SHARE TRAFFICKING EVIL

Hawke's Bay Tribune, Volume I, Issue 208, 19 August 1911, Page 5

SHARE TRAFFICKING EVIL

A SERIOUS MENACE.

THE CONTROLOFEXCHANGES

REMEDIAL ACTION NECESSARY.

(Own Correspondent.)

[SPECIAL —BY TELEGRAPH.]

Wellington, Aug. 19

The trafficking evil among speculative brokers is recognised as having reached a stage that, besides being prejudicial t-o the interests of the legitimate broker, is a matter of serious concern to the invest-! ing public. Even the. ty’ro whoj knows nothing of the guileful ways; of him who gambles in mining scrip! has heard of those queer and elus-! ive animals, “ bulls” and “bears,” but not even the victims of the' creatures can always appreciate the stealthy stalk by which these devourers of innocents gather in their prey. In view of the presistent talk of late concerning the necessity of some definite metm i of coping with this “trafficking” curse, your representative interviewed the Hon. Jas. McGowan, whose intimate knowledge of mines and the methods of dealers in mining scrip, gathered during his long 'years of association with a mining district, and as Minister of Alines, tenders his opinion on the subject, which is one worthy of serious consideration.

Can you suggest a. remedy for this trafficking habit among brokers ?

Air. McGowan : I think the only practical way of dealing with the matter would be to pass an Act with the view of preventing brokers inclined to gamble from tiafinking in shares. A broker should not traffick, either directly’ or indirectly, in shares at all. The legitimate broker who follows biokmng strictly’ as his calling is bv this trafficking system being virtually: cheated out of his legitimate bust-; iicv. while the unfortunate si uc holders are undoubtedly swindled by r the action of the broxers who can traffick in shares on small margins—"margins which could not; possibly pay’ the legitimate investor.” declared Air McGowan emphatically. Continuing, he said that this matter had become a serious thing, on the .Auckland Stock Exchange, and no doubt to some extent on other exchanges, and it is absolutely neces-itry that sonic action should be takt.i to prevent lhe gambling eleimat controlling the i xchanges im-tread of the legitimate business which the responsible and honest brok.rs wish to encourage. The; honest broker is. a., a matter of fact, being very gravely' hampered, if not being actually driven out of his business, by’ his unscrupulous •colleague. “No doubt,” lamented Air. AlcGowan, “the biokers might protect themselves if that was the: only evil, but the general jiublic, who are the clients of both the,; gambling element of the association ami the legitimate brokers, are also, heavy losers -in the end the heaviest losers.'’ :

As a specific you would suggest ?

Mr. McGowan: I think a law; .should be passed for the protection i </f dm !■ nil i.in.le broker and the public, providing that the books of; any broker might be examined on 'lemainl by the chairman of the Exchange or by a duh’ qualified brother broker. “ I think that the num 1 er of honest brokers would be reffi ii.it to mu’ c this class of, business r.'-profitablc for thore engaged in it.” * I

ISE LIANG FOB FEIT ED SHARES .Another matter which seems to call for some stringent remedy is the system of selling forfeited shares by public auction, end this question was also put to Air. AleGo wan.

■’Yes. Ihcte is no doubt about the evil alt aching to the present system of disposing of forfeited shares.” he replied. “I am convinced that it is a wrong and injurious s;-stun. No forfeited shares should be sold at public auction at all. Do you see? It is like this.: The holder of a large number of shares may avoid paying calls by letting them go forfeit, and then at auction secure them again, cither directly or through an agent, at a nominal price In my opinion, all forfeited shares should either be’ distributed pro rata among the’ other shareholders, or held in re-i serve by the company. There was, ‘ by the way an Act or agreement in' force some 23 or 30 years ago to: p»e v cnt brokers from trafficking in shares, and, although it may have, been evaded in some instances, yet it undoubtedly had an immensely ! deterring effect, and did a lot of good. I think.” concluded Mr.' McGowan, •‘'that tlm Imne-t broker who has to do the public busi-. nvss has a right of protection from' his gambling colleagues apart from the question of protecting the gen-; eral investor, who is now fleeced) so flagrantly.” I