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posals submitted by 25 individual stockholders. The principal reasons for such omissions and the numbers of times each such reason was involved (counting only one reason for omission for each proposal even though it may have been omitted under more than one provision of rule 14a-8) were as follows:
(a) 18 proposals related to the ordinary conduct of the company's business;
(b) 17 proposals involved the election of directors;
(c) 13 proposals concerned a personal grievance against the company;
(d) 11 proposals were not a proper subject matter under State law;
(e) 5 proposals were resubmitted after not having received sufficient affirmative votes at a previous meeting; and
(f) 1 proposal was not submitted timely. Ratio of Soliciting to Non-Soliciting Companies
Of the 2,236 issuers that had securities listed and registered on national securities exchanges as of June 30, 1959, 1,985 had voting securities so listed and registered. Of these 1,985 issuers, 1,544 or 78.7 percent, solicited proxies under the Commission's proxy rules during the 1959 fiscal year for the election of directors. Proxy Contests
During the 1959 fiscal year, 19 companies were involved in proxy contests when nonmanagement persons filed detailed statements as participants, or proposed participants, under the requirements of rule 14a-11 when proxies are to be solicited from stockholders for the election of directors. A total of 259 persons, including both management and nonmanagement, filed such statements in 11 cases for control of the board of directors and in 8 cases for representation on the board.
Management retained control in 8 of the 11 contests, opposition nominees won in 2, and 1 was settled by negotiation. Of the 8 cases where representation on the board was involved, management retained all places on the board in 5 and in the other 3 cases nonmanagement persons were elected to the board.
REGULATION OF BROKER-DEALERS AND OVER-THE-COUNTER
The Securities Exchange Act requires under section 15(a) that brokers and dealers, with certain exceptions, using the mails or instrumentalities of interstate commerce to engage in securities transactions on the over-the-counter market must register with the Commission. Brokers and dealers whose business is exclusively intrastate or exclusively in exempt securities are not required to register.
The chart below sets forth statistics regarding the registration of brokers and dealers and applications for such registration during the fiscal year 1959. Effective registrations at close of preceding fiscal year--
4, 752 Applications pending at close of preceding fiscal year.
60 Applications filed during fiscal year---
5, 756 *23 registrations were in suspension at close of the fiscal year. Administrative Proceedings
Section 15(b) of the Securities Exchange Act provides that the Commission shall revoke a firm's broker-dealer registration or deny broker-dealer registration to an applicant if, after appropriate notice and opportunity for hearing, it finds such action is in the public interest and that the registrant or applicant or any partner, officer, director or other person directly or indirectly controlling or controlled by such broker-dealer or applicant is subject to one or more of the disqualifications set forth in the act. In addition, pending final determination whether any registration shall be revoked, the Commission shall by order suspend such registration if after appropriate notice and opportunity for hearing, suspension shall appear to the Commission to be necessary or appropriate in the public interest or for the protection of investors. The disqualifications referred to above, are briefly : (1) conviction in the past 10 years of a felony or misdemeanor
involving the purchase or sale of securities or any conduct
arising out of business as a broker-dealer; (2) willful false or misleading statements in the application or
documents supplementing the application; (3) injunction by a court of competent jurisdiction from engag
ing in any conduct or practice in connection with the purchase or sale of securities; and
(4) willful violation of any of the provisions of the Securities
Act of 1933 or the Securities Exchange Act or any of the
Commission's rules and regulations thereunder. Under section 15A of the Securities Exchange Act brokers and dealers may be suspended or expelled by the Commission from membership in a national securities association, and under section 19(a) (3) from national securities exchanges, for violations of the federal securities laws or the regulations thereunder. Registration may not be denied to an applicant absent evidence of misconduct specified in the act. Other factors, such as bad reputation or character, lack of experience in the securities business or even conviction of the applicant of a felony unrelated to securities transactions, do not constitute statutory grounds for denial of registration as a broker-dealer.
Section 15A (b)(4) of the Securities Exchange Act of 1934 provides that in the absence of the Commission's approval or direction, no broker or dealer may be admitted to or continued in membership in a national securities association if the broker or dealer or any partner, officer, director or controlling or controlled person of such broker or dealer was a cause of any order of revocation or suspension or expulsion from membership which is in effect. An individual named as such a cause often is subject to one or more statutory disqualifications under section 15(b) and his employment by any other broker-dealer thus could also become a basis for broker-dealer revocation proceedings against the new employer.
The following statistics deal, among other things, with administrative proceedings instituted to deny and revoke registration and to suspend and expel from membership in an exchange or a national securities association:
Proceedings pending at start of fiscal year to :
20 Revoke registration and suspend or expel from NASD or exchanges.--- 25 Deny registration to applicants_
Total proceedings pending--
Proceedings instituted during fiscal year to:
Revoke registration ----
60 43 8
Total proceedings instituted.
Total proceedings current during fiscal year..
Disposition of Proceedings
Dismissed on withdrawal of registration.--
Proceedings to revoke registration and suspend or expel from NASD or
6 14 3
Proceedings to deny registration to applicant:
Total proceedings disposed of.---
Proceedings pending at end of fiscal year to:
54 Revoke registration and suspend or expel from NASD or exchanges --- 39 Deny registration to applicants---
Administrative proceedings in which action was taken during the year included the following: Suspension Proceedings
During the past year the Commission suspended the registration of several broker-dealers pending final determination as to whether their registrations should be revoked. Since suspension has the effect of stopping all securities business by the registrant, this sanction is imposed only in the most serious type of cases where the Commission finds, on the evidence adduced at a hearing, that such action is required, in the public interest and for the protection of investors.
A. G. Bellin Securities Corp.—The registrant was found, in connection with the sale of unregistered stock in General Oils & Industries, to have made false and misleading statements regarding, among other
things, prospects of profits, payment of dividends, increase in market price, listing on exchange, merger, interest of officials of prominent oil companies in General, and the issuers' ownership of and production from oil and gas properties. In addition, registrant was preliminarily enjoined from selling stock of General.
The Commission, on the basis of these findings, held that a sufficient showing had been made to require suspension of registration in the public interest and for the protection of investors. In determining this the Commission stated, “. . . we are required ... to suspend registration where the record before us on the suspension issue contains a sufficient showing of misconduct to indicate the likelihood that after hearings on the revocation issue registrant will be found to have committed willful violations or any of the other grounds prescribed with respect to the revocation in section 15(b) will be established, and that revocation will be required in the public interest.” The Commission also stated that under the suspension provision,“. . . we are only directed to inquire into the question of whether the public interest or the protection of investors warrants suspension, and there is no requirement that suspension be based upon findings of willful violation or the other grounds specified with respect to revocation.” 30 At the close of the fiscal year revocation proceedings were pending against registrant.
Herman Bud Rothbard, doing business as Jonathan & Company.-Rothbard admitted that he filed a false and misleading financial statement with his application for registration, violated the net capital rule, failed to amend his registration to disclose transfer of control of his business, failed to file a required financial report, and maintained materially deficient books and records and he consented to suspension of his broker-dealer registration. The Commission concluded that suspension was appropriate in the public interest and for the protection of investors. 31 In addition, on June 30, 1959, the Commission revoked Rothbard's registration. This is discussed in more detail later in this report.
Jean R. Veditz Co., Inc.—Registrant consented to suspension of its broker-dealer registration. The Commission found suspension to be appropriate in the public interest and for the protection of investors. The order instituting proceedings charged registrant, Jean R. Veditz, its president and sole stockholder, and Ben Goldstein, its sales manager, with violation of the antifraud provisions of the federal securities laws in the offer and sale of stock of Universal Drilling Company. Registrant and Veditz were stated in the order to have been enjoined by the Supreme Court of New York, County of New York, from ensaging in certain activities in connection with the purchase and sale
30 Securities Exchange Act Release No. 5966 (May 18, 1959), 31 Securities Exchange Act Release No. 5797 (Oct. 17, 1958).