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188uers reporting under section 15(d) as of Dec. 31, 1961 a
* Includes only issuers with stocks for which quotations were available.
* These issuers had stocks with only unlisted trading privileges on exchanges. They also had 31 stocks aggregating $937,440,000 which were only over the counter, and which have been included in the over-thecounter showing of stocks and market values above.
DELISTING OF SECURITIES FROM EXCHANGES
Applications may be made to the Commission by exchanges to strike any securities or by issuers to withdraw their securities from listing and registration on exchanges pursuant to Rule 12d2–1(b) under Section 12(d) of the Exchange Act. During the fiscal year ended June 30, 1962, the Commission granted applications by exchanges and issuers to remove 60 stock issues and 45 bond issues from listing and registration. There were 64 total stock removals, since 4 stocks were each delisted by 2 exchanges. The number of issuers of stock involved was 54. The removals were as follows:
Applications filed by:
New York Stock Exchange--
0 1 0 0 0 0 0 0
64 In accordance with the practice in recent years, nearly all of the delisting applications were filed by exchanges. Only four of the applications were filed by issuers, in each instance for the purpose of reducing multiple expenses by delisting from one exchange stocks which remained listed on other exchanges.
The applications by exchanges were based on factors such as limited distribution, sale of assets, or precarious financial condition. The 45 bond issues were all of foreign origin, including 17 issues of
"iron-curtain" countries suspended from trading in 1941, and 28 small residues of offers in exchange and settlement. The 23 stock delistings by the New York Stock Exchange were in accordance with its delisting criteria established in 1914, and expanded from time to time thereafter. During the year, it obtained complete observance of its policy requiring solicitation of proxies for meetings of stockholders. The eight delistings by the Salt Lake Stock Exchange resulted from its adoption on February 16, 1962, of new requirements for retention of listed status. The American Stock Exchange on April 5, 1962, adopted new delisting rules and criteria with respect to lack of earnings, limited distribution of securities and disposal of principal operating assets. Delisting Proceedings Under Section 19(a)
Section 19 (a) (2) authorizes the Commission to suspend for a period not exceeding 12 months, or to withdraw, the registration of a security on a national securities exchange if, in its opinion, such action is necessary or appropriate for the protection of investors and, after notice and opportunity for hearing, the Commission finds that the issuer of the security has failed to comply with any provision of the Act or the rules and regulations thereunder. The following table indicates the number of such proceedings with which the Commission was concerned during the 1962 fiscal year. Proceedings pending at the beginning of the fiscal year-
3 Proceedings initiated during the fiscal year..
Proceedings terminated during the fiscal year:
By order withdrawing security from registration.-
Proceedings pending at the end of the fiscal year.
2 Section 19(a) (4) authorizes the Commission summarily to suspend trading in any registered security on a national securities exchange for a period not exceeding ten days if, in its opinion, such action is necessary or appropriate for the protection of investors and the public interest so requires. During the 1962 fiscal year the Commission found it necessary and appropriate in four instances to use its authority to suspend summarily trading in securities registered on a national securities exchange. All of these suspensions remained in effect at the end of the fiscal year. In addition, two of the three suspensions which were in effect at the beginning of the fiscal year remained in effect at the end of the fiscal year.
One of the two cases in which an order was issued under Section 19(a)(2) during the fiscal year withdrawing securities from registration on a national securities exchange is described below.
Consolidated Development Corporation.—Registrant, a Delaware corporation organized in 1956 under the name of Consolidated Cuban Petroleum Corporation to engage in the operation, development and production of oil and gas in Cuba, registered its common stock on the American Stock Exchange in 1956. It adopted its present name in 1959, after the petroleum ventures had sustained severe financial losses. It then decided to engage in the acquisition and development of real estate in the State of Florida.
Registrant admitted that it had violated Section 13 of the Exchange Act and rules thereunder, in that its application for registration of its common stock on the exchange, its annual reports for the years 1956 through 1959, inclusive, and a number of current reports filed or required to be filed were inaccurate or inadequate. Among other things, the reports failed to set forth that registrant exchanged stock with three corporations in which officers and directors of registrant were promoters, officers, directors, and major stockholders; that it issued stock to certain persons in Cuba for oil leases and services; and that in the years 1956 through 1959, several controlling shareholders and officers disposed of a large amount of stock of registrant, which was not registered under the Securities Act, to residents of and broker-dealer firms in the United States.
Further, registrant admitted that its reports were materially inaccurate in representing that all sales and exchanges of 2,147,457 shares of outstanding stock were made in Cuba and did not require registration under the Securities Act as not involving public offerings in the United States, and in representing that it had 1,086 stockholders when in fact it had only about 766. Registrant also omitted to disclose that in November 1959, a new Cuban law was published cancelling all applications for petroleum exploration and exploitation concessions, permitting continuation of explorations in progress where certain minimum drilling requirements were met and providing for payment to Cuba of a 60 percent royalty on petroleum produced, and the effect of such law on registrant's operations.
On the basis of these and other deficiencies the Commission issued an order withdrawing the registrant's common stock from registration on the exchange, which had suspended trading in the stock in December 1959.1
UNLISTED TRADING PRIVILEGES ON EXCHANGES
Stocks with only unlisted trading privileges on exchanges continued to decline in number, falling from 212 on June 30, 1961, to 187 on June 30, 1962. The American Stock Exchange accounted for 12
1 Securities Exchange Act Release No. 6672 (November 24, 1961).
of the 25 removals. This Exchange now applies to its unlisted issues the same requirements for retention as it applies to listed issues, pursuant to rules and criteria established April 5, 1962. The Pacific Coast Stock Exchange also accounted for 12 removals, leaving only 5 stocks remaining in the unlisted category on that exchange. The distribution of unlisted stocks and share volumes among the exchanges is shown in Appendix Table 8 of this report.
The reported volume of trading on the exchanges in stocks with only unlisted trading privileges, for the calendar year 1961, was about 45,427,000 shares or about 2.1 percent of the total share volume of all the exchanges. About 83.2 percent of this volume was on the American Stock Exchange, 15.3 percent was on the Pacific Coast Stock Exchange, and three other exchanges contributed the remaining 1.5 percent. The share volume in these stocks was about 6.9 percent of the total share volume on the American Stock Exchange and about 10.8 percent of that on the Pacific Coast Stock Exchange in the calendar year 1961.
Unlisted trading privileges on some exchanges in stocks listed and registered on other exchanges numbered 1,532 on June 30, 1962. The volume of unlisted trading in these stocks, for the calendar year 1961, was reported at about 57,900,000 shares. About one-fifth of this volume was on the American Stock Exchange in stocks listed on regional exchanges, and about four-fifths was on regional exchanges in stocks listed on the New York or American Stock Exchanges. While the 57,900,000 shares amounted to only about 2.7 percent of the total share volume on all the exchanges, they constituted substantial portions of the shares traded on the leading regional exchanges, reaching about 78 percent on Boston, 72 percent on Philadelphia-Baltimore, 68 percent on Cincinnati, 53 percent on Detroit, 44 percent on Pittsburgh, 30 percent on Midwest, and 17 percent on Pacific Coast Stock Exchange. Applications for Unlisted Trading Privileges
Applications by exchanges for unlisted trading privileges in stocks listed on other exchanges, made pursuant to Rule 12f-1 under Section 12(f) of the Exchange Act, were granted by the Commission during the fiscal year ended June 30, 1962, as follows:
Number Stock exchange:
of stocks Stock exchange Con. Boston
24 Philadelphia-Baltimore Cincinnati
10 Pittsburgh Detroit
24 Spokane Midwest
12 Pacific Coast..
Number of stocks
9 1 1
During the fiscal year, the Commission granted applications by the American Stock Exchange pursuant to Rule 12f-2 under Section 12(f) of the Exchange Act for continuance of unlisted trading, on the ground of substantial equivalence, in the stock of Dominion Tar & Chemical Co., Ltd., after the number of its shares was more than doubled through offers of exchange for other common stocks, and in the stock of Wagner Baking Corporation in substitution for voting trust certificates upon expiration of the voting trust.
BLOCK DISTRIBUTIONS REPORTED BY EXCHANGES
The usual method of distributing blocks of listed securities considered too large for the auction market on the floor of an exchange is to resort to "secondary distributions" over the counter after the close of exchange trading.
In an effort to keep as much as possible of this business on their floors, Special Offering Plans were adopted by leading exchanges commencing in 1942, and the somewhat more flexible Exchange Distribution Plans commencing in 1953. The plans, declared effective by this Commission, include an exemption from the anti-manipulative Rule 106–2, as set forth in paragraph (d) thereof, with respect to payment of compensation in connection with the distribution of securities.
The largest number of Special Offerings was 87 in 1944, with $32,454,000 aggregate value. The number has declined through the years, there being only two in 1961, aggregating $1,503,750.
• Details of these distributions appear in the Commission's monthly Statistical Bulletins. Data for prior years are shown in an appendix table in this Annual Report.
The largest number of Exchange Distributions was 57 in 1954, compared with 33 in 1961. However, the $58,072,418 total in 1961 was considerably larger than in any previous year.
Secondary distributions, as reported since 1942, reached a peak of $926,514,000 during the calendar year 1961. Totals for recent half