06
THE WORK OF THE STOCK EXCHANGE
able to the investing public information which will be adequate
for an investor to form his own opinion intelligently concern-
ing the value of the securities. Naturally, the Stock Exchange
cannot be responsible for the ultimate success or failure of the
corporate enterprise in question, for after all, the Exchange is
not running its business, but simply furnishing a market place
for its securities. The fact that a given security is listed on
the Stock Exchange is not and cannot be any guaranty of its
value, nor does it even imply that the Exchange recommends it
for the favorable consideration of speculators or investors.
During the war an exception to this rule was of course
made in respect to Liberty bonds; these the Exchange heartily
endorsed on patriotic grounds, and did its utmost to persuade
investors to purchase them. Yet, from the purely investment
standpoint, this advice was unfortunately not altogether happy,
for these issues, which were generally and correctly termed
“the soundest security in the world,” ultimately caused large
losses to a great many investors. This instance should suffice
to show why the Exchange cannot undertake to endorse its
listed securities. It does everything actually in its power, how-
ever, to safeguard the American investor, frequently regardless
of the possible profits of its own members.
Insistence by the Stock Exchange upon Publicity.—The
New York Stock Exchange demands that corporations and
foreign governments listing their securities upon it give the
widest and most adequate possible publicity to their affairs.
In the initial listing application, the applicant is called upon to
reveal past earning power and revenue, and with corporations
a thorough current balance sheet. In addition, the Exchange
strives to obtain agreements from the applicant to publish
balance sheets annually, and earning statements as frequently
during the year as is possible, in order to keep the public record
up-to-date.
© gee Appendix IVE.
