Downtown

In the Securities Act of 1933 wilful misstatement of or "omission to state any material fact" in connection with a registration statement is a criminal offense. No court has yet defined a "material fact," but last week in a lengthy ruling the Federal Trade Commission declared that a material fact was "a fact which if it had been correctly stated or disclosed would have deterred or tended to deter the average prudent investor from purchasing the securities in question."

Every bondsalesman knows that few investors (except professional security buyers) ever read even the few material facts in the old one-page prospectus. Today a prospectus for a big corporative issue contains 50 or 60 pages of facts. P: Lately the Senate asked the Federal Trade Commission to investigate monopolistic tendencies under the Steel Code. Last week in a 70-page report the Commission said that the Steel Code did indeed foster monopoly. It struck at the domination of the Code Authority by a handful of big producers, flayed the price-fixing provisions. Particularly obnoxious to the Commission was restoration of the ancient "Pittsburgh plus'' method of price quotation. Banned by the Commission in 1924, this ingenious device forces a steelmaker to add to his delivered price freight charges from Pittsburgh or some other basing point, even if both buyer & seller are next door neighbors.

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