aries. The company recently requested permission to withdraw its registration statement after a year's unsuccessful attempt to sell its securities by means of its amended prospectus.

The sponsor of an investment trust sought to register $250,000 face value of investment contracts providing for monthly payment of installments which were to be invested in securities to be held in trust for the benefit of the investors. The first 20 payments, however, were to accrue to the sponsor for its services and expenses. Investigation by the Commission revealed that the registrant, before the passage of the Securities Act of 1933, had sponsored a similar plan under which there had been received from the public $80,000, of which only $2,400 had been invested in securities. The balance had accrued to the sponsor because of forfeitures for nonpayment of installments. The ratio of maintenance charges to income of the trust had been over 2,300 percent. The registrant was required to amend its prospectus to disclose the fact that its previous experience had been disastrous to investors. In the year that has elapsed since the statement, thus amended, became effective, the registrant has sold no contracts whatsoever to the public.

Another company filed a registration statement covering an issue of so-called " endowment bonds" having a maturity value of $1,000,000. The issuer had been selling these bonds for several years, principally to school teachers resident in the State where it was incorporated, and wished to extend its selling campaign to other States. Stop-order proceedings were instituted by the Commission and it was discovered that the issuer was actually insolvent, that it had created a reserve of only $5,000 to meet a liability of $53,000, to its securityholders, and that there was every likelihood that persons who had already invested in its bonds would lose practically their entire investment. The entry of the stop order will prevent the further victimizing of the public, at least in States other than that where the issuer is incorporated.

EXEMPTIONS FROM REGISTRATION REQUIREMENTS

The Commission has promulgated rules, under section 3 (b) of the Securities Act of 1933, exempting certain issues not exceeding $100,000 from the registration requirements of the act. In order to secure certain of these exemptions, it is necessary to file prospectuses, which are examined for the purpose of determining whether the requirements of the rules have been met. From September 1, 1934, through June 30, 1935, 193 such prospectuses covering issues of securities amounting to $15,734,812 were filed and examined.

Special regulations have also been adopted, under section 3 (b) of the Securities Act of 1933, providing for the exemption of frac

tional undivided interests in oil, gas, or other mineral rights, not exceeding $100,000. In order to secure such exemptions, the regulations require the filing of offering sheets. From September 1, 1934, to June 30, 1935, approximately 2,500 original and corrected offering sheets were filed and examined.

STATISTICS OF SECURITIES REGISTERED UNDER THE SECURITIES ACT

When the Securities and Exchange Commission took over the administration of the Securities Act of 1933, there were 1,093 registration statements on file. Of these, 794 were effective, 49 were under stop or refusal order, 153 had been withdrawn, and 97 were under examination or pending the receipt of amendments.

During the period from September 1, 1934, to June 30, 1935, inclusive, 440 additional registration statements were filed. There were 315 registration statements which became effective during the period 10 and 1.094 were effective at the end of the period, 15 of those effective at the beginning either having been withdrawn or placed under stop order.

The number of registrations withdrawn increased by 72 to 225 on June 30, 1935. Stop or refusal orders increased during the period by 42, there being 91 of such orders in effect on June 30, 1935. As of June 30, 1935, there were 123 registration statements in the process of examination or awaiting amendment.

During the 10-month period ended on June 30, 1935, securities with estimated gross proceeds of $909,387,000 have become effectively registered. Of this amount, $805,698,000 represented new securities, while $103,689,000 were for securities in reorganization, for voting trust certificates, for certificates of deposit, and for securities to be exchanged for registrants' or predecessors' securities or certificates of deposit.

Detailed statistical tables, showing gross proceeds, net proceeds, costs of distribution and selling, and proposed use of funds for these securities are contained in the appendix. In interpreting the tables, it should be kept in mind that these statistics are based solely on the registration statements as filed by the registrants with the Securities and Exchange Commission. All data, therefore, refer to registrants' intentions as of the date of filing or of later amendments. They thus represent, in reality, statistics of intentions to sell securities rather than statistics of actual sales of securities.

Although figures for Sept. 1, 1934, were included in the Federal Trade Commission report for June 30, 1934, that day is here included for completeness.

'Including registrations effective under notice of deficiencies and effective under notice of bearing.

Including 32 statements effective under notice of deficiencies or hearings.

REGISTRATION FEES

Section 31 of the Securities Exchange Act of 1934 provides that every national securities exchange shall pay to the Commission on or before March 15 of each calendar year a registration fee for the privilege of doing business as a national securities exchange during the preceding calendar year or any part thereof. Such fee shall be in an amount equal to one five-hundredths of 1 percentum of the aggregate dollar amount of the sales of securities transacted on such national securities exchanges during the preceding calendar year and subsequent to its registration as a national securities exchange.

Pursuant to the provisions of this section, and as of June 30, 1935, the Commission had collected $61,659.86 as fees from national securities exchanges.

Each national securities exchange submits monthly reports to the Commission indicating the volume and the dollar value of trading in stocks and in bonds during the preceding month. In addition to using these reports as an aid in determining the accuracy of the fees paid by the exchanges, the figures are compiled for distribution to the general public in monthly releases and are reprinted in detail in the appendix. It will be seen that from October 1, 1934, to June 30, 1935, the total volume of trading on national securities exchanges (including some transactions which are not contained in the usual reports of volume of trading, particularly odd-lot transactions on the New York Stock Exchange) amounts to $10,076,637,186, of which $7,283,039,072 represents the value of trading in stocks and $2,793,343,008 that of trading in bonds. The New York Stock Exchange accounts for 83.7 percent of the value of trading on all registered exchanges and the New York Curb Exchange is responsible for another 12.2 percent.

Section 6 (b) of the Securities Act of 1933 provides that at the time of filing a registration statement the applicant shall pay to the Commission a fee of one one-hundredth of 1 percentum of the maximum aggregate price at which such securities are proposed to be offered, but in no case shall the fee be less than $25.

Pursuant to this section, during the fiscal year ended June 30, 1935, $160,299.25 were collected.

COMPLAINTS, INVESTIGATIONS, HEARINGS, AND LITIGATION

Under the Securities Act of 1933 and the Securities Exchange Act of 1934 the Commission has broad powers to enforce the acts and the rules and regulations thereunder through investigations, hearings, and injunctions.

During the year fraudulent and illegal activities violating the Securities Act or the Securities Exchange Act came to the attention

f the Commission through complaints or inquiries received from public, State securities commissions, State and Federal prosecutng officials, and others, from the Commission's surveillance of ading activities and examination of registration statements, and herwise. Supposed violations were investigated and during the Par approximately 2,300 cases were under investigation. Whenever essary, the investigative powers of the Commission under sec19 and 20 of the Securities Act and section 21 of the Securities Exchange Act were invoked by a Commission order for formal intigation and hearing, designating an officer of the Commission conduct the hearings, with power to take evidence, subpoena witbesses, and compel the production of records. In these hearings, he Commission was represented by members of the General Cound's staff, who prepared the cases and presented the evidence. If apparent violations of the acts were disclosed, suits for injuncwere brought by the Commission in the Federal courts. During the fiscal year the Commission brought 22 suits for injunction and arrel on 3 suits already brought by the Federal Trade Commison. As of June 30, 1935, permanent injunctions had been obaned against 32 defendants, temporary injunctions against 28 defendants, and temporary restraining orders against 19 defendants. Nuts involving 72 defendants were awaiting hearing.

Evidence of willful violations discovered in 30 of the cases invesgated by the Commission was transmitted to the Attorney Genral for criminal prosecution. In certain cases, in the interest of speedy justice, evidence of criminal violation was referred forthwith for prosecution without bringing suit for injunction.

Among the more important matters investigated or litigated by The Commission were the following:

On September 24, 1934, the United States District Court for the District of New Jersey granted a permanent injunction against fraudulent violations of the Securities Act by National Investment Transcript, Inc.. Clement H. Congdon, and Marshall Ward, doing siness as Marshall Ward & Co. The Commission's bill charged a gantic swindle in stock of Rayon Industries Corporation, effected ugh a tipster sheet, a manipulated market, and fraudulent mispresentations through wholesale long-distance telephone solicitaThe evidence obtained in the Commission's investigation was ferred to the Attorney General for criminal prosecution. On January 7, 1935, a permanent injunction was obtained by the Commission in the United States District Court for the District of isiana against fraudulent violations of the Securities Act by Turivas & Co., and others. The evidence was referred to the Attorney General.

On January 15, 1935, the Commission filed a suit for injunction against Robert Collier & Co., and others in the United States District. Court for the Southern District of New York, alleging fraudulent activities in violation of the Securities Act. The United States. district court dismissed the Commission's suit on the ground that the Commission was not entitled to appear except by the United States attorney or the Attorney General. On appeal, the United States. Circuit Court of Appeals for the Second Circuit held that in proceedings brought under section 20 (b) of the Securities Act the Commission was entitled to appear by its own counsel. The case was remanded to the district court and on June 30, 1935, had been sent to a referee to take testimony."1

On February 4, 1935, the Commission filed in the United States District Court for the Southern District of New York a suit against J. Edward Jones and others to enjoin alleged fraudulent and illegal activities in violation of the Securities Act. On February 8, 1935, the respondents consented to and the court granted a temporary injunction. On May 4, 1935, Jones filed a registration statement under the Securities Act relating to securities proposed to be issued by Jones. Because of alleged material misstatements and omissions in this registration statement, proceedings under section 8 of the Securities Act were ordered by the Commission. A subpoena was issued for the appearance of Jones at a hearing on June 27, 1935. Jones failed to appear at the hearing, and, through his counsel appearing specially, refused to obey the subpoena. On June 28, 1935, Jones filed in the United States Circuit Court of Appeals for the Second Circuit a petition purporting to be a petition under section 9 of the Securities Act for review of the proceedings before the Commission.12

On February 28, 1935, the Commission obtained in the United States District Court for the Northern District of Illinois, with the

"After taking testimony before the master for approximately 8 weeks, during which time the Commission presented its case and the principal witness for the defendants were examined and cross-examined, the defendants consented to the entry of a permanent injunction and an order requiring the return of $50,000 to subscribers. This order was signed by Federal Judge Murray Hulburt on Oct. 16, 1935. The amount returned to subscribers amounted to about 80 percent of the total subscriptions.

13 On July 3, 1935, the Commission applied to the United States District Court for the Southern District of New York for an order compelling the attendance of Jones as a witness in the proceedings before the Commission. After considering argument and extensive briefs, the district court granted the order on Aug. 13, 1935. Jones thereupon. appealed to the United States Circuit Court of Appeals for the Second Circuit. The argument on this appeal was consolidated with the argument on the Commission's motion to dismiss the petition for review of the proceedings before the Commission, filed by Jones on June 28, 1935. Extensive briefs were again submitted, and on Nov. 5, 1935, the circuit court of appeals sustained the Commission on all points, dismissing Jones' petition for review and affirming the order of the district court compelling Jones to appear and to testify before the Commission. The opinion by Circuit Judge Manton expressly, upheld the constitutionality of the Securities Act.