The West Virginian

ADVICE TO INVESTORS
BY AUDITOR DARST

Only Authorized Salesmen May Legally Sell Stock in This State.

CHARLESTON, Jan. 20.—State Auditor J. S. Darst, who administers West Virginia's Blue Sky Law, has received information of considerable activity in the state by unauthorized stock salesmen, and makes the following suggestions to those who are requested to buy stocks or other securities in this state.

When approached by a stock salesman require him to produce a letter of authority signed by the State Auditor to sell the stock he offers, and if he has no such authority, wire the Auditor immediately, giving the name of the agent and company whose stock he is attempting to sell. If he has a letter of authority, remember that such is not even a recommendation that the company will be successful, but only a statement that the technical requirements of the law have been satisfied.

The law aims to compel every promoter to lay all his cards on the table. If the stock has been issued for intangible assets, or for property the value of which is not readily ascertainable, that fact must be clearly set forth in the subscription blanks, in order that every signer may have notice of the true condition of the Company. Certain statements are required, and in general all papers having anything to do with the condition, standing or purpose of the company must be presented before the stock can be sold.

Another important feature is that the Auditor may require all stock issued for property or intangible assets to be placed in escrow and there held under such terms as he may prescribe. This prevents the promoter from placing stock on sale that has been given for certain supposed valuable consideration, and makes the value of his stock depend on the success of the concern.

Our law specifically limits the amount any stock salesman shall receive for selling stock to 10 per cent.

par value, which is a big protection.

Before we had this law it was a common thing for the stock salesman to receive from 25 to 50 per cent. for the sale of stock.

The law makes it a conspiracy to defraud in connection with the sale of stocks, or other securities, a penitentiary offense. It also provides that any person making a false statement, either oral or written, or conceals any figures concerning securities, which he is offering for sale, shall be guilty of a felony.

It is our custom to place in the subscription blanks as many of these facts as possible in order that the prospective buyer may know the true situation. Then it is up to each individual to judge for himself, whether or not he wants to invest. Neither the Auditor nor any other living man can tell what the outcome will be.

Of course, if it appears on the face of the papers that the promotion is insolvent or fraudulent permission to sell stock is absolutely refused as happens in many cases.

If you desire further knowledge than the subscription blank shows write the Auditor, and he will gladly give you such information as he has.

This is about all any law can do it is then up to you. If it is an Oil Company only the drill can determine whether oil will be found. If it is a manufacturing company, the personnel of the management, everything else being equal will determine the success or failure of it.

For these and many other reasons you should proceed with great caution before purchasing any stocks.

If you are an employe consult your employer, or a business friend in whom you have confidence Make your time, legitimate business will wait, investigate to your full satisfaction, and remember a man of means can afford to take a chance that a man of small means should not think of, because in one case the man may only lose a small portion of what he has, and the other can lose all.

Finally, use this office in every way possible. Each company authorized to sell stock in this state has certain statements under oath on file here, and we are glad to furnish information.