carrying out its enforcement responsibilities are the national securities exchanges, brokerage firms, state and Canadian securities authorities, better business bureaus, the National Association of Securities Dealers, Inc. and various law enforcement agencies. It is the Commission's general policy to conduct its investigations on a confidential basis. Such a policy is necessary to effective law enforcement and to protect persons against whom unfounded or unconfirmed charges might be made. The Commission investigates many complaints where no violation is ultimately found to have occurred. To conduct such investigations publicly would ordinarily result in hardship or embarrassment to many interested persons and might affect the market for the securities in question, resulting in injury to investors with no countervailing public benefits. Moreover, members of the public would have a tendency to be reluctant to furnish information concerning violations if they thought their personal affairs would be made public. Another advantage of confidential investigations is that persons under suspicion of having violated the law are not made aware that their activities are under surveillance, since such awareness might have the effect of frustrating or obstructing the investigation. Accordingly, the Commission does not generally divulge the result of a nonpublic investigation unless it is made a matter of public record in proceedings brought before the Commission or in the courts. When it appears that a serious violation of the Federal securities laws has occurred or is occurring, a case is opened and a full investigation is conducted. Under certain circumstances it becomes necessary for the Commission to issue a formal order of investigation which appoints members of its staff as officers to issue subpoenas, to take testimony under oath and to require the production of documents. Usually this step is taken when the subjects of the investigation and others who may be involved are uncooperative and it becomes necessary to use the subpoena power to complete the investigation of the case. During the past year 213 formal orders were issued in connection with investigations handled through the Division of Trading and Markets. In addition, there were 11 formal orders issued upon the recommendation of the Division of Corporate Regulation and 27 upon the recommendation of the Division of Corporation Finance. The latter Division conducts certain investigative work in connection with the processing of filings under the Securities Act of 1933 and the Securities Exchange Act of 1934. When an investigation has been completed and enforcement action appears appropriate, the Commission may proceed in one of several ways. It may refer the case to the Department of Justice for criminal prosecution. The Commission may also, when appropriate, authorize the institution of civil proceedings for injunctive relief to halt further violations of the Federal securities laws. In such event a complaint is filed in the appropriate United States District Court and the case is presented by a member of the Commission's staff. Finally, the Commission may institute administrative proceedings when its investigation indicates that a registration statement or report filed with it is false or misleading or omits required information, or that a broker-dealer or investment adviser registered with it is violating the Federal securities laws. The following table reflects in summarized form the investigative activities of the Commission during fiscal 1963: Investigations of possible violations of the Acts administered by the Commission ENFORCEMENT PROBLEMS WITH RESPECT TO FOREIGN SECURITIES Progress was again made during fiscal 1963 in reducing the unlawful offer and sale of Canadian securities in the United States. The continuing cooperation of responsible Canadian officials and segments of the Canadian securities industry has resulted in even fewer enforcement problems with respect to such activities than last year. This decrease, however, has been offset by an increasing number of fraudulent promotions from other sources outside the United States. During the past fiscal year United States residents have been subjected to massive mail campaigns from such diverse areas as Panama, Ireland, Switzerland and the Bahamas. In its efforts to deal with these problems, the Commission has employed new and simplified procedures for obtaining issuance of foreign postal fraud orders. The success of this program is due in large measure to the continuing cooperation of the Post Office Department. The Commission is still hampered by jurisdictional problems, including the status of the Supplementary Extradition Convention with Canada,40 The Commission continues to maintain its Canadian Restricted List, which is a list of Canadian companies whose securities the Commission 40 See 26th Annual Report pp. 202-203 for a description of some of these problems. 717-943-6410 has reason to believe are being, or recently have been, distributed in the United States in violation of the registration requirements of the Securities Act of 1933. The list and supplements thereto are issued to and published by the press, and copies are mailed to all registered broker-dealers and are available to the public. As a practical matter, most United States broker-dealers refuse to execute transactions in such securities. The Court of Appeals for the District of Columbia upheld the Commission's right to publish the Canadian Restricted List in Kukatush Mining Corporation v. Securities and Exchange Commission.“1 In its opinion, the court pointed out that the list does not charge anyone with any wrongdoing, and that the Commission expressly disavows any comment on the investment merits of the securities listed. The court said that listing simply states "a fact that the securities have not been registered-which the American public has a right to know." Eleven supplements to the list were issued in fiscal 1963. As a result of more effective enforcement activities here and in Canada, it was necessary to add only 7 names to the list during the year, compared to 9 names added in fiscal 1962, 47 in fiscal 1961, and 82 in fiscal 1960. Twelve names were deleted during the year, leaving 253 names on the list as of June 30, 1963. The current list, as of September 30, 1963, follows: CANADIAN RESTRICTED LIST Abbican Mines, Ltd. Alaska Highway Beryllium Venture A. L. Johnson Grubstake Alouette Mines, Ltd. Amador Highland Valley Coppers, Ambassador Mining Developments, Americanadian Mining & Exploration Anthony Gas and Oil Explorations, Anuwon Uranium Mines, Ltd. Livestock Growers of Ontario 41 309 F.2d 647 (1962). Atlantic Industrial Development Co., Autofab, Ltd. Ava Gold Mining Co., Ltd. Basic Lead and Zinc Mines, Ltd. Bengal Development Corp., Ltd. Blue Springs Explorations Canadian Alumina Corp., Ltd. Canol Metal Mines, Ltd. Cartier Quebec Explorations, Ltd. CANADIAN RESTRICTED LIST-Continued Central and Eastern Canada Mines (1958), Ltd. Dolsan Mines, Ltd. Dominion Fluoridators, Ltd. Dominion Granite and Marble, Ltd. Eagle Plains Developments, Ltd. Export Nickel Corp. of Canada, Ltd. Font Petroleums, Ltd. Foreign Exploration Corp., Ltd. Genex Mines, Ltd. Grandwick Mines, Ltd. Guardian Explorations, Ltd. Haitian Copper Mining Corp., Ltd. Hoover Mining and Exploration, Ltd. Marian Lake Mines, Ltd. Marpoint Gas & Oil Corp., Ltd. Merrican International Mines, Ltd. Milldale Minerals, Ltd. Minden Land Enterprises, Ltd. Missile Metals and Mining Corp., Ltd. Monpre Mining Co., Ltd. New Campbell Island Mines, Ltd. Norseman Nickel Corp., Ltd. North American Asbestos Co., Ltd. North Tech Explorations, Ltd. CANADIAN RESTRICTED LIST-Continued Nortoba Mines, Ltd. Nu-Gord Mines, Ltd. Nu-Reality Oils, Ltd. Nu-World Uranium Mines, Ltd. Olympus Mines, Ltd. Outlook Explorations, Ltd. Palliser Petroleums, Ltd. Pantan Mines, Ltd. Paramount Petroleum & Minerals Corp., Ltd. Peace River Petroleums, Ltd. Plexterre Mining Corp., Ltd. Rambler Exploration Co., Ltd. Red River Mining & Exploration, Ltd. Regal Mining & Development, Ltd. Resolute Oil and Gas Co., Ltd. Revere Mining Corp., Ltd. Riobec Mines, Ltd. Roberval Mining Corp. Rockroft Explorations, Ltd. Rothsay Mines, Ltd. Roxton Mining & Development Co., Ltd. St. Anthony Mines, Ltd. St. Lawrence Industrial Development Corp. Ste. Sophie Development Corp. St. Stephen Nickel Mines, Ltd. Sastex Oil and Gas, Ltd. Savoy Copper Mines, Ltd. Seaboard Industries, Ltd. Senvil Mines, Ltd. Sheba Mines, Ltd. Sico Mining Corp., Ltd. Sinclair Prospecting Syndicate Space Age Mines, Ltd. Stackpool Mining Co., Ltd. Strathcona Mines, Ltd. Sudbay Beryllium Mines, Ltd. Tamicon Iron Mines, Ltd. Temanda Mines, Ltd. Territory Mining Co., Ltd. Trans Nation Minerals, Ltd. Trans-Oceanic Hotels Corp., Ltd. Trenton Petroleum & Minerals Corp., Ltd. Tri-Cor Mining Co., Ltd. Triform Explorations, Ltd. Triform Explorations (B.C.), Ltd. Trio Mining Exploration, Ltd. Trojan Consolidated Mines, Ltd. Tumac Mining & Development Co., Ltd. Turbenn Minerals, Ltd. Turzone Explorations, Ltd. Tyndal Explorations, Ltd. Upper Ungava Mining Corp., Ltd. Val Jon Explorations, Ltd. Valray Explorations, Ltd. Venus Chibougamau Mines, Ltd. Ver-Million Gold Placer Mining, Ltd. Vico Explorations, Ltd. Vimy Explorations, Ltd. Viscount Oil and Gas, Ltd. Wakefield Uranium Mines, Ltd. Webbwood Exploration Co., Ltd. Western Allenbee Oil and Gas Co., Ltd. Westwind Explorations, Ltd. Windy Hill Mining Corp. Wingdam & Lightning Creek Mining Co., Ltd. Yukon Prospectors' Syndicate SECTION OF SECURITIES VIOLATIONS A Section of Securities Violations is maintained by the Commission as a part of its enforcement program to provide a further means of detecting and preventing fraud in securities transactions. The Section maintains files providing a clearinghouse for other enforcement |