resident if he resides in any place not subject to the jurisdiction of the United States.

Rule 15b-8. Statement of Financial Condition to be Filed With Application for Registration as a Broker or Dealer.

(a) Every broker or dealer who files an application for registration on Form BD shall file with such application, in duplicate original, a statement of financial condition in such detail as will disclose the nature and amount of assets and liabilities and the net worth of such broker or dealer (securities of such broker or dealer or in which such broker or dealer has an interest shall be listed in a separate schedule and valued at the market) as of a date within 30 days of the date on which such statement is filed. Attached to such statement shall be an oath or affirmation that such statement is true and correct to the best knowledge and belief of the person making such oath or affirmation. The oath or affirmation shall be made before a person duly authorized to administer such oath or affirmation. If the broker or dealer is a sole proprietorship, the oath or affirmation shall be made by the proprietor; if a partnership, by a general partner; if a corporation, by a duly authorized officer.

(b) The schedule of securities furnished as a part of such statement of financial condition shall be deemed confidential if bound separately from the balance of such statement, except that it shall be available for official use by any official or employee of the United States or any state, by national securities exchanges and national securities associations of which the person filing such statement is a member, and by any other person to whom the Commission authorizes disclosure of such information as being in the public interest. Nothing contained in this paragraph shall be deemed to be in derogation of the rules of any national securities association or national securities exchange which give to customers of a member, broker or dealer the right, upon request to such member, broker or dealer, to obtain information relative to his financial condition.

(c) The statement of financial condition required by this rule shall constitute a "document supplemental" to such application for registration within the meaning of section 15 (b) of the Act.

Rule 15b-9. Proceedings under Sections 15 (b). 15A (1) (2) and 19 (a) (3) of the Act. (a) Where the Commission denies or revoke the registration of a broker or dealer pursuan to section 15 (b) of the Act or suspends or expe a member of a national securities association national securities exchange pursuant to section 15A (7) (2) or section 19 (a) (3) of the A the Commission may determine and announce for purposes of section 15A (b) (4) of the Art whether any person associated with the member. broker or dealer was a cause of the imposition d such sanction; such determination may be made whether or not the member, broker or dealer s mits the violation or consents to the imposition of the sanction. In such proceedings the Commission may also make such findings with respec to violation by associates of the member, broke or dealer, as may be relevant to the question of causation for purposes of section 15A (b) (4) ☛ to the issues under sections 15 (b), 15A (7) 2 or 19 (a) (3).

(b) In proceedings under sections 15 (b), 154 (7) (2) or 19 (a) (3) of the Act, the Commissi will give appropriate notice and opportunity hearing to the member, broker or dealer concerned and to any person associated with him whose in terests may be affected by the proceedings. Th member, broker or dealer will be named in the caption of the proceeding and shall be deems a party of record. An associated person who ms! be aggrieved will not ordinarily be named in th caption of the proceeding but shall be entitled " participate as a party. If he participates erally in the proceeding or files a notice of appe ance, he shall be deemed a party of record will be given notices of intermediate developmen in the proceeding. In any event he may info himself of such developments by attendance at the hearings or examination of the record (whethe the proceedings be public or private) or by s rangement with a party of record, so that he a determine whether he desires to be heard st time. Rule XVII of the Rules of Practice, tr than paragraph (a) thereof, shall not applyi proceedings under this rule.

(c) The terms "associated person" and "pess associated" as used in this rule shall mean a pers associated with a member, broker or dealer in s of the capacities specified in sections 15 (b) s 15A (b) (4) of the Act.

or for both such customer and some other person, either the name of the person from whom the security was purchased or to whom it was sold for such customer and the date and time when such transaction took place or the fact that such information will be furnished upon the request of such customer, and the source and amount of any commission or other remuneration received or to be received by him in connection with the transaction. Rule 15c1-5. Disclosure of Control.

The term "manipulative, deceptive, or other fraudulent device or contrivance," as used in section 15 (c) (1) of the Act, is hereby defined to include any act of any broker or dealer controlled by, controlling, or under common control with, the issuer of any security, designed to effect with or for the account of a customer any transaction in, or to induce the purchase or sale by such customer of, such security unless such broker or dealer, before entering into any contract with or for such customer for the purchase or sale of such security, discloses to such customer the existence of such control, and unless such disclosure, if not made in writing, is supplemented by the giving or sending of written disclosure at or before the completion of the transaction.

Rule 15c1-6. Disclosure of Interest in Distributions.

The term "manipulative, deceptive, or other fraudulent device or contrivance," as used in section 15 (c) (1) of the Act, is hereby defined to include any act of any broker who is acting for a customer or for both such customer and some other person, or of any dealer who receives or has promise of receiving a fee from a customer for advising such customer with respect to securities, designed to effect with or for the account of such customer any transaction in, or to induce the purchase or sale by such customer of, any security in the primary or secondary distribution of which such broker or dealer is participating or is otherwise financially interested unless such broker or dealer at or before the completion of each such transaction, gives or sends to such customer written notification of the existence of such participation or interest.

Rule 15c1-7. Discretionary Accounts.

(a) The term "manipulative, deceptive or other fraudulent device or contrivance," as used in sec

tion 15 (c) (1) of the Act, is hereby defined u include any act of any broker or dealer desig tc effect with or for any customer's account in spect to which such broker or dealer or his age or employee is vested with any discretionary por any transactions of purchase or sale which are e cessive in size or frequency in view of the financi resources and character of such account.

(b) The term "manipulative, deceptive, or other fraudulent device or contrivance," as used in se tion 15 (c) (1) of the Act, is hereby defined: include any act of any broker or dealer desig to effect with or for any customer's account in spect to which such broker or dealer or his age or employee is vested with any discretionary pos any transaction of purchase or sale unless imme diately after effecting such transaction such bro or dealer makes a record of such transaction whi record includes the name of such customer, name, amount, and price of the security, and the date and time when such transaction took place. Rule 15c1-8. Sales at the Market.

The term "manipulative, deceptive, or othe fraudulent device or contrivance," as used in se tion (15) (c) (1) of the Act, is hereby defined t include any representation made to a customer a broker or dealer who is participating or other wise financially interested in the primary or ondary distribution of any security which is r admitted to trading on a national securities change that such security is being offered to 59 customer "at the market" or at a price related: the market price unless such broker or dea knows or has reasonable grounds to believe the a market for such security exists other than th made, created, or controlled by him, or by any pe son for whom he is acting or with whom he is sociated in such distribution, or by any perso controlled by, controlling or under common ** trol with him.

Rule 15c1-9. Use of Pro Forma Balance Sheets

The term "manipulative, deceptive, or oce fraudulent device or contrivance," as used in se tion 15 (c) (1) of the Act, is hereby defined include the use of financial statements purport to give effect to the receipt and application of part of the proceeds from the sale or exchange securities, unless the assumptions upon which es such financial statement is based are clearly forth as part of the caption to each such stateme

n type at least as large as that used generally in he body of the statement.

Rule 15c2-1. Hypothecation of Customers' Securities.

(a) General provisions.-The term "frauduent, deceptive, or manipulative act or practice," s used in section 15 (c) (2) of the Act, is hereby lefined to include the direct or indirect hypotheation by a broker or dealer, or his arranging for ›r permitting, directly, or indirectly, the continued ypothecation of any securities carried for the ccount of any customer under circumstances= (1) that will permit the commingling of securiies carried for the account of any such customer with securities carried for the account of any ther customer, without first obtaining the written onsent of each such customer to such hypothecaion;

(2) that will permit such securities to be comningled with securities carried for the account of any person other than a bona fide customer of uch broker or dealer under a lien for a loan made o such broker or dealer; or

(3) that will permit securities carried for the ccount of customers to be hypothecated, or subected to any lien or liens or claim or claims of the ›ledgee or pledgees, for a sum which exceeds the ggregate indebtednes of all customers in respect f securities carried for their accounts; except that his clause shall not be deemed to be violated by eason of an excess arising on any day through he reduction of the aggregate indebtedness of istomers on such day, provided that funds or curities in an amount sufficient to eliminate such xcess are paid or placed in transfer to pledgee or the purpose of reducing the sum of the liens r claims to which securities carried for the acount of customers are subject as promptly as racticable after such reduction occurs, but before e lapse of one-half hour after the commenceent of banking hours on the next banking day It the place where the largest principal amount f loans of such broker or dealer are payable and, any event, before such broker or dealer on such ay has obtained or increased any bank loan colteralized by securities carried for the account f customers.

= (b) Definitions. For the purposes of this ule

(1) the term "customer" shall not be deemed to include any general or special partner or any director or officer of such broker or dealer, or any participant, as such, in any joint, group or syndicate account with such broker or dealer or with any partner, officer, or director thereof;

(2) the term "securities carried for the account of any customer" shall be deemed to mean:

(i) securities received by or on behalf of such broker or dealer for the account of any customer;

(ii) securities sold and appropriated by such broker or dealer to a customer, except that if such securities were subject to a lien when appropriated to a customer they shall not be deemed to be "securities carried for the account of any customer" pending their release from such lien as promptly as practicable;

(iii) securities sold, but not appropriated, by such broker or dealer to a customer who has made any payment therefor, to the extent that such broker or dealer owns and has received delivery of securities of like kind, except that if such securities were subject to a lien when such payment was made they shall not be deemed to be "securities carried for the account of any customer" pending their release from such lien as promptly as practicable;

(3) "aggregate indebtedness" shall not be deemed to be reduced by reason of uncollected items. In computing aggregate indebtedness, related guaranteed and guarantor accounts shall be treated as a single account and considered on a consolidated basis, and balances in accounts carrying both long and short positions shall be adjusted by treating the market value of the securities required to cover such short positions as though such market value were a debit; and

(4) in computing the sum of the liens or claims to which securities carried for the account of customers of a broker or dealer are subject, any rehypothecation of such securities by another broker or dealer who is subject to this rule or to Rule 8c-1 shall be disregarded.

(c) Exemption for cash accounts.-The provisions of paragraph (a) (1) hereof shall not apply to any hypothecation of securities carried for the account of a customer in a special cash account within the meaning of section 4 (c) of Regulation T of the Board of Governors of the Federal Reserve System, provided that at or be

fore the completion of the transaction of purchase of such securities for, or of sale of such securities to, such customer, written notice is given or sent to such customer disclosing that such securities are or may be hypothecated under circumstances which will permit the commingling thereof with securities carried for the account of other customers. The term "the completion of the transaction" shall have the meaning given to such term by Rule 15c1-1 (b).

(d) Exemption for clearing liens.-The provisions of paragraphs (a) (2), (a) (3), and (ƒ) hereof shall not apply to any lien or claim of the clearing corporation, or similar department or association, of a national securities exchange, for a loan made and to be repaid on the same calendar day, which is incidental to the clearing of transactions in securities or loans through such corporation, department or association: Provided, however, That for the purpose of paragraph (a) (3) hereof, "aggregate indebtedness of all customers in respect of securities carried for their accounts" shall not include indebtedness in respect of any securities subject to any lien or claim exempted by this paragraph.

(e) Exemption for certain liens on securities of noncustomers.-The provisions of paragraph (a) (2) hereof shall not be deemed to prevent such broker or dealer from permitting securities not carried for the account of a customer to be subjected (i) to a lien for a loan made against securities carried for the account of customers, or (ii) to a lien for a loan made and to be repaid on the same calendar day. For the purpose of this exemption, a loan shall be deemed to be "made against securities carried for the account of customers" if only securities carried for the account of customers are used to obtain or to increase such loan or as substitutes for other securities carried for the account of customers.

(f) Notice and certification requirements.No person subject to this rule shall hypothecate any security carried for the account of a customer unless, at or prior to the time of each such hypothecation, he gives written notice to the pledgee that the security pledged is carried for the account of a customer and that such hypothecation does not contravene any provision of this rule, except that in the case of an omnibus account the broker

or dealer for whom such account is carried m furnish a signed statement to the person carry such account that all securities carried therein such broker or dealer will be securities carried f the account of his customers and that the hypetis cation thereof by such broker or dealer will contravene any provision of this rule. Ther visions of this clause shall not apply to any pothecation of securities under any lien or of a pledgee securing a loan made and to be rej on the same calendar day.

Rule 15c2-2. Prohibition of Trading Dur Suspension of Trading on a National S curities Exchange.

The term "fraudulent, deceptive, or manip tive act or practice," as used in section 15 (c) of the Act, is hereby defined to include any any broker or dealer designed to effect with er the account of a customer any transaction in induce the purchase or sale by such custome any security during the period between (a) 17 lic announcement by the Commission that it: suspended trading in such security on a nat securities exchange pursuant to section 19 (s) of the Act in order to prevent fraudulent, de tive, or manipulative acts or practices and (b) expiration or lifting of such suspension.

Rule 15c2-3. Prohibiting Trading in Germ. Securities Unless Validated.

The term "fraudulent, deceptive, or mani tive act or practice," as used in section 15 t of the Act, is hereby defined to include any s any broker or dealer designed to effect art action in, or to induce or attempt to indas purchase or sale of, any security required validated under any applicable validation the Federal Republic of Germany unless security has been duly validated, and (b) such security is a dollar bond, there is atta document of the Validation Board for Dollar Bonds certifying to the validation security, or (2) if such security is an inters pon detached from an unvalidated dollar b document of the Validation Board for G Dollar Bonds certifying to the validation ef coupon is delivered with such coupon.