judge Lentz practiced at Glendive and served a term there as county attorney. He had lived in Missoula since 1909. Montanans who paid delinquent taxes under the installment plan as provid ed in a law which has now been held invalid by the state supreme court, cannot recover the interest and pen alty, according to a ruling issued by Attorney General Nagle In answer to requests from the county attorneys of Glacier and Teton counties. ms % 200 ROOMS 200 BATHS FROM COFFEE SHOP Under Hotel Management Wonderful food at moderate prices.... EARL HUN6E.RFORD Owner and Manager h >31*7 «mIsI 3 » 't « A is Just as esk enttnl to produce than as to produce fence posts or timber. To a limited extent they can be^sapjpüed from th inning «, for the benefit of the remaining stand, but where that is noc possible, there is no reason why they should no* be produced^ a« the final product of the land .provided they properly cut and selected so that productivity erf the land is continued, Usually not more than 60 to 76 trees to the acre are cut at one time, and it possible to recut the same area every five or 10 years without damage to the final stand. , ... _ .. Income from the sale of the Obnat mas trees includes not only the price paid for them, but also the wag es earned by men who must harvest them. This Is a considerable sum. of direct benefit to numerous communities in the western Montana, •I A' £ fc A 1 FOB QUICK ACTION CALL THE GALLOPING u »? SWEDE Rig-Building Trucking Ditching Construction of any kted. Anywhere. ALL WORK GUARANTEED References: Any Supply Houae in Northern Montana or Sunbont bank, Shelby. J. HUGO ARONSON OILMONT and CUT BANK Office Address: Cot Bank, Mori. Phone 17S PHONE FOR QUICK ACTION!