enumerates registrant's profits and indicates variances from prevailing market prices; and Exhibits 1, 2, 3, 4, and 5A, B and C, which are photo copies of confirmation slips mailed out and used by registrant in connection with the transactions with five of the customers, as shown in Schedule B.

Registrant also consented to the entry of an order, revoking his registration as an over-the-counter broker and dealer, and expelling him from the National Association of Securities Dealers, Inc.

From these schedules in the record, it appears, and we find that registrant has effected approximately 28 transactions with his customers at prices which ranged from 16 to 25 percent in excess of the indicated market price for said securities-and that the spread, in dollars, in said transactions ranged from $60 to $1,312.50, above the indicated market price for said securities.

From the exhibits referred to, it appears and we find:

1. That on April 29, 1937, registrant confirmed the sale to Riley Reams, a customer, of 50 shares of United Light and Railways 6.36% preferred at 100-for a $5,000 total, and these securities were obtained on May 3, 1937, by registrant, from Hickey, Doyle and Co. at 791⁄4 net or $3,962.50. The National Quotation Bureau Eastern sheets showed, on April 28, 1937, an offer at 80 by one broker and, on April 30, 1937, an offer at 80 by one broker.

(2) That on February 16, 1938, registrant confirmed that he had "Bought For" Riley Reams 160 shares of United Printers and Pub. Conv. Pfd. at 20 for $3,200, charging no commission, and, on February 15, 1938, (the day before) these shares were purchased from Doyle O'Connor and Co. at 16 or a total purchase price of $2,560. Registrant obtained a secret profit of $640 on this transaction.

(3) That on July 1, 1937, registrant confirmed that he "Bought For" Mrs. Josephine E. Dutcher 200 shares of Hearst Consolidated Publications, Inc., 7% preferred stock at 25 for a total of $5,000. On the same day he purchased these shares from Doyle O'Connor and Co. at 20% or $4,075. Registrant obtained a secret profit of $925 on this transaction.

We conclude, therefore, that registrant willfully violated Section 17 (a) of the Securities Act of 1933, and Section 15 (c) (1) of the Securities Exchange Act of 1934 and Rules X-15C-1-2 (a) and (b) and X-15C-1-4 (2) of the rules and regulations thereunder; that the public interest requires revocation of his registration; and that it is necessary and appropriate in the public interest and for the protection of investors and to carry out the purposes of Section 15A of the Securities Exchange Act and that he be expelled from the National Association of Securities Dealers, Inc.

Accordingly, it is ordered, pursuant to Section 15 (b) and 15A (1) (2) of the Securities Exchange Act of 1934,

(1) That the registration of G. P. Lyle, doing business as G. P. Lyle Company, as a broker and dealer be, and it hereby is, revoked. (2) That G. P. Lyle, doing business as G. P. Lyle Company, be, and he hereby is, expelled from the National Association of Securities Dealers, Inc.

By the Commission: (Chairman Purcell and Commissioners Healy, Pike, Burke, and O'Brien).

11 S. E. C.

[No. 1564]

IN THE MATTER OF

SAYRE & FISHER BRICK COMPANY, Debtor

Filed May 28, 1942

SUPPLEMENTAL REPORT OF THE COMMISSION ON PROPOSED AMENDED PLAN OF REORGANIZATION

On September 10, 1941, the Commission filed its advisory report on a plan of reorganization of the debtor, Sayre & Fisher Brick Company, jointly proposed by two bondholers' committees, and on an amendment thereto proposed by an individual bondholder. In that report we concluded that the plan as amended was fair, but that its feasibility was contingent upon (1) the obtaining of a commitment for a proposed loan necessary to maintain working capital requirements, and the terms of the loan; and (2) culmination of pending negotiations with the borough of Sayreville for settlement of a real estate tax arrears, and the terms of the settlement.

The special master recommended approval of the plan subject to the qualifications as to feasibility pointed out in the Commission's report. Thereafter, due primarily to the national emergency and priority restrictions affecting building construction, the debtor's earnings experienced a sharp decline. On May 8, 1942, the two bondholders' committees filed amendments to the plan, designed to meet the contingencies as to feasibility, as well as the change in the company's immediate prospects. The amendments have been referred to the Commission for supplemental advisory report.

In our opinion the amended plan is fair and, with the qualifications noted below, feasible.

THE AMENDMENTS

The amended plan in effect constitutes a new plan. The amendments may be summarized as follows:

(1) Instead of the issuance of 10 shares of new $10 preferred stock and 20 shares of new $10 common stock for each $1,000 principal of outstanding first mortgage bonds, as provided in the original plan, there will be issued 30 shares of new $10 common stock. Bondholders

11 S. E. C.-C. R.-54

will thus receive a total of 80,529 shares of new common stock having a total par value of $805,290.1

(2) The provision in the original plan for borrowing of new money up to $50,000 has been deleted. Instead, it is provided that to the extent cash shall be insufficient, after setting aside a sufficient amount for working capital, to pay the amounts hereafter to be allowed by the court as compensation for services in the reorganization proceeding,' such allowance shall be paid in 5% unsecured notes maturing 6 years from consummation of the plan. The principal of the notes is to be amortized by annual payments of $5,000 plus 50 percent of net earnings before depreciation, and no dividend is to be paid on the common stock so long as the notes remain outstanding.

(3) The tax arrears due to the borough of Sayreville, amounting to approximately $111,500 inclusive of the accrued interest, are to be adjusted as follows: At or prior to consummation of the plan approximately 40 acres of nonessential land will be conveyed to the borough against a credit of $25,000, and $27,500 will be paid in cash;" during the first year after reorganization, $6,000 will be paid in four quarterly installments; and during the following 4 years the balance of approximately $53,000 with interest at 6% per annum on the unpaid balances will be paid in 16 quarterly installments. It is contemplated that the reorganized company will sell real estate not needed for operations as rapidly as practicable and apply the net proceeds on account of these funded tax arrears.

(4) After the unsecured notes and tax arrears have been fully paid, any proceeds from the sales of nonessential real estate are to be placed in a special fund, and when such fund equals or exceeds $20,000 it is to be disbursed as a dividend on the common stock. This provision is to become inoperative after a total of $270,490 or $22 per share has been paid out as dividends.

(5) The amended plan contains additional provisions, to be incorporated in the new charter, for protection of the OKUL

No other changes have been made regarding distribution of new ingly, as formerly provided, creditors entitled to priority (except the wrat ville) will be paid in cash in full; unsecured creditors will regne af Da shares of the new common stock, on the basis of one share for aty. amount of claim; and holders of the debtor's outstanding pre

will receive no participation.

Except compensation allowed to the special master, which is WA ISHL lowances as reimbursement for proper costs and expenses in the yvtom to be paid in cash.

'The amended plan does not define net income for this purpose Fue un

It shall be determined without deduction for depreciation but ce seen a payment of $5,000 on the notes plus current installments of the Car

that in computing net income deduction will also be made for a Of the $27,500 to be paid in cash on consumination, 3

recent sales of other nonessential realty and $15,000 will be a bea

stockholders. These include a provision for cumulative voting, prohibition against mortgage of any of the company's property (other than by purchase money mortgage) or sale of the business as an entirety except upon the affirmative approval of two-thirds of the voting power of the common stock outstanding, and prohibition against any amendment of the charter which would alter the rights of the common stock without affirmative vote of 75 percent of the outstanding common stock.

FAIRNESS AND FEASIBILITY OF THE AMENDED PLAN

The amendments do not affect the conclusion in our original report that the plan is fair. The amended plan, like the previous plan, properly makes no provision for stockholder participation, as there is clearly no equity for either the preferred stock or the common stock of the debtor. Under the amended plan unsecured creditors are to receive the same number of shares of common stock (590) while the bondholders, instead of receiving 26,843 shares of preferred stock and 53,686 shares of common stock, are now to receive 80,529 shares of common stock only. In our opinion, this modification is not so material as to render unfair the relative participations accorded the bondholders and unsecured creditors.

With respect to feasibility, the substitution of an all common stock capitalization for preferred and common is in accord with the recommendation in our original report. The need for conservative financing has become even more apparent since that report was issued, in view of the drastic curtailment of the 'debtor's business resulting from wartime restrictions. The problem of feasibility now presented is the narrow and immediate one of the adequacy of working capital and the ability of the company to meet the proposed fixed charges on the notes and funded taxes during the emergency period. On the assumption that no more than $50,000 of notes will be issued the fixed charges called for by the amended plan will amount to about $13,500 during the first year and will average about $21,000 over the next 6 years.

The net working capital of the company as of April 30, 1942, was approximately $227,000. At the hearings on the original plan the trustee testified that in his opinion the reorganized company will require between $200,000 and $225,000 for working capital, an estimate

See Advisory Report re Sayre & Fisher Brick Company, Debtor, 10 S. E. C. 64 (1941), at pp. 73-74.

• Ibid., p. 74.

7 The feasibility of the plan is necessarily contingent upon the amount of new notes to be issued, which in turn is contingent upon the total compensation to be allowed by the court for services in the proceeding. Without attempting at this time to estimate what the total of allowances will be, we assume, for purposes of this report, that it will not exceed $50,000, the maximum of new debt contemplated by the original plan.