remove the implication theretofore existing that the registrant's business would be substantially more than doubled in the ensuing year. Because of the registrant's delay in correcting its registration statement, it became necessary to file more recent financial statements, which disclosed that the registrant's average monthly production had decreased some 70 percent and, in the most recent 3 months, it had sustained a relatively substantial loss. These facts had not previously been disclosed even at the time the registrant amended its statement to include a description of the "contract" referred to above.

(4) Issuance of stock for promotional purposes and its effect not disclosed. A company engaged in the manufacture and sale of armaments filed a registration statement covering an offering of approximately 100,000 shares of common stock, at $6.25 per share. About half this stock was to be sold for the account of the company and the balance for the accounts of certain large stockholders. The company was recently organized as the successor, through a series of reorganizations, to certain predecessor companies which had, since 1938, been engaged in the development of the registrant's products.

In the course of the examination of this registration statement, it was discovered that 260,000 shares (approximately two-thirds of the company's outstanding common capital stock) were in effect promotional shares which had been issued in exchange for junior stock of the predecessor companies. These latter shares had in turn been issued, for a purely nominal total cash consideration of approximately $162, to certain persons interested in the original development of the enterprise. This situation was nowhere disclosed in the registration statement or prospectus as originally filed but was elicited as a result of questions raised by the Commission's staff in connection with certain material in the original filing. The circumstances thus discovered with respect to the issuance of these promotional shares were, of course, required to be set forth fully by appropriate amendments to the registration statement and prospectus. It is to be noted in this connection that the public was asked to pay $6.25 per share for the same class of stock sold to promoters for approximately six onehundredths of 1 cent per share.

STATISTICS OF SECURITIES REGISTERED UNDER SECURITIES ACT

OF 1933

At the beginning of the fiscal year, there were 4,453 registration statements on file, of which 3,529 were effective, 172 were under stop or refusal order, and 704 had been withdrawn, while 48 were in process of examination or awaiting amendment.

During the period July 1, 1940, to June 30, 1941, inclusive, 337 registration statements were filed, and there were 318 registration statements which became effective during the period; a total of 3,823

statements were effective at the end of the period, 24 of those effective at the beginning of the period or during the period having been either withdrawn or placed under stop order.

The net number of registration statements withdrawn increased by 50 to a total of 754 on June 30, 1941. The net number of stop and refusal orders increased during the period by 3, a total of 175 such orders being in effect on June 30, 1941. As of June 30, 1941, there were 38 registration statements in process of examination or awaiting amendment.

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

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

Does not include 24 registration statements effective at the beginning or during the period which were either withdrawn or placed under stop order.

Eleven stop order proceedings were instituted during the fiscal year. Of these, four resulted in with drawal of the registration statements and discontinuance of the proceedings; two resulted in stop orders and five were pending at the end of the fiscal year.

The following table indicates the number of Securities Act registration statements as to which stop orders, consent refusal orders, and withdrawal orders were issued July 1, 1940, to June 30, 1941:

• One consent refusal order issued prior to period was lifted during period.

8

Four additional stop orders were lifted during this year, two by withdrawal and two by becoming,

re-effective. These were in connection with stop orders issued prior to period.

A total of 1,025, amendments to registration statements were also filed and examined during the past fiscal year, compared with a corresponding total of 1,027 during the preceding 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 255 annual reports and 63 amendments thereto, all of which required examination. This compares with figures for the previous fiscal year of 252 reports and 69 amendments.

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

(1) 312 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) 232 sets of supplemental prospectus material were filed by registrants to show material changes occurring after the commencement of the offering; and

(3) 322 sets of so-called 13-month prospectuses were filed pursuant to Section 10 (b) (1) of the Act.

Thus during the past fiscal year there were filed in the aggregate 866 additional prospectuses of these 3 classes.

At the same time, 300 supplementary statements of actual offering price were filed as required by Rule 970; and there were 22 instances where registrants voluntarily filed supplemental financial data.

Securities effectively registered.-During the fiscal year ended June 30, 1941, securities effectively registered under the Securities Act of 1933 aggregated $2,611,000,000. This compared with a total of $1,787,000,000 for the preceding fiscal year and $2,579,000,000 for the fiscal year ended June 30, 1939. Securities proposed for sale by issuers amounted to $2,081,000,000 in the fiscal year 1941, as against $1,433,000,000 in the preceding year and $2,020,000,000 in the year

1939.

Of the indicated net proceeds amounting to $2,018,000,000 new money uses accounted for $287,000,000, or 14.2 percent. Included in this total were $152,000,000 for plant and equipment, $118,000,000 for working capital, and $17,000,000 for other new money purposes. The greater part of net proceeds was to be applied to the repayment of indebtedness and retirement of stock in the aggregate amount of $1,485,000,000, or 73.6 percent of the total. This included 70.1 percent for repayment of indebtedness and 3.5 percent for retirement of preferred stock. Net proceeds to be used for the purchase of securities equaled $240,000,000, or 11.9 percent, with 11.8 percent of net proceeds being destined to the purchase of securities for invest

ment.

These amendments include 759 classed as "pre-effective" and 266 as "post-effective," and do not take into account 359 others of a purely formal nature classed as "delaying" amendments.

Fixed interest-bearing securities amounted to $1,566,000,000, equal to 75.3 percent of the total proposed for sale by issuers. Included in this total were secured bonds aggregating $1,180,000,000, or 56.7 percent, and unsecured bonds aggregating $386,000,000, or 18.6 percent. This left 24.7 percent for all equity issues combined, distributed as follows: certificates of participation, beneficial interest, face-amount installment certificates, etc., with $235,000,000, or 11.3 percent; preferred stock with $164,000,000, or 7.9 percent; and common stock with $116,000,000, or 5.5 percent.

Electric, gas, and water utilities constituted the most important industry group of issuers, showing a total of $1,022,000,000, or 49.1 percent of total securities proposed for sale by issuers. Next in importance were issues of manufacturing companies aggregating $611,000,000, or 29.4 percent, followed by issues of financial companies with $284,000,000, or 13.7 percent. These three leading industry groups accounted for all but 7.8 percent of the total.

Securities to be offered through underwriters totaled $1,570,000,000, or 75.4 percent of all securities proposed for sale by issuers. Securities to be offered through agents amounted to $293,000,000, or 14.1 percent, while securities to be offered directly by issuers amounted to $218,000,000, or 10.5 percent. A total of $1,836,000,000, or 88.2 percent, was to be offered to the general public, as compared with $165,000,000, or 7.9 percent, to others and $80,000,000, or 3.9 percent, to security holders.

A break-down of registration during the fiscal year ended June 30, 1941, indicates that the 313 statements covering 456 issues which became effective in the total amount of $2,611,000,000 included $28,000,000 of substitute securities, such as voting trust certificates and certificates of deposit, and $204,000,000 of securities registered for the account of others, of which $190,000,000 was proposed for sale. This left $2,378,000,000 of securities other than substitute securities registered for the account of issuers. However, securities totaling $297,000,000 were not to be offered for sale, the chief components being $226,000,000 of securities to be exchanged for other securities and $53,000,000 of securities reserved for conversion. The remainder of $2,081,000,000 constituted securities proposed for sale by issuers, of which only $197,000,000 represented the issues of newly organized companies.

Detailed statistics showing break-downs by types of securities, industry classification of issuers, purpose of registration, proposed use of net proceeds, and proposed methods of selling, for securities regis tered under the Securities Act of 1933 during the fiscal year ended June 30, 1941, are presented in tables 1 to 7 of Appendix II, pages 249 to 268. These statistics are kept current in regular monthly releases of the Commission. In interpreting the tables, as well as

the summary figures used in the text above, it should be kept in mind that these statistics are based solely on the registration statements which become effectively registered under the Securities Act of 1933. All data, therefore, refer to the registrants' intentions and estimates as reflected in registration statements on the effective date and consequently represent statistics of intentions to sell securities rather than statistics of actual sales of securities.10

Security offerings.-Securities registered under the Securities Act of 1933 constitute only part of all new issues offered for cash. On the other hand, the statistics of new offerings include only actual offerings, whereas the statistics of registrations reflect registrants' intentions to sell securities. Comprehensive statistics of new cash offerings of securities are presented in tables 8 and 9 of Appendix II, pages 269-75. Table 8, parts 1 and 2, show the estimated gross proceeds of all issues offered for sale, classified by type of offering, type of security, and type of issuer; in addition, table 9 presents data on the proposed use of proceeds of corporate issues.

In general, the data cover such issues over $100,000 in amount, and (for debt issues) of a maturity of 1 year or over at date of issuance as were reported as offered for cash in the financial press, in documents filed with the Commission, or in other available sources. The statistics include offerings irrespective of whether the issues were publicly or privately placed and regardless of whether they were registered under the Securities Act of 1933. The statistics of new offerings thus embrace certain corporate and noncorporate issuing groups exempt from registration under the Securities Act of 1933, by virtue either of the nature of the transaction or issuer, and include securities of common carriers, most issues placed privately, and Federal, State, and local governmental issues.11

New issues of securities offered for cash during the fiscal year ended June 30, 1941, amounted to $9,847,000,000, as compared with $5,512,000,000 during the preceding fiscal year. Of the total amount of issues offered during the 1941 fiscal period, $5,530,000,000 was issued by the United States Government and Agencies,12 $2,991,000,000 by corporations, $1,295,000,000 by States and municipalities, $27,000,000 by eleemosynary institutions and $4,000,000 by foreign governments (sold in this country). Fixed interest-bearing securities aggregated

The difference between the amount of securities registered and the amount of registered securities actually sold may be assumed to be largest-apart from registered issues of investment companies subject to continuous sale for the issues of small and unseasoned corporations. A special study made by the Research and Statistics Section of the Trading and Exchange Division indicates that actual sales of unseasoned issues have averaged only about one-fourth of the amounts registered (see "Sales Record of Unseasoned Registered Securities 1933-1939," June 1941).

"The statistics include only Federal government issues sold to the public and exclude "Special Series" issues and other interagency sales. Also excluded from the corporate offerings statistics are issues which do not appear in the financial press (largely those sold through continuous offering, such as securities of openend investment companies); and intercorporate transactions.

"Only agency issues guaranteed by the Government are included in these figures; agency issues not guaranteed by the Government are included with corporate issues.