is a director or officer of the issuer of such securities, to file reports with the Commission and the exchange disclosing his ownership of the issuer's equity securities. This information must be kept current by filing subsequent reports for any month in which a change in his ownership occurs. Similar reports are required by Section 17(a) of the Public Utility Holding Company Act of officers and directors of public utility holding companies and by Section 30(f) of the Investment Company Act of officers, directors, principal security holders, members of advisory boards and investment advisers or affiliated persons of investment advisers of registered closed-end investment companies. All ownership reports are available for public inspection as soon as they are filed at the Commission's office in Washington and reports filed pursuant to Section 16(a) of the Securities Exchange Act may also be inspected at the exchanges where copies of such reports are filed. In addition, for the purpose of making the reported information available to interested persons who may not be able to inspect the reports in person, the Commission summarizes and publishes such information in a monthly "Official Summary of Security Transactions and Holdings," which is distributed by the Government Printing Office on a subscription basis. Increasing interest in this publication is evidenced by the increase in the total circulation from a rate of about 8,000 at the end of the 1959 fiscal year to more than 10,000 at the end of the 1960 fiscal year. During the fiscal year, 38,821 ownership reports were filed. This represents a slight decrease from the 39,275 reports filed during the 1959 fiscal year but is still substantially greater than the yearly average of 23,472 reports filed during the first 25 years of the reporting requirements. The following table shows details concerning reports filed during the fiscal year ended June 30, 1960. Number of reports filed during fiscal year 1960 Form 4 is used to report changes in ownership; Form 5 to report ownership at the time an equity security of an issuer is first registered on a national securities exchange; and Form 6 to report ownership of persons who subsequently become officers, directors or principal stockholders of the issuer. In order to prevent insiders from making unfair use of information which may have been obtained by reason of their relationship with a company, Section 16(b) of the Securities Exchange Act, Section 17(b) of the Public Utility Holding Company Act, and Section 30 (f) of the Investment Company Act provide for the recovery by or on behalf of the issuer of any profit realized by insiders from certain purchases and sales, or sales and purchases, of securities of the company within any period of less than six months. The Commission has certain exemptive powers with respect to transactions not comprehended within the purpose of these provisions, but is not charged with the enforcement of the civil remedies created thereby. REGULATION OF PROXIES Scope of Proxy Regulation Under Sections 14(a) of the Securities Exchange Act, 12(e) of the Public Utility Holding Company Act of 1935, and 20(a) of the Investment Company Act of 1940, the Commission has adopted Regulation 14 requiring the disclosure in a proxy statement of pertinent information in connection with the solicitation of proxies, consents and authorizations in respect of securities of companies subject to those statutes. The regulation includes provisions that when the management is soliciting proxies, any security holder desiring to communicate with other security holders for a proper purpose may require the management to furnish him with a list of all security holders or to mail his communication to security holders for him. A security holder may also, subject to reasonable prescribed limitations, require the management to include in its proxy material any appropriate proposal which such security holder desires to submit to a vote Form U-17-1 is used for initial reports and Form U-17-2 for reports of changes of ownership. 3 Form N-30F-1 is used for initial reports and Form N-30F-2 for reports of changes of ownership. of security holders. Any security holder or group of security holders may at any time make an independent proxy solicitation upon compliance with the proxy rules, whether or not the management is making a solicitation. Copies of proposed proxy material must be filed with the Commission in preliminary form prior to the date of the proposed solicitation. Where preliminary material fails to meet the prescribed disclosure standards, the management or other group responsible for its preparation is notified informally and given an opportunity to avoid such defects in the preparation of the proxy material in the definitive form in which it is furnished to stockholders. Statistics Relating to Proxy Statements During the 1960 fiscal year, 2,089 proxy statements in definitive form were filed under the Commission's Regulation 14 for the solicitation of proxies of security holders; 2,071 of these were filed by management and 18 by nonmanagement groups or individual stockholders. These 2,089 solicitations related to 1,876 companies, some 200 of which had more than one solicitation during the year, generally for a special meeting not involving the election of directors. There were 1,864 solicitations of proxies for the election of directors, 207 for special meetings not involving the election of directors, and 18 for assents and authorizations for action not involving a meeting of security holders or the election of directors. In addition to the election of directors, the decisions of security holders were sought through the solicitation in the 1960 fiscal year of their proxies, consents and authorizations with respect to the following types of matters: Mergers, consolidations, acquisitions of businesses, purchases and 170 388 Employee pension and retirement plans (including amendments to existing plans) ----. Bonus, profit-sharing plans and deferred compensation arrangements (including amendments to existing plans and arrangements) –– Stock option plans (including amendments to existing plans) ----Stockholder approval of the selection by management of independent auditors---- Miscellaneous amendments to charter and by-laws, and miscellaneous other matters (excluding those involved in the preceding matters) –– Stockholders' Proposals During the 1960 fiscal year, 42 stockholders submitted a total of 130 proposals which were included in the 94 proxy statements of 94 companies under Rule 14a-8 of Regulation 14. Typical of such stockholder proposals submitted to a vote of security holders were resolutions relating to amendments to charters or by-laws to provide for cumulative voting for the election of directors, limitations on the granting of stock options and their exercise by key employees and management groups, the sending of a post-meeting report to all stockholders, changing the place of the annual meeting of stockholders, and the approval by stockholders of management's selection of independent auditors. The managements of 22 companies omitted from their proxy statements under the Commission's Rule 14a-8 a total of 48 additional proposals submitted by 32 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) 11 proposals related to the ordinary conduct of the company's business; (b) 11 proposals were not a proper subject matter under State law; (c) 9 proposals concerned a personal grievance against the company; (d) 5 proposals were resubmitted after not having received sufficient affirmative votes at a previous meeting; (e) 1 proposal was not timely submitted; (f) 4 proposals and reasons therefor were deemed misleading; (g) 1 proposal involved the election of directors; and (h) 6 proposals were withdrawn by the stockholders. Ratio of Soliciting to Non-Soliciting Companies Of the 2,307 issuers that had securities listed and registered on national securities exchanges as of June 30, 1960, 2,030 had voting securities so listed and registered. Of these 2,030 issuers, 46 listed and registered voting securities after their annual stockholders' meeting in fiscal 1960; thus, of the remaining 1,984 issuers with voting securities, 1,607, or 81 percent, solicited proxies under the Commission's proxy rules during the 1960 fiscal year for the election of directors. Proxy Contests During the 1960 fiscal year, 25 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 382 persons, including both management and nonmanagement, filed such statements in 16 cases for control of the board of directors and 9 cases for representation on the board. Management retained control in 12 of 16 contests, 1 was settled by negotiation, and 3 were pending as of June 30, 1960. Of the 9 cases where representation on the board was involved, management retained all places on the board in 7 and in the other 2 cases nonmanagement persons were elected to the board. REGULATION OF BROKER-DEALERS AND OVER-THE-COUNTER Registration MARKETS Section 15 (a) of the Securities Exchange Act requires the registration of all brokers and dealers who use the mails or instrumentalities of interstate commerce to effect or induce transactions in securities in the over-the-counter market. Exemptions from registration are afforded to those brokers and dealers that conduct an exclusively intrastate business or deal only in exempt securities, commercial paper, commercial bills or bankers' acceptances. The table below sets forth statistics with respect to broker-dealer registrations for fiscal 1960. Effective registrations at close of preceding fiscal year- Total___ Applications denied.__. Applications withdrawn.. 4, 907 87 1,077 6, 071 22 *27 registrations were in suspension at the close of the fiscal year. Administrative Proceedings The power of the Commission to deny or revoke the registration of a broker-dealer is provided by Section 15 (b) of the Securities Exchange Act. An order of denial or revocation will issue if the Commission finds that such a sanction is in the public interest and that the applicant or registrant, or any partner, officer, director or other person directly or indirectly controlling or contolled by such applicant or broker-dealer is subject to a specific statutory disqualification. These disqualifications, in general, are: (1) willful false or misleading statements in the application or documents supplemental thereto; |