Business: Act in Action

For the first time last week the Federal Trade Commission invoked the Securities Act against a company which had already sold a bond issue. The company was Laclede Gas Light Co. (St. Louis), an operating subsidiary of Promoter Harley L. Clarke's Utilities Power & Light. In registering a $3,000,000 bond issue with the Trade Commission, Laclede directors had signed a sworn statement that no suits were pending against the company which would affect the new bonds' value. After the issue had been distributed, the Trade Commission stumbled on the fact that there were rate cases pending against Laclede in Missouri courts.

Promptly the Commission ordered hearings to determine whether adverse decisions might not affect the bonds' value. If the Commission revokes the registration, bondholders may demand their investment's return, may sue Laclede directors for damages.