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SECURITIES EXCHANGE ACT* OF 1934

BROKER-DEALER REGISTRATION

FAILURE TO REGISTER

Where one partner withdrew from registered broker-dealer firm and remaining partner notified the Commission with respect to such withdrawal and his association with a new partner, but failed to register new partnership by filing the appropriate form for such registration, held, Commission would not, under the circumstances, take any disciplinary action by reason of such violation of Section 15 (a) of the Securities Exchange Act ... Page 634.

FALURE TO FILE FINANCIAL STATEMENTS

Where registered broker-dealer firm did not file annual financial report because its accountants were unable to complete the report on account of the press of year-end business, held, Commission would not, under the circumstances, take any disciplinary action against the registrant merely on the basis of such violation of Section 17(a) of the Securities Exchange Act and Rule X-17A-5 thereunder ... Page 634.

Over-the-counter transactions in non-exempt securities by unregistered dealer primarily engaged in business of trading in exempted securities, held to constitute violation of Section 15(a) of the Securities Exchange Act of 1934 ... Page 126.

FRAUD IN SALE AND PURCHASE OF SECURITIES

Where partner in registered broker and dealer firın by means of misleading omissions respecting his financial condition induced a customer, with whom he was in confidential relationship, to purchase his personal note and where by means of misrepresentation of fact and misleading omissions the partner induced the same customer to become a partner in a successor broker and dealer firm and contribute all her securities to the firm, held, partner willfully violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule X-10B-5 thereunder ... Page 634.

GROUNDS FOR DENIAL--PUBLIC INTEREST

Where, notwithstanding prior willful violations of Securities Exchange Act of 1934 by partner in firm applying for registration as a broker and dealer, Commission is satisfied that under all the circumstances, including applicant undertaking to deal with customers primarily as agent, the likelihood that violations will occur in the future is substantially lessened, held, that the public interest does not require denial of application for registration ... Page 126.

Where prior willful violations of Securities Act of 1933 and Securities Exchange Act of 1934 by person applying for registration as a broker and dealer appear to have been departures from normal conduct of applicant and where other factors in case afford substantial assurance that misconduct is not likely to be repeated, held, it is not in the public interest to deny registration ... Page 858.

GROUNDS FOR REVOCATION

Where registered broker-dealer's transactions on national securities exchange, including purchases from others and wash sales and matched orders in great volume, raised and maintained the prices of securities and where registrant sold said securities at levels artificially attained and where registrant's defense that its sole purpose in effecting wash transactions was to delay payment is rebutted by the evidence which shows a manipulative purpose, held, registrant willfully violated Section 9 (a) (1) and (2) of the Securities Exchange Act of 1934 ... Page 208.

*The term “Act" as used in Part 1 of this Digest refers to the Securities Exchange Act of 1934.

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Where registered broker-dealer failed to file annual reports of financial condition held,
willful violation of Section 17(a) of the Securities Exchange Act and Rule X-17A-5 thereunder
requiring in the public interest that registration be revoked unless, pursuant to offer by
registrant, financial report or notice of withdrawal of registration is filed within designated
period ... Page 227.

Where registrant willfully violated the anti-fraud provisions of the Securities Act of 1933
and the Securities Exchange Act of 1934 by taking secret profits in transactions with a
customer and inducing excessive trading in such customer's account, and willfully violated
Commission rules by failing to disclose certain required information in reports of his
financial condition and to keep required books and records; but where, prior to the insti-
tution of revocation proceedings, registrant ceased to do business and filed a notice of
withdrawal of registration, he', under all the circumstances (including the character of
the violations and the fact that they apparently affected only one customer, and giving due
weight to the hearing examiner's recommendation that no adverse action be taken agains:
registrant), that order permitting the notice of withdrawal to become effective would be
consistent with the public interest and the protection of investors ... Page 323.

Where a registered dealer has been en joined by a State court from engaging in the securi-
ties business as a broker or dealer and has consented to the entry of an order revoking his
registration with this Commission, held, that revocation of registration is in the public
interest ... Page 387.

Where registered broker-dealer accepted monies and securities from customers while
insolvent, commingled and pledges customers' securities without their consent, and without
disclosure to pledgees, and made false and fictitious entries in its books and financial
statements held, willful violation of Section 17(a) of the Securities Act of 1933 and Sections
8(c), 10(b), 15(c/1) and 17(a) of the Securities Exchange Act of 1934 and rules thereunder
requiring in the public interest revocation of registration and expulsion from membership
in national securities association ... Page 449.

Where despite repeated requests of Commission representatives registered broker
failed to file annual financial statements as required by Rule X-17A-5, because he was
unwilling to make disclosure of allegedly confidential data and was advised by counsel
that statement did not have to be filed by him, held respondent willfully violated Section
17 (a) of the Securities Exchange Act of 1934 and Rule X-17A-5 thereunder ... Page 894.

Where registered broker during hearing in revocation proceedings establishing willful
violations of Commission's Rule requiring filing of financial reports seeks to withdraw
his registration, and it appears that for several years prior to the hearings he has not
engaged in business as a broker, held under circumstances presented the public interest
and the protection of investors are adequately served by withdrawal rather than revoca-
tion ... Page 894.

Where registered broker-dealer (1) obtained monies and securities from customers in
connection with transactions of purchase and sale of securities and instead of executing
the transactions promptly, in accordance with trade custom, as it had represented it would,
converted customers' monies and securities to its own use; and (2) failed to keep required
books and records; held, willful violations of Section 17(a) of the Securities Act of 1933, and
Sections 15(cX1) and 17(a) of the Securities Exchange Act of 1934 and rules thereunder,
further held in the public interest to revoke broker-dealer's registration, and notice of
withdrawal from registration filed by the broker-dealer not permitted to become effective ...
Page 30.
LIABILITY FOR BORROWED SECURITIES

Reports under Rule X-17A-5 which failed to show liability for return of securities bor-
rowed by registrant, even though the lenders had in fact agreed to subordinate their claims
to claims of public creditors, held, misleading and not in compliance with the express
requirements of the Rule ... Page 323.
MANIPULATION OF MARKET ON SECURITIES EXCHANGE

Where, without disclosure, registered broker-dealer's sales over the counter were made
at prices geared to prices artificially raised and maintained by its activities on national
securities exchange, held, registrant willfully violated Sections 10 (b) and 15 (cX1) of the
Securities Exchange Act of 1934 and Rules X-10B-3 and X-15C1-2 adopted thereunder ...
Page 208.

VIOLATION OF NET CAPITAL RULE

Where registered broker-dealer permitted its liabilities to exceed its assets, held, willful violation of Section 15 (cX3) of Securities Exchange Act of 1934 and Rule X-15C3-1 thereunder ... Page 634.

WITHDRAWAL FROM REGISTRATION

Where parmer controlling broker-dealer firm had willfully violated the anti-fraud provisions of Securities Act and Securities Exchange Act in transactions of purchase and sale with one customer and where firm applied to withdraw its registration, held, application to withdraw from registration would be permitted to become effective, if firm furnished satisfactory proof that it had made restitution to the customer who had been defrauded and had paid all of its obligations in full but that, if such proof not furnished, public interest requires revocation of registration ... Page 634.

NATIONAL SECURITIES ASSOCIATION

APPROVAL FOR MEMBERSHIP--PUBLIC INTEREST

Where national securities association has applied for approval of admission to membership of broker-dealer firm having partner who had been expelled from national securities exchange for violating rules of such exchange prohibiting conduct inconsistent with just and equitable principles of trade, held, under all the circumstances, including the fact that the firm has been barred from membership for nine years, and giving due weight to the recommendation of the national securities association that such firm should be admitted to membership. that it is in the public interest to approve its admission to such membership ... Page 319.

CONTINUANCE IN MEMBERSHIP

Application of national securities association pursuant to Section 15A(b)(4) of the Securities Exchange Act of 1934 for approval of continuance in membership of broker-dealer while employing individual previously found to be "a cause" of an order of revocation and expulsion approved, upon a showing that such employment was appropriate in the public interest ... Pages 198, 200, 202, 204, 206.

PUBLIC INTEREST--EXPULSION FROM NATIONAL SECURITIES ASSOCIATION

Where registered broker-dealer engaged in a series of transactions on national securities exchange artificially raising and maintaining the prices of securities traded thereon and where without disclosure it sold securities over the counter on the basis of the manipulated exchange prices, held, in the public interest to revoke the firm's registration and to expel it from membership in national securities association ...!

Page 208.

PUBLIC UTILITY HOLDING COMPANY ACT* OF 1935

ACCOUNTING

Proposed accounting entries relating to investment in subsidiary on books of parent and entries relating to certain charges and credits to surplus prior to January 1, 1940, permitted, subject to reservation of jurisdiction to require other and different treatment from that proposed, and accounting entries relating to transfer of portion of depreciation reserve to surplus on books of parent permitted, subject to condition that amounts proposed to be credited to surplus shall be not available for any purpose except pursuant to further order of this Commission ... Page 150.

Declaration by registered holding company to change the method of recording its investments in subsidiaries from "fair value" to "underlying book value” permitted to become effective, there being no basis for adverse findings ... Page 569.

ACQUISITION OF SECURITIES BY REGISTERED HOLDING

COMPANY Application of parent holding company to acquire securities of one subsidiary and certa in securities held by another of its subsidiaries, granted, the Commission finding that such acquisitions, as a temporary step. conform to applicable standards of Section 10, subject to condition that such securities shall be held subject to an outstanding divestment order... Page 150.

Application by registered holding company for approval of its acquisition of additional common stock of subsidiary granted, the Commission finding that the applicable standards of Section 10 of the Act are satisfied ... Page 290.

Application by a public utility company pursuant to Sections 9 and 10 of the Act regarding the acquisition of the securities of three public utility companies and applications by three persons, pursuant to said sections of the Act, to acquire common stock of the acquiring company, granted, subject to certain conditions, the Commission finding that the standards of Section 10 have been met ... Page 861.

Application pursuant to Section 10 of the Act by a registered holding company regarding the acquisition of additional shares of common stock of two of its subsidiary companies, granted, subject to condition that securities thus acquired are held by applicant and its parent subject to provisions of outstanding Sections 11 (b) and (e) orders ... Page 312.

Application by a registered holding company pursuant to Sections 9 and 10 of the Act regarding the acquisition of the securities of a public utility company, granted, subject to certain conditions, the Commission finding that the standards of Section 10 have been met ... Page 451.

Acquisition by registered holding company of additional shares of common stock of its subsidiary pursuant to exercise of its preemptive rights approved, the Commission making no adverse findings under Sections 10 (b) and 10 (C) (1) and finding that the transaction has the tendency required by Section 10 (c) (2) of the Act in view of the proposed distribution by the registered holding company of its shares of stock in said subsidiary to its own stockholders in the immediate future . . . Page 621.

Declaration filed pursuant to Section 12 (c) of the Act by registered holding company respecting acquisition of presently outstanding notes in exchange for new notes, permitted to become effective, the Commission making no adverse findings ... Page 114.

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The term “Act" as used in Part II of this Digest refers to the Public Utility Holding Company Act of 1935.

28 S, E, C,

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