Alabama. Securities Commission (1919-1935).

Authorities:

Alabama Government Manual. Sixth edition. Atlanta: Darby Printing Company, 1979.

Code of Ala. 1923. 9877-9900. Atlanta: Foote and Davies Co., 1923.

Code of Ala. 1940. Title 53, Sections 1-27. Charlottesville: The Michie Company, 1941.

Markley, Anne Ethelyn. Author Headings for the Official Publications of the State of Alabama. Chicago: American Library Association, 1948.

Gov. Thomas E. Kilby in his 1919 Jan. address to the Legislature recommended that that body enact legislation "to prevent wild-catting and to protect the gullible part of the public from investing in stocks and bonds which have no real foundation of value." In 1919 Sept. the Legislature approved an act establishing the State Securities Commission, composed of the State Superintendent of Banks as president, the State Attorney General as secretary, and the State Commissioner of Insurance.

It was the responsibility of the State Securities Commission to grant permits to persons or corporations wishing to sell bonds or securities in Ala. Applicants for permits were required to submit to the president of the Commission: a copy of the security to be sold; a financial statement listing the assets and liabilities of the company issuing the security; the name, address and financial standing of the company's fiscal agent; a statement indicating whether or not the securities were secured by mortgage, and if so, a copy of the mortgage and an appraisal of the property; a statement showing the gross and net earnings of the company; information relative to the value of the security and of the earning capacity of the company, a copy of any general prospectus and advertising literature; the names, address and selling territories of the company's selling agents who would be involved in the sale of securities; the names and addresses of all partners, directors or trustees; a statement giving a detailed plan on which the business would be conducted; the articles of partnership or a copy of the corporation's charter; and a filing fee of twenty-five dollars (Acts of Ala. 1919, No. 660, Sec. 3, pp. 947-948).

When these conditions had been met, the president was authorized to examine or audit the records or affairs of the applicant, and to employ at the applicant's expense as many as three appraisers to assist him. The failure of the applicant to cooperate with the appraisers or to furnish information required for the investigation was considered as a withdrawal of the application for a permit. The applicant was also required to enter into a fund of not less than $1000 nor more than $100,000, an amount determined by the president at no more than ten percent of the stock proposed to be issued.

Upon completion of his investigation, the president made a report to the Commission and filed with the secretary copies of any appraisals conducted. Within ten days of receipt of the report, the Commission gave the applicant a hearing. The Commission was authorized to order additional investigations and audits, independent of those conducted by the president. The expense of these audits was the responsibility of the applicant. When the Commission returned a report favorable to the applicant it directed the president to issue a permit.

The general accounts of persons or corporations licensed to sell securities in Ala. were subject to the examination of the president of the Commission or his appraisers at all times. The licensee was liable for examination fees not exceeding fifteen dollars a day when the president and his assistants were so occupied. In addition, the licensee was required to submit quarterly statements attesting to the true financial condition of the enterprise. Each statement was accompanied by a filing fee of two dollars and fifty cents (Acts of Ala. 1919, No. 660, Sec. 10, p. 954).

The Commission could suspend and revoke a permit if it received complaints from responsible parties. Upon receipt of sufficient complaint, the Commission suspended the permit and notified the offending company of an impending hearing on the matter. The Commission was authorized to subpoena witnesses and documents to determine the validity of the complaints brought before it. Findings of the Commission were considered as prima facie evidence, and on the basis of the Commission's decision, civil or criminal charges could be brought against the offending company. Appeals of decisions of the Commision had to be made within thirty days and only in the circuit court of Montgomery County. In the event that the circuit court judge set aside the Commission's decision, the Commission could appeal to the Ala. Supreme Court without bond.

Violation of the Securities Act could result in a fine of up to $5000 or confinement in the State Penitentiary for up to seven years, or both. The provisions of the act did not apply to the securities of the United States or any foreign government; public or quasi-public corporations; State or national banks or trust companies or mortgage companies dealing exclusively in bona fide mortgages on farm or city real estate or building and loan associations authorized by the State Securities Commission; or securities of any domestic corporation organized without capitol stock and not for gain, or organized for purely religious, educational, charitable or reformatory purposes (Acts of Ala. 1919, No. 660, Sec. 9, pp. 953-4).

1920 Oct., the Legislature provided that the State Securities Commission be composed of the members of the Ala. Public Service Commission. The authority and jurisdiction of the members of the Public Service Commission were enlarged so that they, when functioning as the State Securities Commission, could more effectively supervise, inspect and regulate the promotion and sale of securities in Ala. Each member of the Public Service Commission was authorized to receive an annual salary of fifteen hundred dollars as compensation for services rendered as a member of the State Securities Commission (Acts of Ala. 1920, No. 38, pp. 60-76).

In 1932 Nov., the Legislature imposed upon the State Superintendent of Banks the duties previously exercised by the State Securities Commission (Acts of Ala. 1932, No. 270, pp. 273-4).

In 1935 Sept., the Legislature imposed upon the Attorney General all the duties of the State Securities Commission and the Superintendent of Banks (Acts of Ala. 1935, No. 509, pp. 1096-7). After that time the body ceased to be known as the State Securities Commission, and subsequent legislative acts and sections of the Code of Ala. refer to the Attorney General as he functioned as the State Securities Commissioner (Code of Ala. 1940 and 1958, Title 53, Section 1).

From the description of Agency history record. (Unknown). WorldCat record id: 145408633