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The Milwaukee Leader
Milwaukee, Milwaukee County, Wisconsin
What is this article about?
Madison securities division bans sale of unit stocks by brokers, calling them tantamount to fraud after studies reveal high break-even costs for investors due to fees, with potential certificate suspensions.
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MADISON—Announcement was made yesterday by the securities division of the public service commission that it will not permit brokers to sell units of stock, consisting of grouped shares of a selected list of corporations even though the stocks are listed on one or more of the exchanges recognized by the securities act.
The commission said it will consider the offering of unit stocks as "tantamount to fraud" and that "the certificate of any licensed broker who shall be found selling or offering such units for sale will be suspended."
A study of three unit offerings has been made by the commission.
One unit consisted of one share of the stock of each of 25 corporations. The commission said the aggregate odd lot market value of the stocks amounted to $84 on May 12, 1932, and that the brokerage fee of $1 a share brought the unit price to $109.
To break even, computing stock exchange commissions at the standard minimum of $5, the investor in this case would have to realize $237 on a sale of the unit, an increase of nearly 300 per cent over the market as of May 12, the commission said.
Another unit consisted of five shares of the stock of each of eight corporations with market value of $137 as of May 27, and by the same method the investor would have to realize $198 to break even, the commission said.
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Where did it happen?
Domestic News Details
Primary Location
Madison
Event Date
Yesterday
Outcome
the commission will consider unit stock offerings as tantamount to fraud and suspend certificates of licensed brokers selling or offering such units for sale. studies of three unit offerings showed investors would need significant gains to break even due to brokerage fees.
Event Details
The securities division of the public service commission announced it will not permit brokers to sell units of stock consisting of grouped shares of selected listed corporations. A study of three unit offerings was made, including one with one share each of 25 corporations valued at $84 market on May 12, 1932, but unit price $109 with $1 per share fee, requiring $237 to break even (nearly 300% increase). Another with five shares each of eight corporations valued at $137 on May 27, requiring $198 to break even.