year periods were $455,764,000 for the first 6 months and $366,572,000 for the last 6 months of 1959, $176,345,000 and $248,343,000 for the respective periods in 1960, $559,924,000 and $366,590,000 for 1961, and $365,915,000 for the first 6 months of 1962. The $559,924,000 total for the 6 months ending June 30, 1961 is the largest on record. Manipulation MANIPULATION AND STABILIZATION The Exchange Act describes and prohibits certain forms of manipulative activity in any security registered on a national securities exchange. The prohibited activities include wash sales and matched. orders effected for the purpose of creating a false or misleading appearance of trading activity in or with respect to the market for any such security; a series of transactions intended to raise or depress the price of such security or to create actual or apparent active trading for the purpose of inducing purchases or sales of such security by others; circulation by a broker, dealer, seller, or buyer, or by a person who receives consideration from a broker, dealer, seller or buyer, of information concerning market operations conducted for a rise or a decline in the price of such security; and the making of any false and misleading statement of material information by a broker, dealer, seller, or buyer regarding such security for the purpose of inducing purchases or sales. The Act also empowers the Commission to adopt rules and regulations to define and prohibit the use of these and other forms of manipulative activity in any security registered on an exchange or traded over the counter. The Commission's market surveillance staff in its Division of Trading and Exchanges in Washington and in its New York Regional Office and other field offices observes the tickertape quotations of securities listed on the New York Stock Exchange and on the American Stock Exchange, the sales and quotation sheets of the various regional exchanges, and the bid and asked prices published by the National Quotation Bureau for about 6,000 unlisted securities to observe any unusual and unexplained price variations or market activity. The financial news ticker, leading newspapers, and various financial publications and statistical services are also closely followed. When unusual and unexplained market activity in a security is observed, all known information regarding the security is examined and a decision made as to the necessity for an investigation. Most investigations are not made public so that no unfair reflection will be cast on any persons or securities and the trading markets will not be upset. These investigations, which are conducted by the Commission's regional offices, take two forms. A preliminary investigation or "quiz" is conducted to rapidly discover evidence of unlawful activity. If it appears that more intensive investigation is necessary, a formal order of investigation, which carries with it the right to issue subpoenas, is issued by the Commission. If violations by a broker-dealer are discovered, the Commission may institute administrative proceedings to determine whether or not to revoke his registration or suspend or expel him from membership in the National Association of Securities Dealers, Inc., or from a national securities exchange. The Commission may also seek an injunction against any person violating the Exchange Act and it may refer information obtained in its investigation to the Department of Justice recommending that persons violating the Act be criminally prosecuted. In some cases, where state action seems likely to bring quick results in preventing fraud or where Federal jurisdiction may be doubtful, the information obtained may be referred to state agencies for state injunctive action or criminal prosecution. The following table shows the number of quizzes and formal investigations pending at the beginning of fiscal 1962, the number initiated in fiscal 1962, the number closed or completed during the same period, and the number pending at the end of the fiscal year: When securities are to be distributed to the public, their markets are watched very closely to make sure that the price is not unlawfully raised prior to or during the offering period. Registered offerings numbering 1,815, having a value of over $19 billion, and 1,065 offerings exempt under Section 3(b) of the Securities Act, having a value of about $237 million, were so observed during the fiscal year. Other offerings numbering 141, such as secondary distributions and distributions of securities under special plans filed by the exchanges, having a total value of $382 million, were also kept under surveillance. Stabilization Stabilization involves open-market purchases of securities to prevent or retard a decline in the market price in order to facilitate a distribution. It is permitted by the Exchange Act subject to the restrictions provided by the Commission's Rules 10b-6, 7, and 8. These rules are designed to confine stabilizing activity to that necessary for the above purpose, to require proper disclosure and to prevent unlawful manipulation. During 1962 stabilizing was effected in connection with stock offerings totaling 65,028,432 shares having an aggregate public offering price of $1,536,800,426 and bond offerings having a total offering price of $153,991,500. In these offerings, stabilizing transactions resulted in the purchase of 1,803,713 shares of stock at a cost of $46,092,610 and bonds at a cost of $2,069,243. In connection with the stabilizing transactions, 10,241 stabilizing reports showing purchases and sales of securities effected by persons conducting the distribution were received and examined during the fiscal year. INSIDERS' SECURITY HOLDINGS AND TRANSACTIONS Section 16 of the Act is designed to prevent the unfair use of information by directors, officers and principal stockholders by giving publicity to their security holdings and transactions and by removing the profit incentive in short-term trading by them in securities of their company. Such persons by virtue of their position may have knowledge of the company's condition and prospects which is unavailable to the general public and may be able to use such information to their personal advantage in transactions in the company's securities. Provisions similar to those contained in Section 16 of the Act are also contained in Section 17 of the Public Utility Holding Company Act of 1935 and Section 30 of the Investment Company Act of 1940. Ownership Reports Section 16(a) of the Securities Exchange Act requires every person who is a direct or indirect beneficial owner of more than 10 percent of any class of equity securities (other than exempted securities) which is registered on a national securities exchange, or who 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 the filing of 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. Ownership reports are available for public inspection at the Commission's office in Washington and those filed under Section 16(a) of the Securities Exchange Act may also be inspected at the appropriate exchange. 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. Subscriptions to this publication exceed 16,000. During the fiscal year, 42,983 ownership reports were filed, as compared with 40,869 reports filed during the 1961 fiscal year. The number of reports filed has more than doubled during the past 10 years-21,061 reports having been filed during the 1952 fiscal year. Recovery of Short-Swing Trading Profits by 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 6 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 provides, among other things, 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 limita tions, require the management to include in its proxy material any appropriate proposal which such security holder desires to submit to a vote 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 1962 fiscal year, 2,259 proxy statements in definitive form were filed under the Commission's Regulation 14 for the solicitation of proxies of security holders; 2,253 of these were filed by management and 6 by nonmanagement groups or individual stockholders. These 2,259 solicitations related to 2,135 companies, some 124 of which had more than 1 solicitation during the year, generally for a special meeting not involving the election of directors. There were 2,063 solicitations of proxies for the election of directors, 183 for special meetings not involving the election of directors, and 13 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 1962 fiscal year of their proxies, consents and authorizations with respect to the following types of matters: Mergers, consolidations, acquisitions of businesses, purchases and sales of property, and dissolutions of companies‒‒‒‒ 139 Authorizations of new or additional securities, modifications of existing securities, and recapitalization plans (other than mergers, consolidations, etc.)‒‒‒‒ 346 Employee pension and retirement plans (including amendments to existing plans)-- 44 Bonus, profit-sharing plans and deferred compensation arrangements (in- 41 273 934 Miscellaneous amendments to charter and bylaws, and miscellaneous other matters (excluding those involved in the preceding matters) – 453 |