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Ashburton Guardian Magna est Veritas et Prævalebit. TUESDAY, MARCH 3, 1914. INVESTORS RISKS.

Those of the investing public who prefer the higher rates of interest which private mortgages give are generally prepared to accept the element of risk that sometimes enters into sucK transi actions. But it would seem' that occasionally there 'are risks of a quite unexpected and illegitimate kind, and that these are becoming increasingly frequent. During the past 12 months there have been several instances in which solicitors of good standing have been placed in the dock to answer , charges of embezzlement of trust and other moneys, and to-day it is announced that a warrant has been issued for the arrest of a solicitor on a charge of forgery, the amount involved being stated at £3000. The matter has become so grave in character, affecting as it does the honour of every member of the profession in tlie Dominion, that the frequent recurrence of these frauds seems to call for action other than by legal process. It might be argued that the investing public who are not satisfied with the returns ; offered by banks and Government and municipal securities j and entrust a solicitor with money for investment, must shoulder any responsibility that the investment implies, and that if human nature proves frail that is merely incidental to the risk. If that kind of logic were recognised as sound i in business transactions, it would I put a premium on roguery/and lead to the destruction of society. ]^ot all people who have money to. lend have the business knowledge necessary for wise and stable investment, and it is no small portion of the business of many firms'of solicitors to act as the go-between for lender and borrower. This is one of the privileges for which they pay a license, and' therefore the public have a right to ask that transactions of this nature shall be bona fide in every respecti In short, they may be said to have a fair claim for protection from loss. During the hearing of the recent case at Timaru, in which nearly £50,000 of clients' money was involved through the defalcations of a solicitor, it was suggested that trust accounts in the \ hands of solicitors should be subject to frequent audit by a .Government official, in the same way as public i accounts are examined. But this proposal is^open to the suggestion that a man who was carrying on a fraudulent business would present for scrutiny only those transactions that were above-board; and, in any case, if it was found thai fraud".bad taken place, it would be no' relief. to tlie unfortunate investors to know' that the man who had robbed them would be sent to gaol. A more feasiblesuggestion is that the profession as a whole should inaugurate an integrity.' guarantee fund, from which would be made good the defalcations of members. :> of course, is open to; criticisnivas; casting a' slur on the profession, but it should be pointed out that guarantee funds are not unknown amongst bank officials'and Government and municipal employees. In any case, what risk there is should not be one-sided. In some recent instances it has been a case I of "heads I win, tails you lose,'' with the double-heiaded' coin in the solicitors' hands': :It cannot be denied'that the Law. Society always shows a proper regard for{ the "traditions of:' tfe£>. profession ■ when breaches oftrus^becur; but it slfoukl. be possible for, tlie society to devise some method of preventing- such frequent lapses. In their own interests, as well as those of the investing iniblic, some guarantee of integrity is certainly needed.

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Permanent link to this item

https://paperspast.natlib.govt.nz/newspapers/AG19140303.2.15

Bibliographic details

Ashburton Guardian, Ashburton Guardian, Volume XXXIII, Issue 8808, 3 March 1914

Word Count
605

Ashburton Guardian Magna est Veritas et Prævalebit. TUESDAY, MARCH 3, 1914. INVESTORS RISKS. Ashburton Guardian, Volume XXXIII, Issue 8808, 3 March 1914

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