(f) Any applicant for a license under this Act shall file with the Commission, in such form as it by rule may prescribe, an irrevocable consent appointing each member of the Commission or his successor in office to be his attorney to receive service of any lawful process in any noncriminal suit, action, or proceeding against him or his successor, executor, or administrator which shall arise under this Act or any rule or order hereunder after the consent has been filed, with the same force and validity as if served personally on the person filing the consent. A person who shall have filed such a consent in connection with one application or offering need not file another. Service may be made by leaving a copy of the process in the office of the Commission, but it shall not be effective unless (1) the plaintiff forthwith shall send notice of the service and a copy of the process by registered mail to the defendant or respondent at his last address on file with the Commission, and (2) the plaintiff's affidavit of compliance with this subsection shall be filed in the case on or before the return day of the process, if any, or within such further time as the court may allow.

(g) When any person, including any nonresident of the District, shall engage in conduct prohibited or made actionable by this Act or any rule or odrer under this Act and he shall not have filed a consent to service of process under subsection (f) and personal jurisdiction over him cannot otherwise be obtained in the District, that conduct shall be considered equivalent to his appointment of each member of the Commission, or his successor in office, to be his attorney to receive service of any lawful process in any noncriminal suit, action, or proceeding against him or his successor, executor, or administrator which shall arise from that conduct and which shall be brought under this Act or any rule or order under this Act, with the same force and validity as if served on him personally. Service may be made by leaving a copy of the process in the office of the Commission, but it shall not be effective unless (1) the plaintiff forthwith shall send notice of the service and a copy of the process by registered mail to the defendant or respondent at his last known address or shall take other steps reasonably calculated to give actual notice, and (2) the plaintiff's affidavit of compliance with this subsection shall be filed in the case on or before the return day of the process, if any, or within such further time as the court may allow.

(h) For the purposes of subsections (f) and (g) of this section, the term "plaintiff" includes the Commission in any suit, action, or proceeding initiated by it.

(i) After service of process under this section, the court, or the Commission in a proceeding before it, shall order such continuance as may be necessary to afford the defendant or respondent reasonable opportunity to defend.

ADMINISTRATION OF ACT

SEC. 16. (a) This Act shall be administered by the Public Service Commission of the District of Columbia. The Commission is hereby authorized to establish such offices and with such names or titles, and to appoint and employ such officers and employees and prescribe their duties, as may be necessary to carry out the proivsions of this Act, and to prescribe the compensation of its officers and employees in accordance with the classification laws.

(b) All collections, including fees, received pursuant to this Act shall be deposited in the Treasury of the United States to the credit of the District of Columbia: Provided, That not to exceed $5,000 of such fees and other funds shall be retained in a trust fund account for the purpose of defraying the expenses, as authorized by the Commission, of hearings held pursuant to this Act, including stenographic and reporting services (by contract or otherwise) and rental or purchase of equipment: Provided further, That the amount so retained shall not exceed $5,000 at any one time. Expenditures from such trust fund account shall be made in the same manner as provided by law for other expenditures of the District.

(c) Appropriations to carry out the purposes of this Act are hereby authorized. (d) The provisions of section 8 of the Act entitled "An Act making appropriations to provide for the expenses of the government of the District of Columbia for the fiscal year ending June thirtieth, nineteen hundred and fourteen, and for other purposes", approved March 4, 1913 (37 Stat. 974, ch. 150) as now or hereafter amended (title 43, D.C. Code, 1961 edition) are, insofar as they are applicable, made a part of this Act: Provided, That paragraph 42 of such section, as amended (sec. 43-412, D.C. Code, 1961 edition) shall not be deemed to be so applicable.

(e) A majority of the members of the Commission shall constitute a quorum to do business, and any vacancy shall not impair the power of the remaining members to exercise all the powers of the Commission. In the case of any application, investigation, inquiry, hearing, or proceeding under this Act, the Commission many designate one of its members or a hearing examiner to examine documents, hear testimony and submit to the Commission the record of testimony and such documents with his proposed findings and conclusions of fact and law. (f) The Commission is hereby authorized to make, amend, and rescind such rules, orders, and forms as may be necessary to carry out the provisions of this Act, including, but not limited to, rules, orders, and forms governing applications and amendments thereto, investigations, inquiries, hearings, and proceedings, and including by rule definitions of any terms, whether or not used in this Act, insofar as the definitions are not inconsistent with the provisions of this Act. For the purpose of rules and forms, the Commission may classify persons and matters within its jurisdiction and may prescribe different requirements for different classes.

(g) No rule, form, or order may be made, amended, or rescinded, unless the Commission finds that the action is necessary or appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of this Act. In prescribing rules and forms the Commission may cooperate with the securities administrator of any State and the Securities and Exchange Commission with a view to effectuating the policy of this statute to achieve maximum uniformity in the form and content of license applications, records, and reports, and other documents whereever practicable.

(h) The Commission may by rule or order prescribe (1) the form and content of statements, records, reports, and other documents required under this Act or rules or orders thereunder, (2) the circumstances under which such statements, records, reports, or other documents shall be filed with the Commission, and (3) whether any required statements, records, reports, or other documents shall be certified by independent or certified public accountants.

(i) All rules and forms of the Commission made under this Act shall be published.

(j) No provision of this Act imposing any liability shall apply to any act done or omitted in good faith in conformity with any rule, form, or order of the Commission, notwithstanding that the rule, form, or order may later be amended or rescinded or be determined by judicial or other authority to be invalid for any reason.

(k) A document shall be deemed to be filed or submitted to the Commission when it is received by it during regular business hours.

(1) The Commission shall keep a register of all license applications which are or have ever been effective under this Act, and all denial, suspension, postponement, or revocation orders entered under this Act. Such register shall be open for public inspection during regular business hours.

(m) License applications and material submitted therewith or in connection therewith may be made available to the public under such rules as the Commission may prescribe. Such rules may include, but shall not be limited to, rules prescribing reasonable fees for furnishing photostatic or other copies upon request. The Commission may certify under seal such copy or copies of any document available to the public or any entry in the register, and any copy so certified shall be admitted as evidence with the same effect as the exemplifications of record referred to in section 1070 of the Act of March 3, 1901 (31 Stat. 1358; sec. 14-401, D.C. Code).

(n) The Commission may refer evidence concerning violations of this Act or of any rule or order under this Act to the United States attorney for the District of Columbia who may, with or without such reference, institute criminal proceedings under this Act. The Commission shall comply with any request of the Attorney General of the United States, the Postmaster General of the United States, the Securities and Exchange Commission, or the United States attorney for the District of Columbia for any information or evidence coming to it in the administration of the Act. The Commission in its discretion may refer any information or evidence coming to it in the administration of this Act to the securities administrator of any State or to any national securities exchange or national securities association registered under the Securities Exchange Act of 1934.

(0) Any hearing held by the Commission pursuant to this Act shall be public unless the Commission in its discretion and with the consent of all the parties to such hearing order that the hearing be conducted privately.

JUDICIAL REVIEW

SEC. 17. The Act entitled "An Act to consolidate the Police Court of the District of Columbia and the Municipal Court of the District of Columbia, to be known as the Municipal Court for the District of Columbia, to create the Municipal Court of Appeals for the District of Columbia, and for other purposes," approved April 1, 1942 (ch. 207, 56 Stat. 190), as amended (sec. 11-772, D.C. Code, 1961 edition) is hereby amended by adding to paragraph (e) of section 7 of said Act the following new subparagraph:

"(10) Any final order of the Public Service Commission of the District of Columbia under the provisions of the District of Columbia Securities Act.”

SEVERABILITY

SEC. 18. If any provision of this Act or the application thereof to any person or circumstance shall be held invalid, the invalidity shall not affect other provisions or applications of the Act which can be given effect without the invalid provision or application, and to that end the provisions of this Act are severable.

EFFECTIVE DATE

SEC. 19. (a) Sections 3, 13(b), 13(d), and 16 of this Act, together with definitions of terms used therein, shall take effect upon approval of this Act.

(b) The remaining provisions of this Act shall take effect at 12:01 antemeridian on the one hundred and eightieth day after approval of this Act, or, if the one hundred and eightieth day be a holiday in the District, at 12:01 antemeridian on the first business day thereafter.

TITLE II

SEC. 201. The Public Utilities Commission of the District of Columbia established by paragraph 97 of section 8 of the Act entitled "An Act making appropriations to provide for the expenses of the government of the District of Columbia for the fiscal year ending June thirtieth, nineteen hundred and fourteen, and for other purposes", approved March 4, 1913 (37 Stat. 995), as amended (sec. 43-201, D.C. Code, 1961 edition), hereafter shall be known as the Public Service Commission of the District of Columbia. Wherever reference is made to the Public Utilities Commission of the District of Columbia in any Act of Congress, or in any compact authorized by an Act of Congress, or in any regulation or order, such reference shall be held to be a reference to the Public Service Commission of the District of Columbia.

SEC. 202. This title shall take effect upon approval of this Act.

[H.R. 9419, 88th Cong., 2d sess.]

AN ACT To provide for the regulation of the business of selling securities in the District of Columbia and for the licensing of persons engaged therein, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. This Act may be cited as the "District of Columbia Securities Act”.

DEFINITIONS

SEC. 2. When used in this Act, unless the context otherwise requires(a) "Agent" means any individual other than a broker-dealer who represents a broker-dealer or issuer in effecting or attempting to effect purchases or sales of securities. "Agent" does not include any individual who represents an issuer in (1) effecting transactions in an exempt security, (2) effecting exempt transactions, or (3) effecting transactions with existing employees, partners, or directors of the issuer if no commission or other remuneration is paid or given directly or indirectly for soliciting any person in the District. A partner, officer, or director of a broker-dealer or issuer, or a person occupying similar status or performing similar functions, is an agent only if he otherwise comes within this definition.

(b) "Broker-dealer" means any person engaged in the business of effecting transactions in securities for the account of others or for his own account. "Broker-dealer" does not include (1) an agent, (2) an issuer, (3) a bank, sav

ings institution, or trust company, or (4) a person who has no place of business in the District if (A) he effects transactions in the District exclusively with or through (i) the issuers of the securities involved in the transactions, (ii) other broker-dealers, or (iii) banks, savings institutions, trust companies, insurance companies, investment companies as defined in the Investment Company Act of 1940, pension or profit-sharing trusts, or other financial institutions or institutional buyers, whether acting for themselves or as trustees, or (B) during any period of twelve consecutive months he does not direct more than fifteen offers to sell or buy into the District in any manner to persons other than those specified in clause (A), whether or not the offeror or any of the offerees is then present in the District.

(c) "Commission" means the Public Service Commission of the District of Columbia as so designated by section 21 of this Act.

(d) "District" means the District of Columbia, either as a territorial area as defined in the first section of the Act of June 22, 1874, entitled "An Act to revise and consolidate the statutes of the United States, general and permanent in their nature, relating to the District of Columbia, in force on the first day of December, in the year of our Lord one thousand eight hundred and seventy-three" (D.C. Code, sec. 1-101), or as the government and municipal corporation of that name as created by section 2 of such Act (D.C. Code, sec. 1-102), depending on the context. (e) For the purpose of subsection (a) of this section "exempt security"

means

(1) any security (including a revenue obligation) issued or guaranteed by the United States, any State, any political subdivision of a State, the District, or any agency or corporate or other instrumentality of one or more of the foregoing; or any certificate of deposit for any of the foregoing;

(2) any security issued or guaranteed by Canada, any Canadian Province, any political subdivision of any such Province, any agency or corporate or other instrumentality of one or more of the foregoing, or any other foreign government with which the United States currently maintains diplomatic relations, if the security is recognized as a valid obligation by the issuer or guarantor;

(3) any security issued by and representing an interest in or a debt of, or guaranteed by, any bank organized under the laws of the United States, or any bank, savings institution, or trust company organized and supervised under the laws of any State;

(4) any commercial paper which arises out of a current transaction or the proceeds of which have been or are to be used for current transacitons and which evidences an obligation to pay cash within nine months of the date of issuance, exclusive of days of grace, or any renewal of such paper which is likewise limited, or any guarantee of such paper or of any such renewal; or

(5) any investment contract issued in connection with an employees' stock purchase, savings, pension, profit-sharing, or similar benefit plan. (f) For the purpose of subsection (a) of this section "exempt transaction"

means

(1) any transaction between the issuer or other person on whose behalf the offering is made and an underwriter, or any transaction among underwriters;

(2) any transaction in a bond or other evidence of indebtedness secured by a real or chattel mortgage or deed of trust, or by an agreement for the sale of real estate or chattels, if the entire mortgage, deed of trust, or agreement, together with all the bonds or other evidences of indebtedness secured thereby, is offered and sold as a unit;

(3) any transaction by a receiver or trustee in bankruptcy;

(4) any offer or sale to a bank, savings institution, trust company, insurance company, investment company as defined in the Investment Company Act of 1940, pension or profit-sharing trust, or other financial institution or institutional buyer, or to a broker-dealer, whether the purchaser is acting for itself or in some fiduciary capacity;

(5) any transaction pursuant to an offer directed by the offeror to not more than twenty-five persons in the District during any period of twelve consecutive months, whether or not the offeror or any of the offerees is then present in the District, if the seller reasonably believes that all the buyers in the District are purchasing for investment;

32-278-64--2

(6) any offer or sale of a preorganization certificate or subscription if (A) no commission or other remuneration is paid or given directly or indirectly for soliciting any prospective subscriber, and (B) the number of subscribers does not exceed twenty-five, and (C) no payment is made by any subscriber;

(7) any transaction pursuant to an offer to existing security holders of the issuer, including persons who at the time of the transaction are holders of convertible securities, nontransferable warrants, or transferable warrants, exercisable within not more than ninety days of their issuance, if (A) no commission or other remuneration (other than a standby commission) is paid or given directly or indirectly for soliciting any security holder in the District, or (B) the issuer first files a notice specifying the terms of the offer and the Commission does not by order disallow the exemption within the next five full business days; or

(8) any transaction effected with existing employees, partners, or directors of the issuer if no commission or other remuneration is paid or given, directly or indirectly, for soliciting any person in the District. (g) "Fraud", "deceit", and "defraud” shall not be limited to common law deceit.

(h) "Guaranteed" means guaranteed as to payment of principal, interest, or dividends. (i) "Issuer" means any person who issues or proposes to issue any security, except that—

(1) with respect to certificates of deposit, voting-trust certificates, or collateral-trust certificates, or with respect to certificates of interest or shares in an unincorporated investment trust not having a board of directors or persons performing similar functions, or of the fixed, restricted management, or unit type, the term "issuer" means the person or persons performing the acts and assuming the duties of depositor or manager pursuant to the provisions of the trust or other agreement or instrument under which the security is issued; and

(2) with respect to certificates of interest or participation in oil, gas, or mining titles or leases or in payments out of production under such titles or leases, there is not considered to be any "issuer".

(j) "Person" means an individual, a corporation, a partnership, an association, joint-stock company, a trust where the interests of the beneficiaries are evidenced by a security, an unincorporated organization, a government, or a political subdivision of a government.

(k) (1) "Sale" or "sell" includes every contract of sale of, contract to sell, or disposition of, a security or interest in a security for value.

(2) "Offer" or "offer to sell" includes every attempt or offer to dispose of, or solicitation of any offer to buy, a security or interest in a security for value.

(3) Any security given or delivered with, or as a bonus on account of, any purchase of securities or any other thing is considered to constitute part of the subject of the purchase and to have been offered and sold for value.

(4) A purported gift of assessable stock is considered to involve an offer and sale.

(5) Every sale or offer of a warrant or right to purchase or subscribe to another security of the same or another issuer, as well as every sale or offer of a security which gives the holder a present or future right or privilege to convert into another security of the same or another issuer, is considered to include an offer of the other security.

(6) The terms defined in this subsection do not include (A) any bona fide pledge or loan; (B) any stock dividend, whether the corporation distributing the dividend is the issuer of the stock or not, if nothing of value is given by stockholders for the dividend other than the surrender of a right to a cash or property dividend when each stockholder may elect to take the dividend in cash or property or in stock; (C) any act incident to a class vote by stockholders, pursuant to the certificate of incorporation or the applicable corporation statute, on a merger, consolidation, reclassification of securities, or sale of corporate assets in consideration of the issuance of securities of another corporation; or (D) any act incident to a judicially approved reorganization in which a security is issued in exchange for one or more outstanding securities, claims, or property interests, or partly in such exchange and partly for cash.

(1) "Security" means any note; stock; treasury stock; bond; debenture; evidence of indebtedness; certificate of interest or participation in any profit-sharing agreement; collateral-trust certificate; preorganization certificate or subscrip