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the motion, and the Commission appealed. While the appeal was pending, the Chapter XI proceeding was dismissed and the bankruptcy proceeding was reinstated, thus rendering the appeal moot.


Substantial sums could be lost by public investors who fail to exchange outstanding securities of corporations which have been reorganized in recent years for new securities or cash distributable pursuant to the plans for reorganization of such corporations. To facilitate these exchanges, the Commission has published a list of securities of 125 corporations which have been reorganized, informing the public as to the cut-off or "bar date” after which the right to exchange such securities for cash or new securities will be lost.29

29 “Securities Required To Be Exchanged For Cash Or New Securities,” Corporate Reorganization Releases Nos. 163, 164, 172 (1962).



The Trust Indenture Act of 1939 requires that bonds, notes, debentures and similar securities publicly offered for sale, except as specifically exempted by the Act, be issued under an indenture which meets the requirements of the Act and has been duly qualified with the Commission. The Act requires that indentures to be qualified include specified provisions which provide means by which the rights of holders of securities issued under such indentures may be protected and enforced. These provisions relate to designated standards of eligibility and qualification of the corporate trustee to provide reasonable financial responsibility and to minimize conflicting interests. The Act outlaws exculpatory provisions formerly used to eliminate all liability of the indenture trustee and imposes on the trustee, after default, the duty to use the same degree of care and skill "in the exercise of the rights and powers invested in it by the indenture” as a prudent man would use in the conduct of his own affairs.

The provisions of the Trust Indenture Act are closely integrated with the requirements of the Securities Act. Registration pursuant to the Securities Act of securities to be issued under a trust indenture subject to the Trust Indenture Act is not permitted to become effective unless the indenture conforms to the requirements of the latter Act, and necessary information as to the trustee and the indenture must be contained in the registration statement. In the case of securities issued in exchange for other securities of the same issuer and ties issued under a plan approved by a court or other proper authority which, although exempted from the registration requirements of the Securities Act, are not exempted from the requirements of the Trust Indenture Act, the obligor must file an application for the qualification of the indenture, including a statement of the required information concerning the eligibility and qualification of the trustee.


Indentures filed under the Trust Indenture Act of 1939 during the fiscal year

ended June 30, 1962

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OF 1940

Companies primarily engaged in the business of investing, reinvesting, owning, holding, or trading in securities are subject to registration and regulation under the Investment Company Act of 1940. This Act, among other things, prohibits such companies from changing the nature of their business or their investment policies without the approval of their stockholders, requires disclosure of their finances and investment policies, regulates the means of custody of the companies' assets, requires management contracts to be submitted to security holders for their approval, prohibits underwriters, investment bankers, and brokers from constituting more than a minority of the directors of such companies, and prohibits transactions between such companies and their officers, directors, and affiliates except with the approval of the Commission. The Act also regulates the issuance of senior securities and requires face-amount certificate companies to maintain reserves adequate to meet maturity payments upon their certificates.

The securities of investment companies which are offered to the public are also required to be registered under the Securities Act of 1933 and the companies must file periodic reports. Such companies are also subject to the Commission's proxy rules and closed-end companies are subject to "insider” trading rules. The Division of Corporation Finance and the Division of Corporate Regulation both assist the Commission in the administration of the statute, the former being concerned with the disclosure provisions and the latter with regulatory provisions.


As of June 30, 1962, there were 727 investment companies registered under the Act, including 78 small business investment companies, and the estimated aggregate market value of their assets on that date was approximately $27.3 billion. These figures represent an overall increase of 64 registered companies, but a decrease of roughly $1.7 billion in the market value of assets compared with the corresponding totals at June 30, 1961. The total registered companies by classification are as follows:

1 The decrease in asset values as of June 30, 1962 was due primarily to the May 1962 market decline.

Management open-end----
Management closed-end..
Unit investment trust-
Face-amount certificate--

340 228 149 10



During the fiscal year, 97 new companies, including 37 small business investment companies, registered under the Act while the registrations of 33 companies were terminated. The breakdown of these companies by classification is as follows:

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The following table illustrates the striking growth of investment company assets during the past 22 years, particularly in recent years:

Number of investment companies registered under the Investment Company Act

and the estimated aggregate assets at the end of each fiscal year, 1941 through 1962

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1 The increase in aggregate assets reflects the sale of new securities as well as capital appreciation. By way of illustration, the Investment Company Institute reported that during the fiscal year ended June 30, 1962, its open-end investment company members, numbering 172 and representing the bulk of the industry had net sales of their securities amounting to $2.1 billion.

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