Issues registered for offering over an extended period amounted to $8.2 billion, as against $6.5 billion in fiscal year 1963, classified as follows: Of the $6.5 billion expected from the immediate cash sale of corporate securities for the account of issuer in 1964, 86 percent was designated for new money purposes, including plant, equipment and working capital, 5 percent for retirement of securities, and 9 percent for all other purposes including purchases of securities. REGISTRATION STATEMENTS FILED During the 1964 fiscal year, 1,192 registration statements were filed for offerings of securities aggregating $18.6 billion, as compared with 1,159 registration statements filed during the 1963 fiscal year for offerings amounting to $14.7 billion. This represents an increase of 2.8 percent in the number of statements filed and 26 percent in the dollar amount involved. Of the 1,192 registration statements filed in the 1964 fiscal year, 322, or 27 percent, were filed by companies that had not previously filed registration statements under the Securities Act of 1933. Comparable figures for the 1963 and 1962 fiscal years were 357, or 31 percent, and 1,377, or 60 percent, respectively. From the effective date of the Securities Act of 1933 to June 30, 1964, a cumulative total of 24,046 registration statements has been filed under the Act by 11,185 different issuers, covering proposed offerings of securities aggregating over $258 billion. Particulars regarding the disposition of all registration statements filed under the Act to June 30, 1964, are summarized in the following table: Number and disposition of registration statements filed Includes 153 registration statements covering proposed offerings totaling $4,811,384,381 filed by investment companies under Section 24(e) of the Investment Company Act of 1940, which permits registration by amendment to a previously effective registration statement. Excludes 11 registration statements that became effective during the year but were subsequently withdrawn; these 11 statements are counted in the 129 statements withdrawn during the year. Excludes 2 registration statements that became effective prior to July 1, 1963, which were placed under stop order during the year, and 17 registration statements effective prior to July 1, 1963, which were withdrawn during the year; these statements are reflected under stop orders and withdrawn, respectively. The reasons given by registrants for requesting withdrawal of the 129 registration statements that were withdrawn during the 1964 fiscal year are shown in the following table: Reason for registrant's withdrawal request Percent of total Number of 1. Withdrawal requested after receipt of the staff's letter of comment.. 3. Change in financing plans.. 4. Change in market conditions. 5. Financing obtained elsewhere.. 3 6. Registrant was unable to negotiate acceptable agreement with underwriter.. Total... STOP ORDER PROCEEDINGS Section 8(d) provides that, if it appears to the Commission at any time that a registration statement contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading, the Commission may institute proceedings to determine whether a stop order suspending the effectiveness of the registration statement should be issued. Where such an order is issued, the offering cannot lawfully be made, or continued if it has already begun, until the registration statement has been amended to cure the deficiences and the Commission has lifted the stop order. The following table shows the number of proceedings under Section 8(d) of the Act pending at the beginning of the 1964 fiscal year, the number initiated during the year, the number terminated and the number pending at the end of the year. Proceedings pending at beginning of fiscal year_. Proceedings terminated during fiscal year__ 10 0 4 Proceedings pending at end of fiscal year_ Three of the proceedings which were terminated during the fiscal year through the issuance of stop orders are described below: Advanced Research Associates, Inc.-In this proceeding, the Commission held that the company's prospectus was highly misleading and denied a request for withdrawal of the registration statement. The Commission found that despite certain caveats, the description of the issuer's business in the prospectus created a misleading impression of a company on the verge of major expansion and successful operation in the advanced electronic field in aviation, when in fact it had sustained substantial losses in its short history and future prospects were at best doubtful. The Commission pointed out, in this connection, that statements may be so distorted that no disclosure or caveat is sufficient to cure their misleading nature. The Commission also found a number of other deficiencies, including a misleading description of one of the company's products, a "Composite Transistor;" the failure to disclose that prior sales of the company's securities, claimed to have been made in reliance on certain exemptions from the registration provisions of the Securities Act, were in fact not exempt and violated those provisions, thereby giving rise to contingent liabilities; and a false statement that the certifying accountant was independent. The Commission's conclusion that the accountant was not independent with respect to the issuer was based on the fact that there had been a number of transactions and associations between him and two of the Securities Act Release No. 4630 (August 16, 1963). 757-903-65 issuer's principals or companies in which they had a controlling or substantial interest. Atlantic Research Corporation. The registrant, a Virginia corporation incorporated in January 1949, maintains its principal offices at Alexandria, Virginia, and has operations at various locations throughout the country. It is engaged primarily in research, development and manufacture in the field of solid propellant rockets. A large portion of its sales is generated pursuant to contracts and subcontracts for the United States Government. On July 31, 1962, registrant filed a registration statement covering a proposed offering of 179,000 shares of common stock for the account of certain stockholders. Information developed by the Commission's staff in an investigation led to a suspension of trading in registrant's stock on October 10, 1962, because of serious questions as to the adequacy and accuracy of information available to the public concerning the financial condition of registrant. More specifically, unconsolidated financial statements contained in registrant's annual report to stockholders for the year ended December 31, 1961, reported profits on a parent only basis in the amount of $1,473,192. Registrant filed reports with the Commission covering the same period which showed a loss in the amount of $1,066,015 on a consolidated basis. Following the Commission's institution of stop order proceedings on November 7, 1962, registrant entered into a stipulation in which it waived a hearing and post-hearing procedures, and agreed that the registration statement was inadequate and inaccurate in certain respects and that the Commission might enter a stop order. The Commission held that the registration statement was "marked by numerous serious and substantial deficiencies" which "reflected a studied pattern of corporate camouflage and concealment and of artificial market activities, all designed to present to investors and others a fictitious picture of registrant's activities and finances," and it issued a stop order. One of the principal deficiencies related to the failure to disclose registrant's relationships with certain "satellite" corporations. According to the opinion, registrant directed and completely dominated the management, policies and activities of these companies, which had no business activities of their own and were operated together with registrant as one economic unit. The failure to disclose these relationships resulted in the concealment of material aspects of registrant's financial affairs and business operations. Moreover, the Commission held, these satellites were in fact subsidiaries of registrant, and their financial statements should have been consolidated with those of registrant. • Securities Act Release No. 4657 (December 6, 1963). The Commission further found that the registration statement failed to disclose the true facts concerning the relationships between members of the management of registrant and certain landlord and other companies, and the interests of such persons in transactions to which registrant or its subsidiaries were parties. Disclosure in these respects would have raised further questions concerning the reliability of the financial statements in the registration statement. In addition, the registration statement failed to disclose the commitment of substantial amounts of registrant's capital to the acquisition of its own stock in the open market at a critical period in the market, for the purpose and with the effect of manipulating the market price and protecting the pledge by registrant's chief executive of his stock. South Bay Industries, Inc."-Registrant was incorporated in Delaware on August 3, 1959, for the purpose of acquiring 100 percent of the stock of two affiliated California corporations which were engaged principally in manufacturing ground handling equipment for aircraft and guided missiles. On December 11, 1959, it filed a registration statement covering a proposed offering of 210,000 shares of Class A common stock at $5 per share. The registration statement became effective on March 23, 1960, and the offering was completed shortly thereafter. On the basis of a stipulation of facts, the Commission found that the registration statement was materially deficient in failing to disclose current adverse financial information subsequent to the date of the most recent financial statements in the registration statement. A trial balance prepared prior to the effective date indicated a substantial loss for one of the subsidiaries for its latest fiscal year. Under the circumstances, the Commission stated, registrant should at least have deferred the effective date of the registration statement until the imminent final audit figures were available. The Commission further found that even aside from the trial balance, registrant's president, the underwriter, and the certifying accountant were on notice prior to the effective date that the figures in the registration statement were out of date and that the registration statement gave no indication of registrant's subsequent adverse financial condition. The Commission also found, among a number of other deficiencies, that the accountant who certified certain financial statements in the registration statement was not in fact independent with respect to registrant since, among other things, he and registrant's president were business associates in another, closely held company, and his conduct in permitting his certification to appear in the registration statement 5 Securities Act Release No. 4702 (June 11, 1964). |