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quired by Rule 256, or the statement required by Rule 257, that the issuer or other person for whose account the securities are offered shall file a report containing specified information and that a final report shall be made upon completion or termination of the offering.

During the fiscal year 1966, 864 Reports of Sales were filed reporting aggregate sales of $48,632,121. Suspension of Exemption

Regulation A provides for the suspension of an exemption thereunder where, in general, the exemption is sought for securities for which the regulation provides no exemption or where the offering is not made in accordance with the terms and conditions of the regulation or with prescribed disclosure standards. Following the issuance of a temporary suspension order by the Commission, the respondent may request a hearing to determine whether the temporary suspension should be vacated or made permanent. If no hearing is requested within 30 days after the entry of the temporary suspension order and none is ordered by the Commission on its own motion, the temporary suspension order becomes permanent.

During the 1966 fiscal year, temporary suspension orders were issued in 6 cases, which, added to the 7 cases pending at the beginning of the fiscal year, resulted in a total of 13 cases for disposition. In 11 of these cases, the temporary suspension became permanent during the fiscal year: in 5 cases after hearing, in 5 by withdrawal of the request for hearing, and in 1 by lapse of time. Thus, there were 2 cases pending at the end of the fiscal year.

A decision of particular interest rendered by the Commission during the year in a Regulation A suspension proceeding was Del Consolidated Industries, Inc. In that case the Commission found that the offering circular filed by the issuer, which had been organized to engage in oil, gas and mining operations, contained materially misleading statements.

The introductory statement of the circular represented that the issuer had an option to acquire certain properties, including “working interests in four proven oil leases” in New Mexico, “consisting of four wells which produced approximately 15,000 barrels of oil in 1961," and that the properties were more fully described in the section "Business and Property.” The introductory statement did not disclose that the options covered substantially less than the entire working interests in the leases. That fact was disclosed only in the “Business and Property" section, six pages later in the circular, following statistics regarding the production applicable to the entire working interests.

• Securities Act Release No. 4795 (July 26, 1965).

The Commission found that the misleading implication in the introductory statement that the option covered the entire working interests was not cured by the subsequent description. The Commission pointed out that even though an offering circular contains all of the essential facts, it still may not satisfy the disclosure requirements if the facts are not presented so clearly that they will be plainly evident to the ordinary investor. The Commission stated that the burden should not be placed on the investor to examine the offering circular for qualifying language to counteract the misleading nature of a statement in the introductory material which does its damage in its initial effect on the prospective investor.

The issuer requested that the temporary suspension order be vacated, asserting that it had abandoned plans for the proposed offering and that it had not been guilty of bad faith. However, the Commission, affirming the recommendation of the hearing examiner, concluded that the suspension should be made permanent, since it was satisfied that the issuer did not make "a diligent and careful effort” to make an accurate and adequate filing. Exempt Offerings Under Regulation B

During the fiscal year ended June 30, 1966, 235 offering sheets and 302 amendments thereto were filed pursuant to Regulation B and were examined by the Oil and Gas Section of the Commission's Division of Corporation Finance. During the 1965 and 1964 fiscal years, 173 and 242 offering sheets, respectively, were filed. The following table indicates the nature and number of Commission orders issued in connection with such filings during the fiscal years 1964–66. The balance of the offering sheets filed became effective without order.

Action taken on offering sheets filed under Regulation B

Fiscal years

1966

1965

1964

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Temporary suspension orders (under Rule 340(a)).
Orders terminating proceeding after amendment.
Orders consenting to withdrawal of offering sheet and terminating pro-

ceeding
Orders fixing effective date of amendment (no proceeding pending).
Orders consenting to withdrawal of offering sheet (no proceeding pending)..

Total number of orders...

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Reports of sales.—The Commission requires persons offering securities under Regulation B to file reports of the actual sales made pursuant to that regulation. These reports aid the Commission in determining whether violations of law have occurred in the marketing of such securities. The following table shows the number of sales reports filed under Regulation B during the past 3 fiscal years and the aggregate dollar amount of sales during each of such fiscal years.

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Exempt Offerings Under Regulation E

Regulation E provides a conditional exemption from registration under the Securities Act for securities of small business investment companies which are licensed under the Small Business Investment Act of 1958 or which have received the preliminary approval of the Small Business Administration and have been notified by the Administration that they may submit an application for such a license. As has been noted, the terms and conditions of the exemption are substantially similiar to those provided by Regulation A. One notification was filed under Regulation E during the 1966 fiscal year for an offering of securities aggregating $100,000, which was pending at the

end of the year.

Exempt Offerings Under Regulation F

Regulation F provides an exemption for assessments levied upon assessable stock and for delinquent assessment sales in amounts not exceeding $300,000 in any one year. It requires the filing of a simple notification giving brief information with respect to the issuer, its management, principal security holders, recent and proposed assessments and other security issues. The regulation requires a company to send to its stockholders, or otherwise publish, a statement of the purposes for which the proceeds of the assessment are proposed to be used. Copies of any other sales literature used in connection with the assessment must be filed. Like Regulation A, Regulation F provides for the suspension of an exemption thereunder where the regulation provides no exemption or where the offering is not made in accordance with the terms and conditions of the regulation or in accordance with prescribed disclosure standards.

During the 1966 fiscal year, 21 notifications were filed under Regulation F, covering assessments of $486,231. These notifications were filed in three of the nine regional offices of the Commission: Denver, San Francisco and Seattle. Underwriters were not employed in any of the Regulation F assessments. No Regulation F exemptions were suspended during the fiscal year.

REVISION OF RULES, REGULATIONS AND FORMS Amendments to Rule 416

During the fiscal year, the Commission published for comment a proposal to amend Rule 416 relating to the coverage by a registration statement of certain securities issued to prevent dilution as a result of stock splits and stock dividends. After consideration of the comments received, the Commission adopted the proposed amendments with certain changes. The former Rule 416 has been designated Rule 416(a), and concerns the coverage of securities offered or issued pursuant to anti-dilution provisions to holders of warrants, options, convertible securities, or similar rights to purchase securities, upon exercise of their rights. Rule 416 (b) broadens the scope of the former rule by extending the coverage of a registration statement to additional securities issued pursuant to a split of a class of securities which includes undistributed securities covered by the statement or pursuant to a dividend declared on and payable in securities of such class, where there are no applicable anti-dilution provisions. The rule also provides that when all the securities of a class which includes undistributed registered securities are combined by a reverse split into a lesser number of shares, the amount of undistributed securities of such class covered by the registration statement shall be proportionately reduced.

Amendment of Rules and Forms Relating to Registration Fees

Part III of this Report discusses the statutory increase in the fees payable for the registration of securities. During the fiscal year the Commission amended Rules 457 and 458 and Forms D-1, D-1A and S-6, all of which refer to the required filing fee, to conform to the statutory changes. At the same time the Commission adopted additional amendments to Rule 457 to clarify the rule and to incorporate certain recurring administrative interpretations concerning the computation of filing fees. The rule sets forth the method of calculating fees in various situations in which the maximum aggregate offering price is based on fluctuating factors, such as market price or underlying asset values, or is otherwise uncertain at the time of filing.

In order to incorporate all provisions relating to the calculation of filing fees into one rule, the calculation provisions contained in Forms S-8 and S-12 were transferred to Rule 457, calculation provisions in Forms D-1, D-1A and S-6 which were duplicated in Rule 457 were

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? Securities Act Release No. 4793 (July 19, 1965). Securities Act Release No. 4806 (October 26, 1965).

Securities Act Release No. 4815 (January 11, 1966); Securities Act Release No. 4833 (May 24, 1966),

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deleted from those Forms, and additional amendments of Rule 457 relating to the calculation of filing fees in connection with the registration of stock pursuant to certain employee stock options were adopted. Withdrawal of Proposed Amendments of Rule 485

During the fiscal year, the Commission, after consideration of the comments received, withdrew proposed amendments of Rule 485.10 That rule prescribes the procedure for obtaining confidential treatment of material contracts. Adoption of Form S-13

The Commission adopted a new Form S-13 for the registration of voting trust certificates, 11 replacing Form F-1. The disclosure requirements correspond to those in the recently revised Form 16, the form for the registration of voting trust certificates pursuant to Section 12 of the Securities Exchange Act of 1934.12

19 See 31st Annual Report, p. 39; Securities Act Release No. 4801 (September 13, 1965).

1 Securities Act Release No. 4821 (March 4, 1966). » See pp. 74–75, infra.

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