counter data are derived from a continuing survey of the standard security manuals, the National Quotation Bureau Services, and reports to the Commission.

Somewhat over 700 domestic banks have stocks with 300 or more reported holders which are not on any stock exchange. Practically all are common stocks. Their aggregate market value on December 31, 1958, was about $15 billion, which was close to 10 percent of the $155 billion assets on that date of the issuing banks. The corresponding market value of bank stocks on stock exchanges aggregated about $237 million for 24 issues."

About 300 domestic insurance companies have stocks with 300 or more reported holders which are not on any stock exchange. Nearly all are common stocks. The aggregate market value of their quoted stocks on December 31, 1958, was about $11.5 billion, which was close to 40 percent of their $29 billion assets on that date. The corresponding value of insurance stocks on stock exchanges aggregated about $1.6 billion for 17 issues of 16 issuers.

About 500 issuers are registered under the Investment Company Act of 1940, and their aggregate assets are about $20 billion. On December 31, 1958, 39 of these issuers, with about $2.2 billion net asset value, had stocks on stock exchanges with about $1.9 billion aggregate market value. Over-the-counter market or redemption values of the remaining issuers' securities would bear a close correspondence to their approximate $17.8 billion net asset value.

About 2,500 additional domestic industrial, utility, and miscellaneous issuers have stocks with 300 or more reported holders which are not on any stock exchange. The aggregate market value on December 31, 1958, of their shares was about $32.5 billion. About $2.5 billion consisted of preferred stocks. The $30 billion common stocks were of companies with aggregate assets of about $39 billion on that date. Nearly all widely-held railroad stocks and a preponderance of widely-held utility and industrial stocks are on exchanges.

In all, some 3,500 domestic corporate issuers (excluding registered investment companies) have stocks with 300 or more reported hold

9

Of the 22 bank stocks remaining on stock exchanges on June 30, 1959, 1 was listed and registered, and 5 were listed and exempted from registration, on the Washington branch of the Philadelphia-Baltimore Stock Exchange, and 16 were listed on the exempted Richmond, Wheeling, and Honolulu Exchanges.

With 2 exceptions, all investment trust shares on the stock exchanges are of closed-end issuers. Purchases and sales of closed-end investment trust shares are ordinarily made in the open market such as a stock exchange affords. Holders of open-end investment trust shares ordinarily buy them from distributors and redeem them at their liquidating values. The 2 open-end issuers on stock exchanges are Coca Cola International Corporation and General Capital Corporation, whose shares are listed on the New York Stock Exchange and the Boston Stock Exchange respectively, with no exchange volume reported during 1958 in either issue.

The use of registered investment company totals in computing overall securities aggregates would be duplicative to a great extent in that their holdings consist of other securlties, principally listed stocks.

ers which are not on any stock exchange, and whose aggregate market value on December 31, 1958, was approximately $59 billion. The assets of the issuers having over-the-counter common stocks aggregated about $223 billion on that date, of which nearly 70 percent ($155 billion) was of banks.

As in case of issuers having securities on stock exchanges,10 the number of such issuers of over-the-counter stocks has not changed greatly in recent years. The constant additions are substantially offset by losses through new listings on stock exchanges, mergers, sales of assets, liquidations and reduction in number of shareholders in some instances." Share price changes have kept pace with those of stocks on stock exchanges. Aggregate share values of $238.8 billion on stock exchanges on December 31, 1955, were about 5.3 times the $45 billion over-the-counter values as computed for that date in our 22d Annual Report (1956), and the $312.7 billion stock exchange values on December 31, 1958, were similarly about 5.3 times the $59 billion overthe-counter values as above computed.

The domestic over-the-counter stock values of $59 billion, as computed above, included $15 billion of stocks of banks, which report to their own regulatory agencies. Of the $44 billion of other stock values, about $24 billion, or over 50 percent, were of issuers reporting to the Commission pursuant to requirements of the Securities Exchange Act of 1934. The $24 billion included about $20.7 billion stocks of domestic issuers reporting under section 15(d) of the 1934 Act, by reason of registrations of securities for public sale,12 and about

12

10 Issuers represented on stock exchanges numbered 2,594 on June 30, 1956, and 2,527 on June 30, 1959, including issuers of both bonds and stocks.

11 Purchases of stocks for control sometimes reduce holders below 300. Holders of preferred stocks, of real estate stocks issued in reorganizations, and of stocks distributed ("spun-off") by large companies to their numerous stockholders tend to decrease over the years.

13 Issuers required to report under section 15(d) of the Securities Exchange Act of 1934 had aggregate quoted values of shares on December 31, 1958, as follows:

$3.3 billion over-the-counter stocks of issuers reporting because they have other securities listed on registered exchanges.

Taking into account the share values of registered investment companies which do report, and those of banks which do not report to the Commission, it is evident that the total values of shares of domestic issuers reporting to the Commission is more than half of the total domestic over-the-counter share values, as above computed.

DELISTING OF SECURITIES FROM EXCHANGES

Pursuant to rule 12d2-1(b) under section 12(d) of the Securities Exchange Act, applications may be made to the Commission by issuers to withdraw their securities or by exchanges to strike any securities from listing and registration on exchanges. The Commission may not deny such applications if made in accordance with the appropriate exchange rules, but may impose such terms as it may deem necessary for the protection of investors.

During the fiscal year ended June 30, 1959, the Commission granted applications by issuers and exchanges to remove 39 stock issues and 1 bond issue from listing and registration pursuant to rule 12d2–1(b). There were 41 removals, since 1 stock was delisted from 2 exchanges. The number of issuers involved was 37. The removals were as follows:

This stock was also delisted from the American Stock Exchange.

The applications by exchanges were based in general upon the ground that the issues were no longer suitable for exchange trading, by reason of reduced public holdings, small values, few holders, inconsequential trading volumes on the exchanges, or a combination of these factors. Some of the issuers were not operating, or were in process of liquidation. Failure to file reports with the exchange was cited in three instances. In six of the applications made by exchanges it was stated that the issuers had requested the action.

The five applications by issuers were for removal of stocks from various regional exchanges. The stocks remained listed on other exchanges where the principal trading volume therein occurred.

From July 1, 1936, through June 30, 1959,13 there have been 533 delistings of securities on application of exchanges and 279 on application of issuers. Delistings from the New York Stock Exchange numbered 282 pursuant to its applications and 6 pursuant to applications by issuers. Delistings from the American Stock Exchange numbered 58 pursuant to its applications and 25 pursuant to applications by issuers. Delistings from the regional exchanges numbered 193 pursuant to their applications and 248 pursuant to applications by issuers. Thus, about 2 percent of the New York Stock Exchange delistings, 30 percent of the American Stock Exchange delistings, and 56 percent of the regional exchange delistings were pursuant to applications by issuers.

As indicated above, delisting applications filed by exchanges are ordinarily based on lack of adequate public interest in the security issues concerned. The usual exchange application cites diminution in number of holders and publicly held shares or the moribund condition of the issue or issuer. The reduction in the number of holders and publicly held shares frequently results from acquisitions involving an offer of exchange into other listed shares of the same or another issuer. In some cases, a company will have sold its assets for cash and distributed all but small final payments in liquidation. The specific reason given in an application in case of a moribund condition may be that the issuer has failed to file reports required by the listing agreement and registration, or has discontinued transfer and registrar facilities, or faces insolvency proceedings. Some exchanges, upon learning that an issuer has determined to delist an inactively traded issue, will make the application as a matter of good public relations, stating that it is made at the request of the issuer by reason of its inactivity on the Exchange. The New York Stock Exchange, as the leading exchange in number of listings and number of removals, has developed and published criteria on the basis of which it will consider initiation of a delisting application. (See 24th Annual Report, p. 63.) Some of the stocks delisted upon its application have remained or become listed on other exchanges. One of the stocks delisted upon its application has since become prominent.15 In general, however, there are very few instances of substantial public interest in securities after their delisting upon application by exchanges.

Delistings upon application by issuers fall into three classes: those which have little value, those which remain listed on other exchanges,

13 Comparable data are not available for the period prior to July 1, 1936. 14 Examples include Kalamazoo Stove and Furnace Company and DTM Corporation stocks remaining on Midwest Stock Exchange, and Spear & Company, Clopay Corporation, and Davega Stores Corporation stocks which became listed on the American Stock Exchange.

The number of holders of American Express Company stock, delisted in 1939 when it was nearly all owned by Amerex Holding Corporation, increased from under 100 to over 25,000 in its spin-off by the latter 11 years later.

and those which are good over-the-counter material. Upon the market break in 1937 and the subsequent drying up of exchange activity, from 962 million shares in 1936 to 221 million in 1942, and from $23.6 billion to $4.3 dollar volume respectively, there was a plethora of issuer applications. In this period, the Commission frequently required issuers to notify their stockholders of the pending application and to advise them of their right to be heard. Response of the holders was inconclusive,16 but the contents of the notifications were made the cause of denials or dismissals in some instances. For some time after the low point of the decline in share volumes was reached in 1942, the flow of delisting applications by issuers continued, and the Commission in three cases during the period 1944-46 required important issuers to put their decisions to a vote of stockholders." However, volumes on the exchanges were recovering. New delisting applications by issuers dropped to an average of about 7 per annum in the 15 years to June 30, 1959, compared to over 21 per annum in the 8 years to June 30, 1943. Notifications to stockholders were required in only a few instances after 1943, the last being in 1954; no voting requirement has been ordered by the Commission since 1946. On occasion, either voluntarily or in compliance with a rule of an exchange, issuers have put the matter of delisting to vote of their stockholders before submitting applications. Since 1947, the Commission has held hearings on delisting applications only if requested by an interested party, and only three such hearings have been held since that date, all on delisting applications of the New York Stock Exchange.

Most of the delistings pursuant to applications by issuers during the period have been with respect to issues having little value or issues remaining listed on other exchanges.18 Excluding a number of openend investment company stocks, originally listed to qualify for sale under blue sky laws and not suitable for exchange trading, issues having a current market value of around $500 million have been removed to over-the-counter trading by delistings pursuant to applications by issuers during the period.19 The reporting requirements of the Commission pursuant to section 13 of the Securities Exchange Act seem not to have been much of a factor in the deliberations of the issuers with respect to delisting, since about $400 million of the market

10 The letters received were about equally divided for and against delisting, and personal appearances at the hearings were few in number.

17 In none of these cases did the issuer pursue its delisting application further after imposition of the voting requirement.

18 Delistings on application of issuers during the period originally comprised about 117 with no substantial trading value, 95 remaining listed on other exchanges, and 67 which became good over-the-counter trading material. Since delisting, about half of the 67 lastmentioned issues have been exchanged into listed stocks of other companies or passed out of existence in other ways.

19 This amount is less than 0.2 percent of the market value of stocks on the exchanges.