WARNING TO INVESTORS

Sun (Auckland), Volume III, Issue 842, 10 December 1929, Page 10

WARNING TO INVESTORS

OPERATIONS OF THE SHARE HAWKER MISREPRESENTATION ALLEGED Further warnings in respect to the operations of certain classes of company promoters were issued by Mr. G. C. Creagh, chairman of the Auckland Stock Exchange, in his annual address from the chair today. He referred, in particular, to statements freely made by canvassers to the effect that the propositions they were hawking had the support and endorsement of the Exchange. While he had no desire to criticise or condemn any of th€:se propositions, Mr. Creagh stated that he considered it only fair to inform investors that no prospectus was considered by the Exchange un- \ less application was made through one iof the members of the Exchange 1 whose name, if the prospectus was passed by the Exchange, would appear on the prospectus as the official broker for the company. “It is also necessary to point out,” stated Mr. Creagh, “that the statement frequently made in prospectuses and advertisements that ‘early application will he made for listing on the Stock Exchange’ may have no value whatever. Many of those companies do not make the slightest effort to ascertain the conditions under which the Exchange would give recognition to a company’s shares. Such recognition cannot be given until all the listing conditions laid down by the Exchange with a view to protecting reasonably the interests of the investing public are complied with.” Mr. Creagh also warned the public to exercise considerable caution when

considering investments in companies, the flotation of which is guaranteed by underwriters, the financial standing of whom is not known. Experience was showing that there have been many instances of new companies coming to grief as a result of underwriting contracts being entered into with people who could not possibly fulfil them. The lack of discrimina.tion shown by many boards in this respect deserved strong condemnation.