Today’s post is dedicated to some observations on securities regulation from a few of my predecessors.

H.L. Carnahan, California’s first Commissioner  and later Lieutenant Governor, had this to say in 1916:

The essence of the Blue Sky Laws is the spirit of fair dealing

Commissioner E.C. Bellows took an aggressive posture in 1918:

These are evil days for the crooked and conscienceless stock peddler.

Two years later, Commissioner Bellows was just as hyperbolic, but willing to acknowledge the limits of regulation:

No ‘Blue Sky Law’ has yet been devised to effectually check all of the schemes arising from the fertile brains of the parasites who prey upon public credulity.

In 1922, Commissioner Edwin “Mike” Daugherty was calling for tightening of exemptions:

“Promoters of highly speculative projects have sought to avail themselves of exemptions of the Corporate Securities Act.  If possible, these promotions should be brought within the purview of this department by adequate legislation.”

Six years later, Commissioner J.M. Friedlander looked to the future with cautious optimism:

Some day a securities commissioner may report that during a stated period of time no fraudulent transactions have come to his attention. I am not so optimistic as to believe that such an event will come in my day nor so credulous as to even picture California as the first state where such an Utopian situation will prevail.

Wherever gullible persons are found there will also be the guileful cager to take advantage of their credulity.