The proposed form, which emerged from some 2 years of drafting and redrafting by the staff, with the benefit of discussions and correspondence with committees representing the investment company industry and the accounting profession, is designed to provide better disclosure to the investing public and to channel more effectively the Commission's inspection program. The form, either as published for comment or as it may be modified prior to adoption, should also serve to focus attention of the investment companies and their management more sharply on the prohibitions and requirements of the Investment Company Act and thus provide a significant measure of self-regulation.

Registration of New Security Offerings

The 1964 fiscal year saw a slight increase over the previous year in the number of registration statements filed, but a substantial increase in the dollar amount involved. A total of 1,192 statements was filed during the year for securities with an aggregate offering price of $18.6 billion, as compared to 1,159 statements and $14.7 billion the preceding year.

In the course of the fiscal year, the Commission published an extensive guide containing numerous policies and practices of its Division of Corporation Finance with respect to the disclosures required by the Securities Act of 1933 and the rules thereunder in connection with the filing of registration statements under the Act. It is expected that the publication of these policies and practices will not only be of assistance to registrants and their counsel and accountants in the preparation of registration statements, but also that it will relieve the staff of the Commission of the necessity for commenting on these matters in respect of such statements.

The Commission and its staff are constantly striving to reduce the time required to process registration statements, without, of course, diminishing the thoroughness of the examination procedure. During the year, there was a further significant reduction. Thus, with respect to registration statements which became effective during the year (excluding certain investment company filings), the median number of days elapsing from the date of filing to the date of the staff's letter of comment was 16, as compared with 27 the previous year; and the median time from filing to effective date was 36 days as compared to 52 days the year before. A total of 1,121 statements in the amount of

Securities Act Release No. 4666 (February 7, 1964).

$16.9 billion became effective during the year. The chart below portrays the dollar volume and number of registrations with respect to securities which became registered during the fiscal years 1935 through 1964.

LEGISLATIVE ACTIVITIES

During the fiscal year 1964, Congressional hearings were completed on the Commission's proposals for amendment of the Federal securities laws. Hearings had previously been held in the United States Senate before a Subcommittee of the Committee on Banking and Currency, immediately prior to the close of the fiscal year 1963, and during those hearings the broad purposes of the legislation were strongly endorsed by all segments of the securities industry. S. 1642, the Senate bill embodying the Commission's proposals, was passed by the Senate on July 30, 1963 and referred to the House of Representatives. A Subcommittee of the Committee on Interstate and Foreign Commerce, House of Representatives, held hearings for a total of 13 days on S. 1642 and two companion bills, H.R. 6789 and H.R. 6793.1 After the close of the fiscal year, S. 1642 was passed by the House with certain amendments agreed to by the Senate, and was enacted as Public Law 88-467 on August 20, 1964. With some exceptions, the legislation as enacted was closely similar to the Commission's original proposals.

The Commission's legislative proposals were based upon the Report of the Special Study of Securities Markets 2 and had two major purposes. The first was to improve investor protections in the over-thecounter markets, primarily by extending to investors in a significant portion of the securities traded in those markets the fundamental protections which had been afforded generally only to investors in securities listed on a national securities exchange. Under the legislation as proposed by the Commission, the registration, periodic reporting, proxy solicitation and insider reporting and trading provisions of the Securities Exchange Act of 1934 were to be extended to overthe-counter companies having more than 750 shareholders (500 share

1 These identical bills had been introduced on June 4, 1963. S. 1642 was introduced (by request) by Senator A. Willis Robertson, Chairman of the Senate Committee on Banking and Currency; H.R. 6789 was introduced by Representative Oren Harris, Chairman of the Committee on Interstate and Foreign Commerce, House of Representatives; H.R. 6793 was introduced by Representative Harley O. Staggers, Chairman of the Subcommittee on Commerce and Finance of the Committee on Interstate and Foreign Commerce, House of Representatives.

* For a summary of the Report of the Special Study of Securities Markets, see the Commission's 29th Annual Report, pp. 1-3.

holders at a subsequent date) and more than $1,000,000 in assets. Companies meeting these standards would be required to file a registration statement containing material information regarding their businesses and to keep such information current by periodic reports; security holders whose proxies are solicited would be furnished with a proxy statement containing adequate and accurate information; and corporate "insiders" would be required to report their transactions in the securities of such companies and would be liable for short-swing trading profits in the securities of their company. Certain classes of companies were exempted from these requirements. The Commission's proposals in this area were embodied in Public Law 88-467, but were modified by the Congress to exempt also insurance companies which meet certain specified requirements.

The second purpose of the Commission's proposals was to strengthen the qualification standards for entrance into the securities business and to make more effective the disciplinary controls of the Commission and the rules of industry self-regulatory organizations over securities brokers and dealers and persons associated with them. Under the Commission's proposals registered securities associations were to be required to adopt rules, subject to Commission approval, establishing standards of training, experience and competence for members and their employees and to establish capital requirements for members. In addition, all over-the-counter broker-dealers would have been required to be members of a registered securities association in order to bring them within the self-regulatory scheme. Public Law 88-467 did not embody the latter proposal, but provides instead that if a brokerdealer is not a member of a registered securities association, the broker-dealer and all natural persons associated with the brokerdealer must meet such specified and appropriate standards with respect to training, experience and such other qualifications as the Commission finds necessary or desirable. Public Law 88-467 includes the Commission's other proposals in this area, including modification of the statutory scheme for disciplining violators so as to permit action directly against an individual; provision for the imposition of intermediate sanctions against a broker-dealer, such as temporary suspension or censure; and clarification of the authority of a national securities association to act directly against offending individuals.

In connection with Congressional consideration of the Commission's legislative proposals, members of the Commission testified before a Subcommittee of the House Committee on Interstate and Foreign Commerce on November 19 and 20, 1963 and on February 18 and 19, 1964. In addition Chairman Cary testified on March 5, 1964 before the House Committee on the District of Columbia in favor of H.R.

9419, a bill to provide for the regulation of the sale of securities in the District of Columbia and the licensing of persons engaged in that activity. On June 23, 1964 Chairman Cary also testified before the Subcommittee on Census and Government Statistics of the House Committee on Post Office and Civil Service in connection with the Subcommittee's inquiry into the reporting and paper work requirements of the various Governmental agencies. During the fiscal year the Commission analyzed a total of 37 bills and legislative proposals submitted by Congressional Committees or the Bureau of the Budget.

The bill was enacted into law on August 30, 1964, as Public Law 88-503.