297AA

PART I

ADMINISTRATION OF THE SECURITIES ACT OF 1933

Registration of Securities under the Securities Act of 1933

For information as to the general scope of the registration provisions of the Securities Act of 1933, as amended, the registration and examination procedures, the power of the Commission to institute stop-order proceedings to suspend the effectiveness of the registration statement, and the statutory amendment authorizing the Commission in its discretion to accelerate the effective date of registration statements, reference is made to the Sixth Annual Report of the Commission, pp. 117-119, inc., the Seventh Annual Report, pp. 161-162, inc., and previous annual reports.

New Rules, Regulations, and Forms for Registration under the Securities Act of 1933

Further Simplification of Registration Forms. In order further to simplify the registration process, the Commission adopted early in the year two new forms Form S-2 and Form S-3. Form S-2 is designed primarily for securities of small companies. Form S-3 is available for the registration of shares of mining corporations (other than those in the oil and gas field) in the promotional or the developmental stage. In the case of both forms simplification is secured principally by a provision which permits the prospectus to be filed as the basic part of the registration statement.

Further Simplification of Compliance with Similar Registration Requirements under Different Statutes. The Commission adopted Rule 524 to provide a simplified procedure for registration under the Securities Act of 1933 of securities of open-end management investment companies. The rule provides in effect that any such company may register securities under the Securities Act by filing copies of its registration statement filed under the Investment Company Act, together with copies of a prospectus containing the information given in answer to certain designated items on Form N-8B-1 and certain additional information not required by that form but deemed essential under the Securities Act.

A number of other changes of a minor nature were also made during the year in the rules and regulations governing registration of securities under the Securities Act.

Disclosures resulting from examination

Through its examination procedure the Commission secured fair and accurate disclosure of material information required in registration statements and prevented the use in many of these documents of information which was misleading and inaccurate. In some instances sales of securities were prohibited by the issuance of stop-orders following formal public hearings.

Statistics of securities registered under Securities Act of 1933

The following table indicates the disposition of registration statements filed under the Securities Act of 1933:

Does not include 1 registration statement refiled during the year by a registrant who had withdrawn a statement previously filed.

b/ Does not include 19 registration statements effective at the beginning or during this period which were either withdrawn or placed under stop order.

Does not include 1 registration statement withdrawn prior to this period, and rofiled and withdrawn during this period.

A total of 755 amendments to registration statements were also filed and examined during the past fiscal year.

Certain registrants under the Securities Act of 1933 also filed during the year, pursuant to Section 15 (d) of the Securities Exchange Act of 1934, a total of 324 annual reports and 137 amendments thereto, all of which required examination.

In addition, the following supplemental prospectus material was filed during the past fiscal year under the Securities Act of 1933:

(1) 180 prospectuses were filed pursuant to Rule 800 (b) which requires the filing of such information within 5 days after the commencement of the public offering;

(2) 230 sets of supplemental prospectus material were filed by registrants to show material changes occurring after the commencement of the offering; and

(3) 315 sets of so-called 13-month prospectuses were filed pursuant to

Section 10 (b) (1) of the Act.

Stop Orders, Consent Refusal Orders, And Withdrawal Orders

Withdrawals amounted to 49 during the year and none of the statements involved were refiled to June 30, 1942. Stop orders mumbered 7, all of which were still in force at the close of the year. No consent refusal orders were issued during the year.

Securities Effectively Registered

During the fiscal year ended June 30, 1942, securities effectively registered under the Securities Act of 1933 amounted to $2,003,000,000. The issues averaged $7,130,000 in size.

Of all registrations effective during the fiscal year ended June 30, 1942, $476,000,000 were not proposed for sale, $62,000,000 were registered for sale for the account of others than the issuers, and $1,465,000,000 consisted of securities intended to be sold for the account of issuers.

Of the total proposed for sale for the account of issuers manufacturing companies accounted for $468,000,000 or 32 percent, transportation and communication companies $446,000,000 or 30 percent, and electric, gas, and water utilities $389,000,000 or 27 percent.

More than two-thirds of the total value of securities registered for cash sale by issuers or $1,035,000,000 were fixed interest bearing. This included $338,000,000 of secured bonds or 23 percent of the total, and $697,000,000 of unsecured bonds or 48 percent of the total. Common stock amounted to $220,000,000 or 15 percent, followed by preferred stock with $162,000,000 or 11 percent. Certificates of participation, beneficial interest, face-amount installment certificates, etc., added up to $48,000,000 or 3 percent.

A breakdown by methods of issuance showed that $496,000,000 or 34 percent were offered directly by the issuers. Securities offered on an underwritten basis amounted to $899,000,000 or 61 percent and those offered on a best efforts basis aggregated $70,000,000 or 5 percent.

Compensation to be paid to distributors equalled $23,000,000 or 1.6 percent of the gross proceeds of the securities proposed for sale for the account of issuers. Expenses amounted to $8,000,000 or 0.5 percent. The cost of flotation, therefore, was equivalent to 2.1 percent of the gross proceeds. This cost was the lowest for any fiscal year since the series was begun approximately 8 years ago.

Net proceeds, after all issuing and distributing expenses, were estimated at $1,434,000,000. of these proceeds 51 percent was applied to repayment of indebtedness and 2 percent to retirement of preferred stock. Net proceeds to be used for the purchase of securities were $83,000,000 or 6 percent, including $67,000,000 used for the purchase of securities for investment and $16,000,000 for affiliation. New money purposes accounted for $591,000,000 or 41 percent of the total net proceeds. This included $333,000,000 or 23 percent for plant and equipment and $243,000,000 or 17 percent for working capital. The 41 percent for new money purposes was the greatest proportion of net proceeds for any fiscal year since the Securities Act became effective. The absolute amount intended for new money purposes was the largest amount to be applied from corporate securities to fixed and working capital of any fiscal year since 1937.

Detailed statistics of securities registered under the Securities Act of 1933 during the fiscal year are presented in Appendix Tables 1 to 3.

Security Offerings

The securities registered under the Securities Act of 1933 constitute only part of all new issues offered for cash. Comprehensive statistics of new cash offerings of securities are presented in Appendix Tables 4 and 5.

Exempt Issues Relating to Oil and Gas Interests

In connection with exempt issues relating to fractional undivided interests in oil or gas rights, covered by Regulation B, there were filed and examined during the year 965 offering sheets, and 876 necessary amendments to such offering sheets, involving securitie: with an aggregate offering price of approximately $22,177,285.

The following table indicates the action taken with respect to these filings:

A tabular summary, with respect to the Commission's oil and gas investigations, follows:

Where these investigations show evidence of a violation of the criminal provisions of the Securities Act of 1933, the results are transmitted by the Commission to the Department of Justice, and criminal proceedings are instituted in the discretion of the Attorney General of the United States. In the event such proceedings are instituted, the attorneys and engineers on the Commission staff who participated in the investigation leading up to the proceedings assist the United States Attorneys in the preparation of the cases for presentation to the grand jury and for trial.

Proposed Amendments to the Securities Act

of 1933 and the Securities Exchange Act of 1934

During the past fiscal year extensive hearings were held before the Committee on Interstate and Foreign Commerce of the House of Representatives on various proposals to amend the Securities Act of 1933 and the Securities Exchange Act of 1934.