Securities & Exchange Commission v. Los Angeles Trust Deed & Mortgage Exchange

In ruling in this matter, the Court wishes to alert the public to a problem of grave concern to many citizens. This trial has caused many of us to become aware of a serious situation in a very vital part of our economy — the home building industry. We have seen in great detail here the unscrupulous and entirely high-handed manner in which certain speculators mislead countless small investors, and countless other small home buyers, to the mutual detriment of both.

These “10%ers” have developed an ingenious and a thoroughly devious scheme, relying upon what they think to be loopholes in the law regulating those entrusted with investment funds. It is their good fortune that this scheme has not yet come tumbling down around their heads, like the frail cardhouse structure it is, but instead has been arrested by the diligent efforts of the S. E. C. Aside from the unsoundness of the basic plan, this case has unearthed many totally unethical practices on the part of the individuals involved; practices which run a very close line between criminal prosecution and civil actions for fraud.

The Court regrets that the processes of our law have worked so slowly, despite the best efforts of…