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434 PROMOTION [Bk. Il
lic. Ordinarily the shrewd business judgment of the experienced
investing public can weigh the chances of success or
failure; but in fraudulent promotions the appeal is made to
the small investor who is not accustomed to weigh chances, and
who, even were he able to weigh them from the data supplied
by the promoter, would have the dice loaded against him.
Four Methods Used to Sell Low-Grade Securities The
methods, devices, and deceits—even misrepresentations—resorted
to in the marketing of highly speculative and downright
fraudulent securities are much the same. In either case the
stocks are offered directly to the possible investor without the
real indorsement of a banker. This direct appeal is accomplished
by the use of one of four different devices. The highly
speculative or fraudulent promotion may offer its own stock
without intent to obscure this fact. It may sell the stocks
through some officer or otherwise interested party. This accomplice
will pose as the company's "fiscal agent," or even
as an independent banker. Again, the promoters may organ-
! ize a subsidiary corporation, the sole purpose of which is to
• market the stock of the main promotion. Again, the promoters
; may contract for the sale of the new stock with some despicable
concern whose business it is to sell worthless securities at an
inordinate commission.
The first of these methods mentioned, in which the corporation
advertises itself as offering its own stock, is seemingly
the most direct and logical. The company in such a case
merely assigns a certain number of shares to its own treasury
and then announces a sale of "treasury stock." The risk of
sale and the expense of newspaper advertising and distributing
circulars are borne by the corporation itself. Ordinarily this
expense is very large, but considering the fact that the stock
offered for sale has probably no real value, the expenses of distribution
can hardly be said to be excessive.
In the advertisements, the corporation states that it is
offering its own "non-assessable, full-paid, treasury stock" for
Beschrijving voorwerp
| Titel | The financial policy of corporations |
| Auteur | Dewing, Arthur Stone |
| Jaartal | 1926 |
| Collectienaam | NIVRA Historisch Archief, UBVU gedigitaliseerd |
| PPN | 344552586 |
| Toegangsgegevens (URL) | http://imagebase.ubvu.vu.nl/getobj.php?ppn=344552586 |
| Signatuur origineel | NIVRAHA149 |
| Evaluatie |
Beschrijving
| Titel | NIVRAHA149_00458 |
| Transcript | 434 PROMOTION [Bk. Il lic. Ordinarily the shrewd business judgment of the experienced investing public can weigh the chances of success or failure; but in fraudulent promotions the appeal is made to the small investor who is not accustomed to weigh chances, and who, even were he able to weigh them from the data supplied by the promoter, would have the dice loaded against him. Four Methods Used to Sell Low-Grade Securities The methods, devices, and deceits—even misrepresentations—resorted to in the marketing of highly speculative and downright fraudulent securities are much the same. In either case the stocks are offered directly to the possible investor without the real indorsement of a banker. This direct appeal is accomplished by the use of one of four different devices. The highly speculative or fraudulent promotion may offer its own stock without intent to obscure this fact. It may sell the stocks through some officer or otherwise interested party. This accomplice will pose as the company's "fiscal agent," or even as an independent banker. Again, the promoters may organ- ! ize a subsidiary corporation, the sole purpose of which is to • market the stock of the main promotion. Again, the promoters ; may contract for the sale of the new stock with some despicable concern whose business it is to sell worthless securities at an inordinate commission. The first of these methods mentioned, in which the corporation advertises itself as offering its own stock, is seemingly the most direct and logical. The company in such a case merely assigns a certain number of shares to its own treasury and then announces a sale of "treasury stock." The risk of sale and the expense of newspaper advertising and distributing circulars are borne by the corporation itself. Ordinarily this expense is very large, but considering the fact that the stock offered for sale has probably no real value, the expenses of distribution can hardly be said to be excessive. In the advertisements, the corporation states that it is offering its own "non-assessable, full-paid, treasury stock" for |
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