Securities Act

Throughout the first one-half of the Twentieth Century, federal incorporation police forces were debated. As noted above, many a(prenominal) within and without the federal government suggested the routine of such laws as a means of implementing some uniform corporation regulations, sort of than relying upon a confusing array of individual state laws. Opponents, however, argued that the enactment of federal incorporation laws would infringe upon the traditional power of the states to amaze commerce within their own borders. A third group, in favor of compromise, suggested that copulation enact laws requiring the federal licensing of corporations engaged in interstate commerce, rather than the federal charter of such entities. Licensing would go forth the federal government to regulate large corporations (protecting investors and the public) while avoiding invasion upon the states' powers.

The debate over federal incorporation laws continued regular(a) after the enactment of the Acts of 1933 and 1934. In the eight years leading up to the Second World War, several bills were introduced in Congress which would have created federal licensing regulations. The newly created Securities and Exchange Commission issued a report in 1938 which expressed alarm at the utilisation of "charter-mongering" by certain states. These states were more interested in cosmetic surgery revenue by

As noted earlier in this paper, the first of the Blue thumb laws was enacted in Kansas in 1911 and it was typical of the other such laws enacted in other states. Firms selling securities in Kansas were required to obtain a license from the Kansas bank commissioner and to regularly file reports of their financial condition. The law also required investment funds companies to file reports of their business visualize and financial condition and to file copies of all securities proposed for sale in Kansas.

The bank commissioner could bar any investment telephoner from conducting business in the state if, after examining the filed documents, he concluded that the learning about the proposed securities or the investment company contained any "unfair, unjust, inequitable or oppressive," provision. The bank commissioner could also bar the investment company if he concluded that the company was "not solvent and does not intend to do a fair and honest business, and ? does not promise a fair return on the stocks, bonds or other securities ? offered for sale." The law authorized the bank commissioner to conduct examinations of investment companies and to seek appointment of a receiver to wind up the affairs of any investment company found to be insolvent or to be run in an "unsafe, inequitable, or unauthorized manner."

In the year following these federal beg decisions, the proposals for blue sky laws ceased, in part because the constitutionality of these laws was questionable. In addition, the pedigree of the First World War benefited local banks as European money began flowing into depositary accounts in the United States for safe-keeping and the demand for denotation grew. As a result, the local banks lost interest in supporting blue sky edict. Moreover, farmers prospered during the war, as demand for inelegant products in Europe skyrocketed. Representatives of the IBA and state bank regulators began discussing compromise legislation which would regulate securiti
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