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The Commission rejected certain evidence proffered by the issuer after the recommended decision of the hearing examiner and exceptions thereto had been filed, which assertedly reflected certain favorable developments. It pointed out that its findings were based on the deficiencies of the offering circular at the time it was filed and that subsequent developments could not remedy prior misstatements and failures to state adverse material facts.

In addition to the misstatements discussed above, the Commission found that there were a number of other misstatements in the offering circular, that the aggregate offering price exceeded $300,000, and that offering circulars were mailed out earlier than permitted. Exempt Offerings Under Regulation B

During the fiscal year ended June 30, 1963, 231 offering sheets and 248 amendments thereto were filed pursuant to Regulation B and were examined by the Oil and Gas Section of the Commission's Division of Corporation Finance. During the 1962 and 1961 fiscal years, 229 and 261 offering sheets, respectively, were filed. The following table indicates the nature and number of Commission orders issued in connection with such filings during the fiscal years 1961–63. The balance of the offering sheets filed became effective without order.

Action taken on offering sheets filed under Regulation B

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Temporary suspension orders (under Rule 340(a)).
Orders terminating proceeding after amendment.
Orders consenting to withdrawal of offering sheet and terminating pro-

Orders permanently suspending the effectiveness of filing of offering

Notice of opportunity for hearing (under Rule 340(b)).
Notice and order for hearing (pursuant to Rule 340(b))
Orders fixing effective date of amendment (no proceeding pending).
Orders consenting to withdrawal of offering sheet (no proceeding pending)..

Total number of orders...

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Exempt Offerings Under Regulation E

Regulation E provides a conditional exemption from registration under the Securities Act of 1933 for securities of small business investment companies which are licensed under the Small Business Investment Act of 1958, or which have received the preliminary approval of the Small Business Administration and have been notified by the Administration that they may submit an application for such a license.

The Regulation, which is similar in many respects to the general exemption provided by Regulation A, requires the filing of a notifica


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tion with the Commission and, except in the case of offerings not in excess of $50,000, the filing and use of an offering circular containing certain specified information.

Regulation E provides for the suspension of the exemption in particular cases if the Commission finds that any of the terms and conditions of the regulation have not been met or complied with.

During the 1963 fiscal year, one notification was filed under Regulation E, covering a proposed offering of $264,000, and became effective. Exempt Offerings Under Regulation F

Regulation F provides an exemption from registration under the Securities Act for assessments levied upon assessable stock and for delinquent assessment sales in amounts not exceeding $300,000 in any one year. It requires the filing of a simple notification giving brief information with respect to the issuer, its management, principal security holders, recent and proposed assessments and other security issues. The Regulation requires a company to send to its stockholders, or otherwise publish, a statement of the purposes for which the proceeds from the assessment are proposed to be used. If the issuer should employ any other sales literature in connection with the assessment, copies of such literature must be filed with the Commission.

During the 1963 fiscal year, 35 notifications were filed under Regulation F, covering assessments of $937,425. Regulation F notifications were filed in three of the nine regional offices of the Commission: Denver, San Francisco and Seattle. Underwriters were not employed in any of the Regulation F assessments.

Regulation F provides for the suspension of an exemption thereunder, as in Regulation A, where the Regulation provides no exemption or where the offering is not made in accordance with the terms and conditions of the Regulation or in accordance with prescribed disclosure standards.

One Regulation F filing was temporarily suspended in the fiscal year 1963. No hearing was requested and none was ordered by the Commission, with the result that the suspension order became permanent on the 30th day after its entry.




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 national securities associations and 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 transactions on the organized exchanges and in the over-the-counter markets.


Registration and Exemption of Exchanges

As of June 30, 1963, 14 stock exchanges were registered under the Exchange Act as national securities exchanges:

American Stock Exchange

New York Stock Exchange Boston Stock Exchange

Pacific Coast Stock Exchange Chicago Board of Trade

Philadelphia-Baltimore Washington

Stock Exchange Cincinnati Stock Exchange

Pittsburgh Stock Exchange Detroit Stock Exchange

Salt Lake Stock Exchange Midwest Stock Exchange

San Francisco Mining Exchange National Stock Exchange

Spokane Stock Exchange Four exchanges were exempted from registration by the Commission pursuant to Section 5 of the Act: Colorado Springs Stock Exchange Richmond Stock Exchange Honolulu Stock Exchange

Wheeling Stock Exchange

Disciplinary Action

Each national securities exchange reports to the Commission disciplinary actions taken against any member, member firm, or person connected therewith, for violation of any rule of the exchange, of the Securities Exchange Act, or of any rule or regulation thereunder. During the year 9 exchanges reported 75 cases of such disciplinary actions, including imposition of fines ranging from $50 to $5,000 in 34 cases, with total fines aggregating $58,350; the suspension from membership of 4 member firms and 15 individuals, 2 of whom also had their specialist registration revoked; the expulsion of 3 individual members and 1 allied member; the revocation of the registration of 1 member as an odd-lot and round-lot dealer; and the censure of a number of individuals and firms. Various other sanctions were imposed against registered representatives and other employees of member firms.

REGISTRATION OF SECURITIES ON EXCHANGES Unless a security is registered under the Exchange Act or is exempt from such registration it is unlawful for a member of a national se curities exchange or a broker or dealer to effect any transaction in the security on an exchange. In general, the Act exempts from registration obligations issued or guaranteed by a state or the Federal Gorernment 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 er. empt 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.

Pursuant to Section 12 of the Exchange Act, 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. Information must be furnished regarding the issuer's business and capital structure, the terms of its securities, the persons who manage or control its affairs, the remuneration paid to its officers and directors, and the allotment of options, bonuses and profit-sharing plans, and financial statements certified by independent accountants must be filed as part of the application.

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, semi-annual 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 applications filed on Form 10. Semi-annual reports required to be furnished on Form 9-K are devoted chiefly to furnishing mid-year 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, 1963, a total of 2,417 issuers had 4,048 classes of securities listed and registered on national securities exchanges, of which 2,835 were classified as stocks and 1,213 as bonds. Of these totals, 1,359 issuers had 1,578 stock issues and 1,135 bond issues listed and registered on the New York Stock Exchange. Thus, 56 percent of the issuers, 56 percent of the stock issues and 94 percent of the bond issues were on the New York Stock Exchange.

During the 1963 fiscal year, a total of 195 applications for registration of classes of securities on exchanges was filed. Securities were listed and registered for the first time by 115 issuers; the registration of all securities of 103 issuers was terminated.

The following table shows the number of reports filed during the fiscal year pursuant to Section 13 of the Exchange Act and those filed under Section 15(d) of the Act by issuers obligated to file reports by reason of having publicly offered securities effectively registered under the Securities Act of 1933. As of June 30, 1963, there were 2,827 such issuers, including 297 that were also registered as investment companies under the Investment Company Act of 1940. The table also includes the number of annual reports, quarterly reports and reports to stockholders filed by issuers subject to the reporting requirements of Section 30 of the Investment Company Act.

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