violations of the anti-fraud provisions of the Federal securities laws. Decisions in these cases have not yet been rendered. In Moses and New v. Michael (consolidated) 30 the sellers of unregistered undivided working interests in oil and gas leases appealed from summary judgments entered against them under section 12(1) of the Securities Act. Among other things, the sellers argued that they did not violate the Federal securities laws because only photostatic copies of the oil and gas assignments, rather than the assignments themselves, were sent through the mails. The Commission filed a brief amicus curiae, urging rejection of this contention. On July 20, 1961, the Court of Appeals sustained the Commission's contention, affirmed the judgment of the District Court, and stated that "the mailing of photostatic copies of the lease agreements * * *** constituted a violation of the Act ** 292 F. 2d 614 (C.A. 5, 1961). PART V ADMINISTRATION OF THE SECURITIES EXCHANGE ACT OF 1934 The Securities Exchange Act of 1934 provides for the registration and regulation of securities exchanges, and the registration of securities listed on such exchanges and it establishes, for issuers of securities so registered, financial and other reporting requirements, regulation of proxy solicitations and requirements with respect to trading by directors, officers and principal security holders. The act also provides for the registration and regulation of brokers and dealers doing business in the over-the-counter market, contains provisions designed to prevent fraudulent, deceptive and manipulative acts and practices on the exchanges and in the over-the-counter markets and authorizes the Federal Reserve Board to regulate the use of credit in securities transactions. The purpose of these statutory requirements is to ensure the maintenance of fair and honest markets in securities. REGULATION OF EXCHANGES AND EXCHANGE TRADING Registration and Exemption of Exchanges As of June 30, 1961, 14 stock exchanges were registered under the Exchange Act as national securities exchanges: There have been no sales of securities on the Chicago Board of Trade since 1953. The National Stock Exchange was granted registration as a national securities exchange on August 16, 1960, but had not commenced to operate as of June 30, 1961. Four exchanges were exempted from registration by the Commission pursuant to section 5 of the act: Colorado Springs Stock Exchange Richmond Stock Exchange Wheeling Stock Exchange Disciplinary Action Each national securities exchange reports to the Commission disciplinary actions taken against its members and member firms for violations of the Securities Exchange Act of 1934 or of exchange rules. During the year 7 exchanges reported 51 cases of such disciplinary actions, including imposition of fines aggregating $30,137 in 25 cases; the suspension of 9 individuals and the expulsion of another individual from membership; the revocation of 5 specialists' registrations and the censure of a number of individuals and firms. REGISTRATION OF SECURITIES ON EXCHANGES It is unlawful for a member of a national securities exchange or a broker or dealer to effect any transaction in a security on such exchange unless the security is registered on that exchange under the Securities Exchange Act or is exempt from such registration. In general, the act exempts from registration obligations issued or guaranteed by a State or the Federal Government or by certain subdivisions or agencies thereof and authorizes the Commission to adopt rules and regulations exempting such other securities as the Commission may find necessary or appropriate to exempt in the public interest or for the protection of investors. Under this authority the Commission has exempted securities of certain banks, certain securities secured by property or leasehold interests, certain warrants and, on a temporary basis, certain securities issued in substitution for or in addition to listed securities. Section 12 of the Exchange Act provides that an issuer may register a class of securities on an exchange by filing with the Commission and the exchange an application which discloses pertinent information concerning the issuer and its affairs. An application requires the furnishing of information in regard to the issuer's business, capital structure, the terms of its securities, the persons who manage or control its affairs, the remuneration paid to its officers and directors, the allotment of options, bonuses and profit-sharing plans, and financial statements certified by independent accountants. Form 10 is the form used for registration by most commercial and industrial companies. There are specialized forms for certain types of securities, such as voting trust certificates, certificates of deposit, and securities of foreign governments. Section 13 requires issuers having securities registered on an exchange to file periodic reports keeping current the information furnished in the application for registration. These periodic reports include annual reports, semiannual reports, and current reports. The principal annual report form is form 10-K which is designed to keep up-to-date the information furnished in form 10. Semiannual re ports required to be furnished on form 9-K are devoted chiefly to furnishing midyear financial data. Current reports on form 8-K are required to be filed for each month in which any of certain specified events have occurred. A report on this form deals with matters such as changes in control of the registrant, important acquisitions or dispositions of assets, the institution or termination of important legal proceedings and important changes in the issuer's capital securities or in the amount thereof outstanding. Statistics Relating to Registration of Securities on Exchanges As of June 30, 1961, a total of 2,341 issuers had 3,931 issues of securities listed and registered on national securities exchanges, of which 2,748 were classified as stocks and 1,183 as bonds. Of these totals, 1,332 issuers had 1,544 stock issues and 1,124 bond issues listed and registered on the New York Stock Exchange. Thus, 57 percent of the issuers, 56 percent of the stock issues and 95 percent of the bond issues were on the New York Stock Exchange. During the 1961 fiscal year, 130 issuers listed and registered securities on a national securities exchange for the first time, while the registration of all securities of 96 issuers was terminated. The total number of applications for registration of classes of securities on exchanges filed during the 1961 fiscal year was 271. The following table shows the number of annual, semiannual, and current reports filed during the fiscal year by issuers having securities listed and registered on national securities exchanges. The table also shows the number of such reports filed under section 15 (d) of the Securities Exchange Act of 1934 by issuers obligated to file reports by reason of having publicly offered securities effectively registered under the Securities Act of 1933. The securities of such issuers are traded generally in the over-the-counter markets. As of June 30, 1961, there were 2,135 such issuers, including 350 that were also registered as investment companies under the Investment Company Act of 1940. Number of annual and other periodic reports filed by issuers under the Securities Exchange Act of 1934 during the fiscal year ended June 30, 1961 MARKET VALUE OF SECURITIES TRADED ON EXCHANGES The market value on December 31, 1960, of all stocks and bonds. admitted to trading on one or more stock exchanges in the United States was approximately $444,738,418,000. 1 Bonds on the New York Stock Exchange included 52 U.S. Government and New York State and City Issues with $79,537,243,000 aggregate market value. The New York Stock Exchange and American Stock Exchange figures were reported by those exchanges. There was no duplication of issues between them. The figures for all other exchanges were for the net number of issues appearing only on such exchanges, excluding the many issues on them which were also traded on one or the other of the New York exchanges. The number and market value of issues as shown excluded those suspended from trading and a few others for which quotations were not available. The number and market value as of December 31, 1960, of preferred and common stocks separately was as follows: 1 Stocks admitted to unlisted trading privileges only or listed on exempted exchanges. The New York Stock Exchange has reported aggregate market values of all stocks thereon monthly since December 31, 1924, when the figure was $27.1 billion. The aggregate market value rose to $89.7 billion in September 1929, and declined to $15.6 billion in July 1932. The number of stocks on this exchange has increased from 1,253 issues of 831 companies on July 1, 1932, to 1,528 issues of 1,143 companies on December 31, 1960. Their aggregate market value at the close of 1960 was nearly 20 times the total at the low point in July |