of termination or suspension of such unlisted trading privileges, or on its own motion, the Commission shall by order terminate, or suspend for a period not exceeding twelve months, such unlisted trading privileges for such security if the Commission finds, after appropriate notice and opportunity for hearing, that such termination or suspension is necessary or appropriate in the public interest or for the protection of investors.

"In any proceeding under this subsection in which appropirate notice and opportunity for hearing are required notice of not less than ten days to the applicant in such proceeding, to the issuer of the security involved, to the exchange which is seeking to continue or extend or has continued or extended unlisted trading privileges for such security, and to the exchange, if any, on which such security is listed and registered, shall be deemed adequate notice, and any broker or dealer who makes or creates a market for such security, and any other person having a bona fide interest in such proceeding, shall upon application be entitled to be heard.

"Any security for which unlisted trading privileges are continued or extended pursuant to this subsection shall be deemed to be registered on a national securities exchange within the meaning of this title. The powers and duties of the Commission under subsection (b) of section 19 of this title shall be applicable to the rules of an exchange in respect of any such security. The Commission may, by such rules and regulations as it deems necessary or appropriate in the public interest or for the protection of investors, either uncondi tionally or upon specified terms and conditions, or for stated periods, exempt such securities from the operation of any provision of section 13, 14, or 16 of this title."

(c) Section 12 of said Act is further amended by adding thereto the following new subsection:

(g) (1) Every issuer which is engaged in interstate commerce, or in a business affecting interstate commerce, or whose securities are traded by use of the mails or any means or instrumentality of interstate commerce shall-

"(i) within one hundred and twenty days after the last day of its first fiscal year ended after the effective date of this subsection on which the issuer has total assets exceeding $1,000,000 and a class of equity security (other than an exempted security) held of record by seven hundred and fifty or more persons; and

"(ii) within one hundred and twenty days after the last day of its first fiscal year ended after two years from the effective date of this subsection on which the issuer has total assets exceeding $1,000,000 and a class of equity security (other than an exempted security) held of record by five hundred or more but less than seven hundred and fifty persons

register such security by filing with the Commission a registration statement (and such copies thereof as the Commission may require) with respect to such security containing such information and documents as the Commission may specify comparable to that which is required in an application to register a security pursuant to subsection (b) of this section. Each such registration statement shall become effective sixty days after filing with the Commisison or within such shorter period as the Commission may direct. Until such registration statement becomes effective it shall not be deemed filed for the purposes of section 18 of this title. Any issuer may register any class of equity security not required to be registered by filing a registration statement pursuant to the provisions of this paragraph. The Commission is authorized to extend the date upon which any issuer or class of issuers is required to register a security pursuant to the provisions of this paragraph.

(2) The provisions of this subsection shall not apply in respect of—

"(A) any security listed and registered on a national security exchange; "(B) any security issued by an investment company registered pursuant to section 8 of the Investment Company Act of 1940;

"(C) any security, other than permanent stock, guaranty stock, permanent reserve stock, or any similar certificate evidencing nonwithdrawable capital, issued by a savings and loan association, building and loan association, cooperative bank, homestead association, or similar institution, which is supervised and examined by State or Federal authority having supervision over any such institution;

"(D) any security of an issuer organized and operated exclusively for religious, educational, benevolent, fraternal, charitable, or reformatory purposes and not for pecuniary profit, and no part of the net earnings of which inures to the benefit of any private shareholder or individual; or

(E) any security of a foreign issuer, including any certificate of depos for such a security, unless the Commission, by rules or regulations, or order after notice and opportunity for hearing, on its own motion fin that a substantial public market for the equity securities of such issuer of a class of issuers which includes such issuer exists in the United Stat and that continued exemption of securities of such issuer or class of issue is not in the public interest or consistent with the protection of investo (3) Registration of any class of security pursuant to this subsection sha be terminated ninety days, or such shorter period as the Commission may dete mine, after the issuer files a certification with the Commission that the numb of holders of record of such class of security is reduced to less than three hu dred persons. The Commission shall after notice and opportunity for heari deny termination of registration if it finds that the certification is untru Termination of registration shall be deferred pending final determination the question of denial.

(4) For the purposes of this subsection the term 'class' shall include securities of an issuer which are of substantially similar character and t holders of which enjoy substantially similar rights and privileges. The Co mission may for the purposes of this subsection define by rules and regulation the terms 'total assets' and 'held of record' as it deems necessary or appropria in the public interest or for the protection of investors in order to preve circumvention of the provisions of this subsection."

(d) Section 12 of said Act is further amended by adding thereto the followin new subsection:

"(h) The Commission may by rules and regulations, or upon application an interested person, by order, after notice and opportunity for hearing, exemp in whole or in part any issuer or class of issuers from the provisions of subse tion (g) hereof or from section 13, 14, or 15(d) of this title or may exempt from section 16 hereof any officer, director, or beneficial owner of securities of an issuer, any security of which is required to be registered pursuant to subsectio (g) hereof, upon such terms and conditions and for such period as it deem necessary or appropriate, if the Commission finds, by reason of the number o public investors, amount of trading interest in the securities, the nature an extent of the activities of the issuer, income or assets of the issuer, or otherwise that such action is not inconsistent with the public interest or the protection o investors. The Commission may, for the purposes of any of the above-mentione sections or subsections of this title classify issuers and prescribe requirement appropriate for each such class."

(e) Section 12 of said Act is further amended by adding thereto the following new subsection:

"(i) In respect of any securities issued by banks the deposits of which are insured in accordance with the Federal Deposit Insurance Corporation Act, the powers, functions, and duties vested in the Commission under this title to administer and enforce sections 12, 13, 14(a), 14(c), and 16 thereof (1) with respect to national banks and banks operating under the Code of Law for the District of Columbia are vested in the Comptroller of the Currency, (2) with respect to all other member banks of the Federal Reserve System are vested in the Board of Governors of the Federal Reserve System, and (3) with respect to all other insured banks are vested in the Federal Deposit Insurance Corporation."

SEC. 4. Section 13(a) of the Securities Exchange Act of 1934 is amended to read as follows:

"(a) Every issuer of a security registered pursuant to section 12 of this title shall file with the Commission the information, documents, and reports below specified (and such copies thereof as the Commission may require) in accordance with such rules and regulations as the Commission may prescribe as necessary or appropriate for the proper protection of investors and to insure fair dealing in the security

"(1) Such information and documents as the Commission shall require to keep reasonably current the information and documents required to be included in or filed with an application or registration statement filed pursuant to section 12.

.dent

"(2) Such annual reports, cied if r tions of the Commission by ind terly reports, as the Commiss!

ed by the rules and regula

countants, and such quar

Every issuer of a security registered on a national securities exchange shall also file a duplicate original of such information, documents, and reports with the exchange."

SEC. 5. (a) Section 14(a) of the Securities Exchange Act of 1931 is amended to read as follows:

"(a) It shall be unlawful for any person, by the use of the mails or by any means or instrumentality of interstate commerce or of any facility of a national securities exchange or otherwise, in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors, to solicit or to permit the use of his name to solicit any proxy or consent or authorization in respect of any security (other than an exempted security) registered pursuant to section 12 of this title." (b) Section 14(b) of said Act is amended to read as follows:

"(b) It shall be unlawful for any member of a national securities exchange, or any registered broker or dealer, in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors, to give, or to refrain from giving a proxy, consent, or authorization in respect of any security registered pursuant to section 12 of this title and carried for the account of a customer."

(c) Section 14 of said Act is further amended by adding thereto the following new subsection:

"(e) Unless proxies, consents, or authorizations in respect of a security registered pursuant to section 12 of this title are solicited by or on behalf of the management of the issuer from the holders of record of such security in accordance with subsection (a) of this section and the rules and regulations thereunder, prior to any annual or other meeting of the holders of such security, such issuer shall, in accordance with rules and regulations prescribed by the Commission, file with the Commission and transmit to all holders of record of such security information substantially equivalent to the information which would be required to be transmitted if a solicitation were made; but no information shall be required to be filed or transmitted pursuant to this subsection before July 1, 1964."

SEC. 6. (a) Section 15(a) of the Securities Exchange Act of 1934 is amended to read as follows:

"(a) No broker or dealer shall make use of the mails or of any means or instrumentality of interstate commerce to effect any transaction in, or to induce the purchase or sale of, any security (other than an exempted security or commercial paper, bankers' acceptances, or commercial bills) otherwise than on a national securities exchange, unless such broker or dealer (A) is registered in accordance with subsection (b) of this section, and (B) is a member of a securities association which is registered pursuant to section 15A of this title. "The Commission may by such rules and regulations or orders as it deems necessary or appropriate in the public interest or for the protection of investors, either unconditionally or upon specified terms and conditions or for specified periods, exempt from clause (A) or (B), or both, of this subsection (a) any broker or dealer or class of brokers or dealers specified in such rules, regulations, or orders. Clause (B) of this subsection (a) shall be inapplicable with respect to: (1) all brokers and dealers during any period in which there is no registered securities association, and (ii) any broker or dealer during any period in which the rules of each registered securities association preclude the membership therein of such broker or dealer solely because of the geographical location of, or type of business done by, such broker or dealer."

(b) Section 15(b) of said Act is amended to read as follows:

**(b) (1) A broker or dealer may be registered for the purposes of this section by filing with the Commission an application for registration, which shall contain such information in such detail as to such broker or dealer and any persons associated with such broker or dealer as the Commission may by rules and regulations require as necessary or appropriate in the public interest or for the protection of investors. Except as hereinafter provided, such registration shall become effective thirty days after the receipt of such application by the Commission or within such shorter period of time as the Commission may determine.

"An application for registration of a broker or dealer to be formed or organized may be made by a broker or dealer to which the broker or dealer to be formed or organized is to be the successor. Such application shall contain such information in such detail as to the applicant and as to the successor and any person associated with the applicant or the successor, as the Commission may by rules and regulations require as necessary or appropriate in the public

interest or for the protection of investors. Except as hereinafter provided such registration shall become effective thirty days after the receipt of suc application by the Commission or within such shorter period of time as the Commission may determine. Such registration shall terminate on the forty fifth day after the effective date thereof, unless prior thereto the successor shall in accordance with such rules and regulations as the Commission may prescribe adopt such application as its own.

"If any amendment to any application for registration pursuant to this sub section is filed prior to the effective date thereof, such amendment shall be deeme to have been filed simultaneously with and as part of such application; excep that the Commission may, if it appears necessary or appropriate in the publi interest or for the protection of investors, defer the effective date of any such registration as thus amended until the thirtieth day after the filing of such amendment.

"Any provision of this title (other than subsection (a) of this section and section 5) which prohibits any act, practice, or course of business if the mails or any means or instrumentality of interstate commerce are used in connection therewith shall also prohibit any such act, practice, or course of business by any broker or dealer registered pursuant to this subsection or any person acting on behalf of such a broker or dealer, irrespective of any use of the mails or any means or instrumentality of interstate commerce in connection therewith.

"(2) The Commission shall, after appropriate notice and opportunity for hearing, by order censure, deny registration to, suspend for a period not exceed ing twelve months or revoke the registration of, any broker or dealer if it finds that such censure, denial, suspension, or revocation is in the public interest and that such broker or dealer, whether prior or subsequent to becoming such, or any person associated with such broker or dealer, whether prior or subsequent to becoming so associated, (A) has willfully made to caused to be made in any application for registration or report required to be filed with the Commission under this title, or in any proceeding before the Commission with respect to registration, any statement which was at the time and in the light of the circumstances under which it was made false or misleading with respect to any material fact, or has omitted to state in any such application or report any material fact which is required to be stated therein; or (B) has been convicted within ten years preceding the filing of the application or at any time thereafter of any felony or misdemeanor which the Commission finds: (i) involves the purchase or sale of any security, (ii) arises out of the conduct of the business of a broker, dealer, or investment adviser, (iii) involves embezzlement, fraudulent conversion, or misappropriation of funds or securities, or (iv) involves the violation of section 1341, 1342, or 1343 of title 18, United States Code, as heretofore or hereafter amended; or (C) is permanently or temporarily enjoined by order, judgment, or decree of any court of competent jurisdiction from acting as an investment adviser, underwriter, broker, or dealer, or as an affiliated person or employee of any investment company, bank, or insurance company, or from engaging in or continuing any conduct or practice in connection with any such activity, or in connection with the purchase or sale of any security; or (D) has willfully violated any provision of the Securities Act of 1933, or of the Investment Advisers Act of 1940, or of the Investment Company Act of 1940, or of this title, as any of such statutes heretofore have been or hereafter may be amended, or of any rule or regulation under any of such statutes; or (E) has willfully aided, abetted, counseled, commanded, induced, or procured the violation by any other person of the Securities Act of 1933, or the Investment Advisers Act of 1940, or the Investment Company Act of 1940, or of this title, as any such statutes heretofore have been or hereafter may be amended, or of any rule or regulation under any of such statutes or has failed reasonably to supervise, with a view to preventing violations of such statutes, rules, and regulations, another person who commits such a violation, if such other person is subject to his supervision; or (F) is subject to an order of the Commission entered pursuant to paragraph (3) of this subsection (b) barring or suspending the right of such person to be associated with a broker or dealer, which order is in effect with respect to such person. For the purposes of clause (E) of this paragraph, no person shall be deemed to have failed reasonably to supervise any person, if (i) there have been established procedures, and a system for applying such procedures, which would reasonably be expected to prevent and detect, insofar as practicable, any such violation by such other person; and (ii) such person has reasonably discharged the duties and oblianations mbent upon him b by reason of such

procedures and system without reasonable cause to believe that such procedures and system were not being complied with. Pending final determination whether any such registration shall be denied, the Commission may by order postpone the effective date of such registration for a period not to exceed fifteen days, but if, after appropriate notice and opportunity for hearing (which may consist solely of allidavits and oral arguments), it shall appear to the Commission to be necessary or appropriate in the public interest or for the protection of investors to postpone the effective date of such registration until final determination, the Commission shall so order. Pending final determination whether any such registration shall be revoked, the Commission shall by order suspend such registration if, after appropriate notice and opportunity for hearing, such suspension shall appear to the Commission to be necessary or appropriate in the public interest or for the protection of investors. Any registered broker or dealer may, upon such terms and conditions as the Commission may deem necessary in the public interest or for the protection of investors, withdraw from registration by filing a written notice of withdrawal with the Commission. If the Commission finds that any registered broker or dealer, or any broker or dealer for whom an application for registration is pending, is no longer in existence or has ceased to do business as a broker or dealer, the Commission shall by order cancel the registration or application of such broker or dealer. "(3) The Commission may, after appropriate notice and opportunity for hearing, by order censure any person, or bar or suspend for a period not exceeding twelve months any person from being associated with a broker or dealer, if the Commission finds that such censure, barring or suspension is in the public interest and that such person has committed or omitted any act or omission enumerated in clause (A), (D) or (E) of paragraph (2) of this subsection (b) or has been convicted of any offense specified in clause (B) of said paragraph (2) within the time specified therein or is enjoined from any action, conduct, or practice specified in clause (C) of said paragraph (2). It shall be unlawful for any person as to whom such an order barring or suspending him from being associated with a broker-dealer is in effect, willfully to become, or to be, associated with a broker or dealer, without the consent of the Commission, and it shall be unlawful for any broker or dealer to permit such a person to become, or remain, a person associated with him, without the consent of the Commission, if such broker or dealer knew, or in the exercise of reasonable care, should have known, of such order."

(e) Section 15(e) of said Act is amended by adding at the end thereof the following new paragraphs:

"(4) If the Commission finds, after notice and opportunity for hearing, that any person subject to the provisions of section 12, 13, or 15(d) of this title or any rule or regulation thereunder has failed to comply with any such provision, rule, or regulation in any material respect, the Commission may publish its findings and issue an order requiring such person to comply with such provision or such rule or regulation thereunder upon such terms and conditions and within such time as the Commission may specify in such order.

"(5) If in its opinion the public interest and the protection of investors so require, the Commission is authorized summarily to suspend trading, otherwise than on a national securities exchange, in any security (other than an exempted security) for a period not exceeding ten days. No broker or dealer shall make use of the mails or of any means or instrumentality of interstate commerce to effect any transaction in, or to induce the purchase or sale of, any security in which trading is so suspended."

(d) Section 15(d) of said Act is amended to read as follows:

(d) Each issuer which has filed a registration statement containing an undertaking which is or becomes operative under this subsection as in effect prior to the date of enactment of the Securities Acts Amendments of 1963, and each issuer which shall after such date file a registration statement which has become effective pursuant to the Securities Act of 1933, as amended, shall file with the Commission, in accordance with such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors, such supplementary and periodic information, documents, and reports as may be required pursuant to section 13 of this title in respect of a security registered pursuant to section 12 of this title. The duty to file under this subsection shall be automatically suspended if and so long as any issue of securities of such issuer is registered pursuant to section 12 of this title. The duty to file under this subsection shall also be automatically

28 738-64-pt. 1—5