the Securities Act or a requirement of new items or additional instructions to existing items to be reported pursuant to the regular reporting requirements of the Securities Exchange Act. OFFERING OF SECURITIES AS SUBSTITUTE OR SUPPLEMENT FOR SAVINGS ACCOUNT DEPOSITS AND CERTIFICATES OF DEPOSIT During the fiscal year the Commission issued a release announcing its concern regarding recent proposals for public offerings of a novel type of security with characteristics which appear to invite unwarranted comparisons with bank savings accounts, savings and loan association accounts, and bank time deposit certificates.33 Such securities may be presented to the public as a satisfactory investment medium to serve as a supplement, or even a preferable alternative, to such savings accounts and certificates of deposit. The security in question is customarily an unsecured debt security bearing interest at a rate lower than those prevailing for long term corporate debt, but somewhat higher than the prevailing rates for savings accounts and certificates of deposit. When the security does not have a relatively short maturity, it usually has a so-called redemption, presentment, tender or repurchase feature respecting principal and accrued interest which may lead the investor to believe that his security would have liquidity comparable with that of conventional savings accounts and bank certificates of deposit. The Commission's release noted that investors in such securities would not have the safeguards resulting from state and federal supervision of financial institutions or the benefits of federally created insurance protections. It also pointed out that the so-called redemption or similar feature of these securities may be illusory because the issuers of the securities are in general not subject to any regulation or law with respect to the maintenance of reserves. Accordingly, the Commission cautioned members of the public to examine carefully the risk factors associated with securities they are invited to purchase and reminded persons engaged in the offering and sale of the securities described in the release of their obligations under antifraud provisions of the federal securities laws to consider and disclose the risk and other pertinent factors. PROPOSED FEE SCHEDULE Over the past few years, Congress has expressed concern that the Federal Government is not receiving sufficient returns for the services it renders, and it has been suggested that agencies review their schedules of fees and charges with a view to making increases or adjustments to offset the increasing needs for direct appropriations for agency operating costs. Consistent with this suggestion, the Commission, in September 1971, published for comment a proposed fee schedule covering fees for certain filings and services under the Securities Act of 1933, the Securities Exchange Act of 1934, the Public Utility Holding Company Act of 1935, the Investment Advisers Act of 1940 and the Investment Company Act of 1940.34 Under the proposed schedule, fees would be charged for certain filings and services under these acts where no charges have previously been made and there would be no refund of any fees paid. Consistent with that approach, the Commission also proposed to amend Rule 457 under the Securities Act, which now provides for partial refunds of Securities Act registration fees under certain circumstances, so as to provide that no refund will be made once a registration statement has been filed. The authorization to establish fees is found in Title V of the Independent Office Appropriations Act of 1952 which is applicable to all Federal independent agencies. ENFORCEMENT ACTION CHARGING MISUSE OF PENSION FUNDS In S.E.C. v. Victor Posner, et al.,35 the Commission for the first time brought enforcement proceedings involving the alleged misuse of corporate pension funds in connection with the purchase or sale of securities. In May 1971, an injunctive action was instituted against six defendants, who after a takeover of Sharon Steel Corporation allegedly engaged in a fraudulent scheme to use the assets of Sharon's two pension funds to assist in takeovers and consolidation efforts. According to the complaint, the defendants accomplished the scheme by, among other things, causing the pension funds to liquidate a portion of their security holdings and to reinvest the proceeds in securities issued by certain of the defendant companies and other companies, all of them controlled by Posner. 34 Securities Act Release No. 5190 (September 13, 1971). PART II FULL DISCLOSURE OF INFORMATION ABOUT THE ISSUERS OF SECURITIES A basic purpose of the Federal securities laws administered by the Commission, in particular the Securities Act of 1933 and the Securities Exchange Act of 1934, is to provide disclosure of material financial and other information about companies seeking to raise capital through the public offering of their securities and those companies whose securities are already publicly held, so as to enable investors to evaluate the securities of these companies on an informed and realistic basis. To this end, the Securities Act, generally speaking, requires that before securities may be offered to the public by an issuing company or a person in a control relationship to such company, a registration statement must be filed with the Commission disclosing prescribed categories of financial and other information, and that in connection with the sale of the securities investors be furnished a prospectus containing the most significant of that information. The Securities Exchange Act, which deals in large part with securities already outstanding, requires the registration of securities listed on a national securities exchange and over-the-counter securities in which there is a substantial public interest. Issuers of registered securities must file annual and other periodic reports which are designed to provide a public file of current material information. The Exchange Act also requires disclosure of material information to holders of registered securities in connection with the solicitation of proxies for the election of directors or the approval of corporate action at a stockholders' meeting, and in connection with attempts to acquire control of a company through a tender offer or other planned stock acquisition, and it provides that "insiders" of companies whose equity securities are registered must report their holdings of and transactions in all equity securities of the company with which they are affiliated. DISCLOSURE IN CONNECTION WITH PUBLIC OFFERINGS The basic concept underlying the Securities Act's registration requirements is full disclosure. The Commission has no authority to pass on the merits of the securities to be offered or the fairness of the terms of distribution. If adequate and accurate disclosure is made, it cannot deny registration. The Act makes it unlawful to represent to investors that the Commission has approved or otherwise passed on the merits of registered securities. TYPE OF INFORMATION INCLUDED IN REGISTRATION STATEMENT While the Securities Act enumerates the categories of information to be included in a registration statement, the Commission has the authority to prescribe appropriate forms, and to increase, or in certain instances vary or diminish, the particular items of information required to be disclosed. To facilitate the registration of securities by different types of issuers, the Commission has adopted special registration forms which vary in their disclosure requirements so as to provide maximum disclosure of the essential facts pertinent in a given type of offering while at the same time minimizing the burden and expense of compliance with the law. In recent years it has adopted certain short forms, notably Form S-7, which do not require disclosure of matters covered in reports and proxy material filed or distributed under provisions of the Securities Exchange Act. In general, the registration statement of an issuer other than a foreign government must disclose such matters as the names of persons who participate in the management or control of the issuer's business; the security holdings and remuneration of such persons; the general character of the business, its capital structure, past history and earnings; underwriters' commissions; payments to promoters made within 2 years or intended to be made; the interest of directors, officers and principal stockholders in material transactions with the issuer; pending legal proceedings; and the purposes to which the proceeds of the offering are to be applied, and it must include financial statements certified by an independent public accountant. The registration statement of a foreign government must contain information concerning the purposes for which the proceeds of the offering are to be used, the natural and industrial resources of the issuer, its revenues, obligations and expenses, the underwriting and distribution of the securities being registered, and other material matters, but need not contain certified financial statements. NEW REGISTRATION GUIDES From time to time in recent years, the Commission has au |