Filth from Doorstep

There is not a thread of an excuse for the existence of the Boston Curb....It is but the tool of financial swindlers. They have made out of it a national gambling place where the markers are all counterfeits and where those who enter its portals come out stripped eventually of their belongings for the play is not .honest. Let Massachusetts wake up and clean this financial filth from her doorstep.

Thus wrote crusading Editor Louis Guenther of the Financial World in 1927 when Calvin Coolidge was in the White House and Federal regulation of securities was hardly more than an idea in the teeming mind of Felix Frankfurter. But Massachusetts let its doorstep go dirty and the Boston Curb lived on. In the purple days of the boom market gaudy stock promoters like George Graham Rice sold their worthless wares on the Boston Curb until no reputable newspaper dared publish the Curb's "phoney" quotations. When the Securities & Exchange Commission took office last summer, the Boston Curb was faced with a grave crisis. It could 1) apply for registration as a national exchange, or 2) ask for exemption from registration and pose as a purely local institution. Either step meant embarrassing questions, but the Curb decided to apply for exemption. Three weeks ago it suddenly withdrew its application. Then things began to get hot for the Boston Curb.

SEChairman Joseph P. Kennedy, himself a Bostonian, ordered a fact-finding investigation of the Curb's activities, appointed a lawyer named John M. Flynn to conduct it. When Lawyer Flynn walked into the Curb Exchange, its members suddenly departed for the day. They came back next day but refused to tell him anything. After a two-day hearing Lawyer Flynn was able to discover, nonetheless, that thousands of shares not approved by the Massachusetts Securities Commission had been dumped through a hole in the Blue Sky Laws, were listed on the Curb Exchange and sold in the State. Exchange members had contrived to keep the market active by buying shares from fictitious customers, selling them to "dummy" corporations.

Last week Chairman Kennedy arrived in Boston where, in a speech before the Chamber of Commerce broadcast throughout the nation, he promised to prosecute "vicious and fraudulent" stockmarket activities up to the hilt. Next day Massachusetts was rid of its "financial filth" at last when the 26-year-old Boston Curb voluntarily shut up shop for all time.

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