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\ First Annual Report

of the

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Securities and Exchange

Commission

Fiscal Year Ended June 30, 1935

UNITED STATES

GOVERNMENT PRINTING OFFICE

WASHINGTON: 1935

For sale by the Superintendent or Documents, Washington, D. C. Price Paper CoYerlOe

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SECURITIES AND EXCHANGE COMMISSION

Office: 1778 Pennsylvanta Avenue NW.

Washington, D. C. .

COMMISSIONERS

JAMES M. LANDIS, Ohairmen

GEORGE C. MATHEWS.

RoBERT E. HEALY.

J. D. Ross.

FRANCIS P. BRASSOR, Secretary,

Address All Communications

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C.

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LETTER OF TRANSl\II'ITAL

SECURITIES AND EXCHANGE CollIMISSION,

Washington, January 3, 1936.

Sm: I have the honor to transmit to you the First Annual Report

of the Securities and Exchange Commission, in compliance with the

provisiQgS of section 23 JbJ_.Qf the Securities Exchange Act of 1934,

approved June 6, 1934.

Respectfully,

JAMES M. LANDIS,

Ohairman.

The PRESIDENT OF THE SENATE,

The SPEAKER OF THE HOUSE OF REPRESENTATIVES,

W lUlhington, D. O.

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CONTENTS

PART I

Page Organization of the COmmission ..:_____________________________ 1

Functions of the divisions__________________________________________ 3

Establishment of zones and regional offices___________________________ 6

Transfer of administration of Securities Act__________________________ 8

Amendment of Securities Act of 1933, as amended____________________ 8

Acknowledgment__________________________________________________ 8

PART II

Advisory assistance______ __ _ __ 9

Registration of exchanges as national securities exchanges______________ 11

Exemption of exchanges from registration as national securities exchanges, 12

Formulation of rules for the regulation of trading on exchanges_________ 13

Detection of excessive trading and manipulative and deceptive practices

on exchanges___________________________________________________ 14-

Formulation of rules for the regulation of pegging, fixing, or stabilizing

operations, both on exchanges and in the over-the-counter marketa.c., , 15

Formulation of rules for the regulation of puts, calls, straddles, and other

options________________________________________________________ 16

Formulation of rules for the regulation of short selling and stop-loss orders; 16

Cooperation with the Federal Reserve Board in the supervision of its

margin regulationa, _ __ _ __ _ 16-

Formulation of rules relating to borrowings and solvency of, and hypothecation of customers' securities by, exchange members, brokers, and dealers .. ___ 17

Supervision and study of matters relating to unlisted trading privileges in

securities on exchanges .____ __ 17

Formulation of rules relating to the registration of unissued warrants and

unissued securities for "when, as, and if issued" trading on exehanges., 18

Regulation of the over-the-counter markets___________________________ 18

Regulation of miscellaneous exchange and other practices_______________ 19-

Registration of securities on exchanges:

Temporary and provisional registration of securities on exchenges.., 20

Permanent registration of securities on exchanges_________________ 21

Statistics of securities registered or exempt from registration on exchanges 24

Reports of officers, directors, and principal stockholders_______________ 24

Withdrawal or striking from listing and registration of seeurlties on a

national securities exchange______________________________________ 25

Registration of securities under the Securities Act of 1933:

Securities Act fOrIDS____________________________ 25

Examination of Securities Act registration statements____________ __ 26

Typical disclosures made as a result of examinations of Securities

Actregistrations____________________________________________ 27

Exemptions from registration requirements, ______________________ 28

Statistics of securities registered under the Securities Act___________ 29

Registrationfees__________________________________________________ 3B

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CONTENTS

Page

Complaints, investigations, hearings, and litigation____________ 30

Formal opinions__________________________________________________ 34

Securities violation records; ________________________________________ 35

Protective committee study .___ _______ _ 35

Public reference room . .____ __ 36

Publications .___________________ 37

Report on the segregation of functions of dealers and brokers, __________ 37

Seal of the Commission_____________________________________________ 38

Personnel________________________________________________________ 38

Fiscal affairs:

Funds transferred and appropriated_____________________________ 38

Expenditures and obligations; ____________ _________ _ 38

Estimated and actual miscellaneous receipts______________________ 39

PART III. ApPENDICES

Appendix I. Rules for the regulation of trading on exchanges as recommended by the Securities and Exchange Commission to national seeurities exchanges for adoption., , ______________________ _____ ____ 40

Appendix II. Rules of practice of the Securities and Exchange Commission,

effective September 13, 1935____ __________________ _____ 45

Appendix III. Guide to forms adopted by the Securities and Exchange

Commission under the Securities Act of 1933, as amended, and the

Sccurities Exchange Act of 1934, compiled to November 5, 1935______ 53

Appendix IV. Securities Act registration statements as to which stop

orders, consent refusal orders, and withdrawal orders were issued

September 1, 1934, to June 30, 1935_______________________________ 67

Appendix V. Statistical tables:

Table 1. Type classification, by months, of new securities included in

registration statements fully effective September 1, 1934, to June

30, 1935 71

Table 2. Group classification, by months, of issuers of new securities

fully effective September 1,1934, to June 30,1935 72,73

Table 3. Reduction of estimated gross proceeds to net proceeds, by

months, of fully effective new securities intended to be offered for

account of issuers September 1, 1934, to June 30, 1935___________ 74

Table 4. Proposed uses of net proceeds, by months, of new securities

registered for account of issuer and fully effective, September 1,

1934, to June 30, 1935_______________________________________ 75

Table 5. Statistics of new securities registered under Securities Act

of 1933 from October 1, 1934, to June 30, 1935 76-83

Table 6. Channels of distribution of new securities registered with the

Securities and Exchange Commission from October 1, 1934, to

June .30, 1935 84,85

Table 7. Type classification, by months, of securities included in

registration statements for reorganization and exchange issues,

fully effective September 1,1934, to June 30,1935______________ 86

Table 8. Value and volume of sales on registered exchanges, by

months, October 1, 1934, to June 30, 1935:

Part 1. Total market value of all sales_______________________ 87

Part 2. Market value of stock sales__________________________ 88

Part 3. Market value of bond sales .:_____ 89

Part 4. Volume-of stock sales . -- .---- ,90'

Part 5. Par value of bond sales _____________________________ 91

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FffiST ANNUAL REPORT OF THE SECURITIES

AND EXCHANGE COMMISSION

WASHINGTON, D. C.

PART I

ORGANIZATION OF THE COMMISSION

The Securities and Exchange Commission was created pursuant

to section 4 of the Securities Exchange Act of 1934, approved by

the President on June 6, 1934.

The act provides that the Commission shall be composed of five

members, to be appointed by the President, by and with the advice

and consent of the Senate. The act further provides that not more

than three of such Commissioners shall be members of the same

political party.

On June 8~, 1934, the President appointed the following named

as Commissioners: Joseph P. Kennedy, of New York, for a term

of 5 years; George C. Mathews, of Wisconsin, for a term of 4 years;

James M. Landis, of Massachusetts, for a term of 3 years; Robert

E. Healy, of Vermont, for a term of 2 years; and Ferdinand Pecora,

of New York, for a term of 1 year.

The appointments of these five Commissioners were confirmed by

the United States Senate on January 16, 1935. Mr. Pecora resigned

from the Commission, effective January 21, 1935, and the appoint.

ment of a successor has not yet been announced.'

The Commissioners held their first meeting on July 2, 1934, all

Commissioners being present, and chose Commissioner Kennedy as

chairman."

The following named are in charge of their respective divisions:

J-9hn J. Burns, General Counsel; Baldwin B. Bane, Director of the

Registration Division; David Saperstein, Director of the Trading

and Exchange Division; Francis P. Brassor, Secretary of the Commission and head of the Administrative Division; Joseph R. Sheehan, Director of Employment Research; Paul P. Gourrich, Technical Adviser; Kemper Simpson, Economic Adviser; William O.

Douglas, Supervisor of Study on Protective and Reorganization

1Mr. J. D. ROlfS,of the State of Washington, was appointed Ccmmlsaloner on Oct. 5,

1985. for the term ending June 5, 1940. .

Commissioner Kennedy was reelected chairman of tile Commission on July 2, 1935,

and resigned alf chairman and Commissioner, elfectlve Sept. 23, 1935. and Commis810ner JamelJ 11. Landis was elected chairman. 1 .

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Committees; H. Bartlett Benedict, Regional Supervisor; Edwin A.

Sheridan, Supervisor of Information Research.,

The Securities and Exchange Commission is charged with the

administration and enforcement of the Securities Exchange Act

of 1934 and the Securities Act of 1933, as amended."

Under the provisions of the Securities Act, of 1933, as amended,

the main objectives of the Commission's activities are to require a

fair and full disclosure of the material facts regarding securities

offered for sale or sold in interstate commerce or by the use of the

mails and to prevent frauds in the sale of securities. This is accomplished by means of registration statements required to be filed

,J with the Commission in respect to all but exempted securities. A

prospectus embodying the more important information contained in

such registration statements must be given to prospective purchasers

of a registered security. The Commission is not empowered to express approval of the merits or value of any security, but is limited

to requiring the disclosure of the material facts necessary for the

investor to exercise properly his own judgment. However, the act

specifically provides that it shall be unlawful for any person in the

sale of any securities by the use of any means or instruments of

transportation or communication in interstate commerce or by the

use of the mails, directly or indirectly-

(1) To employ any device, scheme, or artifice to defraud, or

(2) To obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact

necessary in order to make the statements made, in the light of the

circumstances under which they were made, not misleading, or

(3) To engage in any transaction, practice, or course of business

which operates or would operate as a fraud or deceit upon the

purchaser.

The act further provides that it shall be unlawful for any person,

by the use of any means or instruments of transportation or communication in interstate commerce or by the use of the mails, to

publish, give publicity to, or circulate any notice, circular, advertisement, newspaper, article, letter, investment service, or communication which, though not purporting to offer a security for sale,

describes such security for a consideration received or to be received,

directly or indirectly, from an issuer, underwriter, or dealer, without

fully disclosing the receipt, whether 'past or prospective, of such

consideration and the amount thereof.

Under. the provisions of the Securities Exchange Act of 1934, the

primary functions of the Commission may be briefly classified as

On Aug. 26, 1935, the Presidl'nt approved the Public Utmty Holding Company Act

of 1935 which is also administered and enforced by this Commission.

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ANNUAL REPORT OF THE SECURITffiS AND EXCHANGE COMMISSION 3

follows: To register and regulate national securities exchanges; to

register securities traded in on such exchanges; regulate over-thecounter markets and transactions in registered securities; to regulate

members of exchanges and other persons doing a business in securities through the medium of such exchanges; to secure monthly statements of holdings of registered equity securities by directors, officers,

and principal stockholders; and to secure an adequate disclosure of

the material facts regarding corporations whose securities are registered on national securities exchanges through periodical reports

of information necessary to keep reasonably current the information

given at the time of first registration, and through rules governing

the solicitation of proxies. For the purpose of effectuating these

provisions, the Commission is vested with broad administrative

powers to promulgate rules and regulations and is empowered to

enforce these regulations.

FUNCTIONS OF mE DIVISIONS

For the sake of efficient administration, the Commission has established several divisions and offices and distributed certain functions

and activities to each as follows:

The Legal Division, under the supervision of the General Counsel,

has charge of legal matters involved in the administration and

enforcement of the Securities Act of 1933, as amended, and the

Securities Exchange Act of 1934, which include (1) the rendering of

opinions and advice to the Commission on general questions of law

arising in connection with the administration and enforcement of the

acts; (2) the preparation for submission to the Commission of orders,

rules, regulations, and forms in collaboration, where appropriate,

with other divisions of the Commission; (3) the rendering of opinions

in response to inquiries submitted to the Commission involving problems of interpretation of the acts and of rules, regulations, or forms

promulgated by the Commission; (4) the conduct of hearings before

the Commission, or an officer of the Commission, other than refusalorder or stop-order proceedings under section 8 (b) and (d) of the

Securities Act of 1933,which are conducted by the Registration Division; (5) investigation of complaints and alleged violations of the

acts; (6) representation of the Commission in all judicial proceedings, including proceedings to enjoin violations of law and proceedings for the review of orders of the Commission; (7) research incident to the .formulation of legal opinions, and the representation of

the Commission in administrative or judicial proceedings; (8) the

preparation of cases for transmission to the Department of Justice

for eriminai prosecution; and (9) collaboration with other divisions
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of the Commission in the preparation of reports to Congress under

sections 11, 12, 19, and 211 of the Securities Exchange Act.

The Registration Dioieion is responsible for the examination of

all registration statements filed pursuant to the Securities Act of

1933 and registration statements covering the listing of securities on

national securities exchanges pursuant to section 12 of the Securities

Exchange Act of 1931; applications for withdrawal or striking from

listing securities listed or registered on national securities exchanges;

reports of officers,directors, and owners of equity securities required

to be filed under the provisions of section 16 of the Securities Exchange Act of 1934. This includes not only the examination of applications, but also statements and accompanying reports, amendments, documents, appraisals, financial statements, prospectuses, etc.;

the preparation of reports and letters of deficiency with respect

thereto; the conduct of investigations and hearings for the development of facts and the verification of data submitted in such registration statements, applications, and reports, and hearings in refusalorder and stop-order proceedings under section 8 (b) and (d) of the

Securities Act of 1933; the preparation of recommendations to the

Commission on the above matters and, after the Commission has

acted, the preparation of the Commission orders.

The Trading and Exchange Dioision has supervision over (1) registration of exchanges as national securities exchanges and exemption

of exchanges from registration; (2) the formulation of rules for the

regulation of floor trading and the prevention of excessive trading

by exchange members; (3) the' detection of unlawful practices on

exchanges, including wash sales, matched orders, pool operations,

and tipping of pool operations, the dissemination of false or misleading information concerning securities and other manipulative

or deceptive devices; (4) the formulation of rules for the regulation

of pegging, fixing, and stabilizing operations; (5) the formulation

of rules for the regulation of puts, calls, straddles, and other options; (6) the formulation of rules for the regulation of short selling

and stop-loss orders; (7) the formulation of rules for the regulation of borrowings and hypothecation of customers' securities by

exchange members; (8) the registration of securities admitted to

unlisted trading privileges; (9) the formulation of rules for the

regulation of over-the-counter markets; (10) the detection of fraudulent or manipulative practices in the distribution of securities over

the counter; and (11) the registration of brokers and dealers in

over-the-counter markets.

The Secretary is the chief administrative officer of the Commission. His duties and responsibilities are threefold, viz, as Secretary, as business manager, and as head of the Administrative Di-
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ANNUAL "REPORT OF THE SECURITIES AND EXCHANGE COMl\lISSIOX 5

VISIon. As Secretary, he is responsible for the administrative,

clerical, and fiscal activities of the Commission. These include actions on all allotments and expenditures of appropriations; liaison

activities with other Government establishments; signing- of all

Commission orders, actions, certifications, etc.; and assisting in the

coordination of functional activities. The recording secretary,

whose duties involve the preparation, maintenance, and indexing of

Commission minutes, is responsible to the Secretary. As business

manager, the Secretary is responsible for the business-management

functions of the Commission and for the preparation of the budget

estimates and justifications in support thereof. As head of the

Administrative Division, he is responsible for the activities of that

division, which is composed of five sections, viz, Budget and Accounting Section, Docket Mail and Files Section, Service Section,

Stenographic Section, and Library Section.

The Director of the Protective Oommittee Study is charged with

the responsibility of conducting investigations and hearings in order

La assemble data and facts for use in the preparation of the report

to Congress required under section 211 of the Securities Exchange

Act of 1934, which section provides that" The Commission is authorized and directed to make a study and investigation of the

work, activities, personnel, and functions of protective and reorganization committees in connection with the reorganization, readjustment, rehabilitation, liquidation, or consolidation of persons

and properties, and to report the results of its studies and investigations and its recommendations to the Congress on or before

January 3, 1936."

The Technical Adciser to the Oommieeion. is responsible for the

assembly of industrial statistics, the conduct of studies of the markets for securities of different industries, the analysis of company

reports and company statistics, the statistical analysis of registrations

under the Securities Act of 1933, the assembly and maintenance of

economic, market, capital, and other-statistics, the study of technical

phases of marketing and underwriting of securities, the examination

and extraction of pertinent information from general and financial

publications, and the rendering of technical advice to the Commission and its staff in connection with the above matters and in

connection with the conduct of special studies required under the

provisions of the Securities Exchange Act of 1934. .

The Economic Adviser to the Oommission is charged with the responsibility of conducting certain economic studies for use by the

Commission in the establishment of general policies and with the

rendering of advice regarding the economic aspects of the problems

involved in the administration of the Securities Act of 1933 and the

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Securities Exchange Act of 1934. The Section on Special Studies is

also a part of the officeof the Economic Adviser. The functions of

this section involve the conduct of research and the drafting of

reports for certain studies which Congress has directed the Securities

and Exchange Commission to make, and others which the Commission will initiate from time to time in order to facilitate the administration of the Securities Act of 1933 and the Securities Exchange

Act of 1934. The conduct of the research and the drafting of the

reports will require cooperation with officials assigned to other divisions and coordination of data assembled by the various divisions of

the Commission.

The Director of Employment Research is charged with the responsibility of making the preliminary selection of personnel (experts

and civil service) and with the conduct of necessary investigations

regarding prospective appointees; also with the preparation of appointment notices, pay rolls, transfers, reinstatements, service records, and the handling of promotion, demotion, separation, and

classification matters. All matters pertaining to personnel, employment, pay, and correspondence regarding same are handled in this

office.

The Regional Supervisor is charged with the administration or

the field activities of the Commission. The regional administrator

in charge of each regional office has supervision over all investigations and matters referred to his officefor action. However; the reports of investigations, memoranda, and correspondence from and

to the regional offices are routed via the regional supervisor. This

is done for record purposes and in order to coordinate the work,

avoid duplication and maintain uniformity of action.

The Supervisor of Information Research is responsible for disseminating public information regarding the activities of the Commission by means of correspondence and releases. The legislation

under which the Commission operates' specifically directs that publicity be given to its rulings, regulations, opinions, and findings, as

well as to the filing of registration statements, the effective registrations, hearings held, and reports and statements filed with the Commission by security issuers, officers, directors, and principal stockholders. This information is made available. to the public by the

supervisor of information research through releases issued to the

press and through mailing lists established for the convenience of

those who wish to receive releases currently.

ESTABLISHMENT OF ZONES AND REGIONAL OFFICES

In order to administer more effectively the .Securities Act of.J.933

and the Securities Exchange Act of 1934, regional officeswere estab-
.ANNUAL REPORT OF THE SECURITIES AND EXCHANGE COMMISSION 7

ZONE 8

ZOl'\E 7

WASHINGTONFIELD

OFFICE

Virginia

West Virginia

Maryland

Delaware

District of Columbia

Washington

Oregon

Idaho

Montana

Alaska

California

Nevada

Arizona

Philippine Islands

Hawaii

ZoNE 5

ZoNE 6

Wyoming

Colorado

New ME!xico

Nebraska

North Dakota

Oklahoma

Arkansas

Texas

Louisiana

Kansas (except Kansas

City)

ZoNE 3

ZoNE 2

. ZoNE 4

Minnesota

Wisconsin

Tennessee'

North Carolina

South Carolina

Georgia

Alabama

Mississippi

Florida

New York

New Jersey

Pennsylvania

lished throughout the country. For this purpose the United States

has been divided into eight zones, exclusive of that area which falls

under the direct administration of the main office in Washington,

D.C.

The various zones are composed of the States, as follows:

ZONE1 Michigan South Dakota

Iowa Utah

IIlinois

Indiana

Ohio

Missouri

Kentucky

Massachusetts Kansas City, Kans.

Connecticut

Rhode Island

Vermont

New Hampshire

Maine

. A regional officehas been established in each of these zones. Each

regional office is supervised by a regional administrator, who is

responsible for all administration, investigation, and enforcement

activities of the Commission within his respective zone.

The names of the regional administrators and the addresses of

the regional officesare indicated below:

Zone I-Robert G. Page, 120 Broadway, New York City, N. Y.

Zone 2-Edmund J. Brandon, 82 Devonshire Street, Boston, Mass.

Zone 3--William Green, Palmer BUilding, Atlanta, Ga.

Zone 4--Thomas A. Reynolds, 231 South LaSalle Street, Chicago, Ill.

Zone 5-0ran H. Allred, New Federal Building, Fort Worth, Tex.

Zone 6-Foster Cline, Patterson Building, Denver, Colo.

Zone 7-Howard A. Judy, 625 Market Street, San Francisco, Calif.

Zone 8-Day Karr, Room 1407, Exchange Building, 821 Second Avenul:',

Seattle, Wash.
8 ANNUAL REPORT OF THE SECURITmS AND EXCHANGE COMMISSION

TRANSFER OF ADMINISTRATION OF SECURITIES ACT

The Securities Act of 1933 was administered by the Federal Trade

Commission from May 27, 1933, the date of enactment, until September 1, 1934. On this latter date, under the provisions of section

210 of the Securities Exchange Act of 1934, the administration and

enforcement of the Securities Act was transferred to the Securities

and Exchange Commission.

AMENDMENT OF SECURITIES ACT OF 1933,AS AMENDED

The Motor Carrier Act of 1935 (approved Aug. 9, 1935), section

214, amended section 3 (a) (6) of the Securities Act of 1933 to read

as follows:

(6) Any security issued by a common or contract carrier, the issuance of

which is subject to the provisions of section 20a of the Interstate Commerce

Act, as amended; [the new law added is in italics].

ACKNOWLEDGMENT

The Commission desires to express its appreciation to the Federal

Trade Commission for the cooperation and assistance rendered to-

:it during the first months of its existence.
PART II

ADVISORY ASSISTANCE

Legislation of the character of the Securities Act of 1933 and the

Securities Exchange Act of 1934 comprehends within its scope such

a variety of complex situations that innumerable questions necessarily arise during the early period of its administration as to the

applicability of the text of the law to situations which are not the

subject of specific provision but to which it is clear its mandates

were intended to apply. The Commission found it necessary to

arrive at determinations as to the applicability of the legislation to

concrete problems presented and as to the manner of compliance

therewith. The many problems presented in connection with the

rendering of such assistance covered every aspect of the acts.

Since the scope of the Securities Act of 1933 extends to various

unique types of security interests, situations frequently arose, under

the act, where the nature of the interest which was offered for sale

was such as to make it difficult to determine whether a security was

involved within the meaning of the act and, if so, who, under the

act, was the issuer of such security. In this connection, problems

most frequently arose in the case of interests in oil, gas, and other

mineral rights, certificates issued under deposit or trust agreements,

and securities issued in reorganizations.

The Securities Act exempts from its registration requirements not

only various types of securities because of their generic character,

but also other securities which are issued in certain specific types of

transactions. The exemptive provisions of the latter type have presented questions of particular difficulty, the solutions of which have

required a thorough-going understanding of the history of the particular provisions in question, and of the practical results of the

application of such provisions. The act also exempts from registration, securities offered in limited amounts where such offerings meet

requirements to be imposed by the Commission. Pursuant to the

authority conferred by this provision of the act, various requirements were formulated to be satisfied as conditions to the availability

-of such exemption to-offerings of such securities.

Numerous problems also arose under those provisions of the act

exempting certain types of transactions, such as private offerings

and dealers' and brokers' transactions, from the requirement of prior

.registration. Other questions on which advice was frequently

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10 ANNUAL REPORT OF THE SECURITmS AND EXCHANGE COMMISSION

sought related to the requirements of the act and of the Commission's regulations in regard to prospectuses and the filing and amendment of registration statements.

The administration of the Securities Exchange Act also brought to

the Commission many questions of a novel and difficult character.

Advice was given to the public on the subjects of national securities

exchanges, temporary registration, and subsequent permanent registration of securities on national securities exchanges. The provisions

of section 16 of the Securities Exchange Act of 1934, relating to the

reporting of transactions by directors, officers, and principal stockholders of issuers of listed securities, were such as to give rise to

numerous inquiries relating to the nature of beneficial ownership

within the meaning of this section. After careful study of the problems involved in this question, opinions were published which, it is

believed, have been of substantial assistance to the public.

In view of the volume and diversity of inquiries received, it was

essential to provide for the coordination of this part of the work

so as to effect uniformity in the opinions which were rendered. The

letters and memoranda of conferences which contained opinions rendered were classified and indexed. In addition, a summary of interpretations of the Securities Act rendered by the Federal Trade

Commission and by the Securities and Exchange Commission was

prepared for the use of the Commission, in such form as to make

practicable its .periodic revision. The preparation of a similar summary was commenced of interpretations rendered of the Securities

Exchange Act of 1934 and regulations promulgated thereunder .

.As a result of the method described above, consistency was obtained in the interpretation of the acts arid rules and regulations.

While for the most part advisory opinions rendered; in answer t-b

inquiries received, were not published, a number or' these opmiofts

were publicly released in cases where the questions involved had been

the subject of wide-spread- interest and numerous inquiries.

The advisory assistance rendered by the Commission was of manifest importance to the public because of the newness of the acts and

regulations and the resulting lack of precedence by which persons

seeking to comply with the law in. particular situations might be

guided. Moreover, it is believed that the spirit of cooperation engendered between the public and the Commission through this interpretative service was of definite value. In addition, the: Oommission benefited greatly from the information obtained through the

correspondence and conferences incidental to the rendering of such

service. From these sources much valuable information: was 'obtained

on the basis of which existing regulations were improved and new

regulations promulgated.
ANNUAL REPORT OF THE-SECURITIES:AND EXCHANGE COMMISSION 11

, REGISTRATION OF EXCHANGES AS NATIONAL SECURITIES

EXCHANGES

Pursuant to section 6 of the Securities Exchange Act of 1934,

24 exchanges submitted applications for registration as national

securities exchanges.

In considering these applications, the constitution, bylaws, and

rules and regulations of each exchange were examined and analyzed.

Each exchange was required to execute an agreement to comply with

the provisions of the act and any rules and regulations thereunder.

and to enforce compliance with such provisions by its members, so

far as is within its power. Each exchange was also required to

include in its rules provision for the expulsion, suspension, or disciplining of members for conduct or, proceeding inconsistent with

just and equitable principles of trade, and to declare that willful

violation of any provision of such act or any rule or regulation

thereunder shall be considered conduct or proceeding inconsistent

with just and equitable principles of trade.

Upon investigation into the affairs of the New York Mining Exchange and the New York Produce Exchange, both of which applied

for registration, the New York Mining Exchange discontinued operations entirely, and the New York Produce Exchange ceased to

afford facilities for trading in securities.

. A merger of the Los Angeles Curb Exchange with the Los Angeles

Stock Exchange necessitated an examination into the terms and

conditions of such merger, and the determination whether the merged

exchange was so organized as to be able to comply with the act and

the rules and regulations thereunder, and whether its rules were just

and adequate to insure fair dealing, and to protect investors. Upon

the completion of this examination, such determination was made

and the merged exchange was permitted to continue in operation

as a national securities exchange;

The cessation of trading in securities by the 2 New York exchanges

above named and the merger of the Los Angeles exchanges, reduced

to. 21 the number of securities exchanges registered with' the

tJoinDiission.

From time to time during the year, such registered exchanges

filed amendments to their registration statements. These amendments covered changes in membership, in exchange trading rules,

in securities admitted to listed or unlisted trading privileges, and

in the: rules for the government of exchanges.' Such amendments.

were subjected to thorough analysis to ascertain whether the exchanges were being maintained in compliance with the provisions.

of the Securities Exchange Act of 1934, and the rules and regulations

30662-35-2
New York Curb Exchange

New York Real Estate Securities

Exchange

New York Stock Exchange

Philadelphia Stock Exchange

Pittsburgh Stock Exchange

St. Louis Stock Exchange

Salt Lake Stock Exchange

San Francisco Curb Exchange

San Francisco Stock Excbange

Wasliington Stock Exchange (D. C.)

12 A.NNUAL REPORT OF THE SECURITIES AND EXCHANGE COMMISSION

thereunder. The following named constitute the national securities

exchanges as of June 30, 1935:

Baltimore Stock Exchange

Boston Stock Exchange

Buffalo Stock Exchange

Chicago Boartr of Trade

Chicago Stock Exchange

Cincinnati Stock Exchange

Cleveland Stock Exchange

Denver Stock Exchange

Detroit Stock Exchange

Los Angeles Stock Exchange

New Orleans StOCkExchange

EXEMPTION OF EXCHANGES FROM REGISTRATION AS NATIONAL

SECURITIES EXCHANGES

Pursuant to section 5 of the Securities Exchange Act of 1934, 19

exchanges filed applications for exemption from registration as national securities exchanges. The applicants were granted temporary

exemption from registration pending investigations with respect to

their constitution, bylaws, trading rules and practices, members,

volume of security transactions, and the financial standing of companies having securities traded 'on these, exchanges. Investigators

were sent to the far West to examine 7 exchanges, to the ':Middle

West to examine 4 exchanges, to the South to examine 3 exchanges,

and to New England to examine 2 exchanges.

The reports filed by the trial examiners before whom hearings

were held on the applications for exemption, were analyzed preliminary to determining which applications should, in the public

interest, be granted.

After investigation of the California Stock Exchange, the Boston

Curb Exchange, and the Hartford Stock Exchange, operations on

those exchanges were altogether discontinued.

The Philippine Stock Exchange ~f Manila discontinued Rpe~atiQns

as of March 1, 193'5,'and thereupon its temporary exempticn was

canceled by the Commission.

The cancelation of this application, together with the dissolution

of the three exchanges above mentioned, reduced the number of exchanges grunted temporary exemption as of June 30, 1935, to 15.

The Standard Stock Exchange of Spokane, which had previously

been granted temporary exemption from registration, submitted an

application for registration as a national securities exchange.

The Chicago Curb Exchange, which also had been granted temporary exemption from registration, asked leave to withdraw ..i~

application for exemption and to substitute therefor an application

for registration as a national securities exchange.
ANNUAL REPORT OF THE SECURITIES AND EXCHANGE COMMISSION 13

After a thorough examination of these two exchanges, it was determined that such exchanges were so organized as to be able to

.comply with the provisions of the Securities Exchange Act of 1934

.and the rules and regulations thereunder. Accordingly, "the Commission granted the Standard Stock Exchange of Spokane registration as a national securities exchange, effective October 1, 1935, and

.extended its temporary exemption from registration to that date,

and granted the Chicago Curb Exchange registration, effective November 1, 1935, and extended its temporary exemption from registration to that date.

During the year a new exchange was organized in Manila under

fhe designation of Associated Stock Exchange (Manila, P. I.).

The Acting Governor General of the Philippine Islands was requested to furnish information concerning such exchange, and on

May 16,1935, the exchange applied for exemption from registration.

Upon request, the Governor General authorized the insular auditor

in Manila to make an investigation of the exchange, in accordance

'with a questionnaire setting forth the scope of such investigation prepared by the Commission. Subsequently, this exchange dissolved.

The following named constitute the exchanges granted temporary

-exemption from registration as national securities exc~.a~ge~as of

.June 30, 1935:

Associated Stock Exchange (Manila.

P. I.)

.Ohleago Curb Exchange

Colorado Springs Stock Exchange

Honolulu Stock Exchange

Louisville Stock Exchange

Manila Stock Exchange

:Milwaukee Grain and Stock Exchange

,Minneapolis-St. Paul Stock Exchange

Reno Stock Exchange

Richmond Stock Exchange

San Francisco Mining Exchange

Seattle Mining Exchange

Seattle Stock Exchange

Standard Stock Exchange of Spokane,

Wash.

Wheeling Stock Exchange

FORMULATION OF RULES FOR THE REGULATION OF TRADING

ON EXCHANGES

A comprehensive survey was made of the activities of specialists,

floor traders, and odd-lot dealers on the New York Stock Exchange

and on the New York Curb Exchange, as well as an analysis of

trading on other exchanges. On the basis of this study, suggested

rules for the regulation of trading on exchanges were formulated.

"These rules were sent to all national securities exchanges, with the

Commission's request or recommendation that they be adopted. As

.of the close of the year, 16 exchanges had adopted such rules, either

.as recommended or in modified form. Itis not considered that these

.suggested rules shall represent the final regulations to be promulgated regarding this matter. They are experimental in character

.and may be changed if further study indicates a necessity therefor.
14 ANNUAL REPORT OF THE-8ECURITIES AND EXCHANGE COMMISSION

Various phases of trading. on exchanges were covered by these

rilles, including limitations on a member's trading while on or off

the floor of an exchange; participation by members in joint accounts; reports of substantial joint accounts; handling of customers'

discretionary accounts and discretionary orders; the use of puts,

calls, and straddles by members; members acting in the dual capacity of brokers and dealers; the preservation of records or orders

by members; successive transactions by members; registration of specialists and odd-lot dealers; limitation upon the dealings of specialists and odd-lot dealers; and short selling.

To assist in the detection of violations of these trading rules, to

study the effect of such rules on market activities and operations, and

to assist the Commission in the formulation of further rules in connection with these subjects and correlated matters, various detailed

report forms were devised to be filed by exchanges and members of

exchanges. These reports disclosed, among other things, the extent of trading by members and partners for their own account as

compared with the total volume of transactions on exchanges, and

the effect of trading by specialists on quotations and the market

action of the securities in which they specialize.

Approximately 380 such report-s are filed each week and a system

has been devised for the expeditious analysis in order to detect manipulative practices or trading by members and to determine whether

further rules are necessary to make exchanges free, open, and orderly

market places for securities.

These reports are also useful in accumulating material in connection with a study of the feasibility and advisability of the complete

segregation or limitation of the functions of the dealer and broker,

the results of which will be reported to the Congress pursuant to the

mandate of section 11 (e) of the Securities Exchange Act of 1934.

DETECTION OF EXCESSIVE TRADING AND MANIPULATIVE AND

DECEPTIVE PRACTICES ON EXCHANGES

Pursuant to sections 9 and 10 (b) of the Securities Exchange Act

of 1934, trading activities on the major exchanges were under surveillance, and all transactions which appeared to be manipulative

in character were promptly referred to the regional offices for investigation. The tape quotations of the New York Stock Exchange

and the New York Curb Exchange were under continuous observation, and complete lists of daily transactions were required to be

furnished by all exchanges.

Transactions the various exchanges were constantly scrutinized

to detect trading in securities by members, which trading might be

excessive in view of the financial resources of such members or in

~
ANNUAL REPORT OF THE SECURITIES AND EXCHANGE COMMISSION 15

view of the market for such securities. Trading activities were also

observed for the purpose of detecting trading by specialists in the

securities in which they specialize, which was not reasonably necessary to permit such specialists to maintain a fair and orderly market

in their securities, and for the purpose of uncovering violations of

the other recommended rules for the trading on the exchanges above

mentioned. .

In connection with the detection of manipulative practices, such

as wash sales, matched orders, pool operations, the "tipping" of

pool operations, the dissemination of false or misleading information concerning securities, and other manipulative and deceptive

devices, investigations into transactions in 67 securities were made

during the year. .

A system was devised for the accumulation of important information published or circulated concerning securities and their price

movements. As it was important that such information be immediately available to aid in investigations and for other purposes,

files were established on 838 individual companies, the securities of

which were listed on registered or exempted exchanges, or traded

in over-the-counter markets. There were also established 116 files on

various industries.

As an aid in uncovering manipulative operations by corporate

"insiders ", examinations were made of the reports of officers, directors, and beneficial owners of registered securities filed under

section 16 of the Securities Exchange Act of 1934. Up to the close

-of the year, analyses were made of transactions of such officers,

directors, and beneficial owners, in 61 securities. Ten field investigations were made as a result of such analyses.

:FORMULATION OF RULES FOR THE REGULATION OF PEGGING, FIXING, OR STABILIZING OPERATIONS BOTH ON EXCHANGES AND IN

THE OVER-THE-COUNTER MARKETS

Pursuant to sections 9 (a) (6)., 10 (b) and 15 of the Securities

Exchange Act of 1934, a careful survey was inaugurated by the

-Commission to determine the extent to which pegging, fixing, or

-stabilizing the prices of securities should, in the public interest, be

permitted. Data concerning various types of pegging, fixing, or

stabilizing operations employed in the past were compiled and analyzed as a preliminary to drafting rules and regulations on this

subject.

Statistics were assembled on the average price range of stabilizing

-operations and a comprehensive report was prepared describing the

.advantages and disadvantages and the uses and abuses of such

.operations. .
16 ANNU sr, REPORT OF THE SECURITIES AND EXCHANGE COMMISSION

During the last week of June invitations were sent to representative banks, investment bankers, underwriters, stock exchange members and stock exchanges, as well as the Investment Bankers Association of America, Investment Bankers Code Committee, New York

Securities Dealers Association, and Associated Stock Exchanges,

informing them of conferences to be held with regard to pegging,

fixing, or stabilizing operations. As an aid in facilitating discussions at these conferences, agenda of matters to be considered were

prepared.

FORMULATION OF RULES FOR THE REGULATION OF PUTS, CALLS,

STRADDLES, AND OTHER OPTIONS

Under authority of section 9 (b) and (c) of the Securities Exchange Act of 1934, a study was made of traqsactions involving

puts, calls, straddles, and other options. Conferences were held with

put and call brokers, commission houses, and others interested in such

options, to determine the extent to which such transactions should be

permitted. The proposed program encompasses trading practices in

connection with such options, the registration of put and call brokers

and dealers, reports in connection with the granting or acquiring of

options, the duration of options and the endorsement of options by

exchange members.

FORMULATION OF RULES FOR THE REGULATION OF SHORT

SELLING AND STOP-LOSS ORDERS

A detailed analysis of the subject of short selling was made for

the purpose of determining the extent to which such selling is

economically justified and the extent to which it should be curbed.

A rule was formulated which all exchanges were requested to adopt

and which, it is anticipated, will preserve those features of short

selling which are in the public-interest.

The subject of stop-loss orders was also studied with a view todetermining the extent to which the preservation of such orders

is in the public interest. No rules have yet been formulated on this

subject.

COOPERATION WITH THE FEDERAL RESERVE BOARD IN THE

SUPERVISION OF ITS MARGIN REGULATIONS

The Commission cooperated closely with the Federal Reserve

Board in the formulation of ite:;rules under section 7 of theSecurities Exchange Act of 1934 governing the extension and maintenance

of credit on registered securities. Many suggestions were made to

the Federal Reserve Board for its consideration in the drafting of

regulation T.
ANNUAL REPOHT OF THE SECURITIES AND EXCHANGE COb'IMISSION 17

For the purpose of supplementing the work of the Federal Reserve

Board, a unit was organized to check up on margin accounts to

ascertain whether they were being maintained in compliance with

regulation T, and also to study the effect of such regulation on the

extension of credits on registered securities. During the year since

the effective date of such regulation, 197 firms were examined. The

results of these examinations were made available to the Federal

Reserve Board for the purpose of indicating the practicability and

effectiveness of regulation T, as well as to reveal violations thereof.

FORMULATION OF RULES RELATING TO BORROWINGS AND SOL.

VENCY OF, AND HYPOTHECATION OF CUSTOMERS' SECURITIES BY,

EXCHANGE MEMBERS, BROKERS, AND DEALERS

Considerable research was done preparatory to the formulation of

rules under section 8 (b) of the Securities Exchange Act of 1934,

defining brokers' aggregate indebtedness and net capital, and determining the proper ratio between the two. This work entailed a study

of brokerage accounting, consideration of an appropriate form of

report of financial condition to be filed periodically by brokers, either

with the exchange or the Commission, and involved several conferences with experts on accounting matters.

Study was also devoted to the matter of hypothecation of customers' securities and safeguards to be erected in connection with

such hypothecation. The subject. included ~'earmarking" of customers' securities, escrowing of customers' surplus funds, commingling of customers' securities, and the extent to which customers'

securities may be hypothecated by brokers. No rules have yet been

promulgated on the subject.

SUPERVISION AND STUDY OF MA'ITERS RELATING TO UNLISTED'

TRADING PRIVILEGES IN SECURITIES ON EXCHANGES

During the year 2,808 applications for continuance or extension

of unlisted trading privileges in securities were submitted to the

Commission pursuant to section 12 (f) of the act. Each application

was examined for the purpose of determining whether the subject

security was eligible for unlisted trading privileges on the applicant

exchange. Before any application could be granted, it was necessary

to determine that the subject security either had been admitted to

unlisted trading privileges on the applicant exchange prior to March

1, 1934,or had been registered on another national securities exchange

and had been listed thereon on March 1, 1934. Of the applications.

filed with the Commission, 2,776 were granted and 32 were denied.

In the public interest, the Commission announced that it would

consider objecti?llS to unlisted trading privileges in securities on
18 ANNUAL REPORT OF THE SECUBITIES AND EXCHANGE COMMISSION

'registered exchanges. Corporations and others filed about 100 such

-objeetions, .

_Section 12. (f) of the Securities Exchange Act of 1934 requires

the Commission to make a study of trading in unlisted securities on

-exchanges, and to report the results of its study to Congress on or

before January 3, 1936. As a preliminary to the writing of such

report, statistics were assembled with respect to the number of securities admitted to unlisted trading privileges on-the-various-registered

and temporarily exempted exchanges, and the information published

by issuers of such securities. A thorough study was also made of

the listing requirements of the various exchanges for admission: of

securities to unlisted trading privileges with a view to determining

the recommendations which should be made with respect to the

listing requirements for admission of securities to such trading privileges.

FORMULATION OF RULES RELATING TO THE REGISTRATION OF

UNlSSUED WARRANTS AND UNISSUED SECURITIES FOR "WHEN,

AS, AND IF ISSUED" TRADING ON EXCHANGES

A comprehensive study was inaugurated concerning the registration of unlisted warrants and securities for" when, as, and if issued"

trading, pursuant to section 12 (d) of the Securities Exchange Act

of 1934. This study embraced an analysis of the economic function

of, and the abuses formerly prevalent in, this type of trading, and

the scope of the regulations to be formulated.

The tentative plan outlined included, among other things, the

registration of unissued warrants or securities, restrictions on margin

trading therein, and the availability of information in respect of

such unissued securities.

In 'Order to expedite a continuous exchange market in such' warrants and securities, both on a "when, as, and if issued" and "issued" basis, consideration was given to the formulation of rules

exempting from registration the class of issued warrants which

would be eligible for registration on a "when, as, and if issued "

basis,' .

REGULATION OF THE OVER-THE-COUNTER MARKETS.

Section 15 of the Securities Exchange Act of ,1934authorizes the

Commission to take such steps as will insure to investors in the overthe-counter markets, protection comparable to that afforded to, investors in securities traded on exchanges.

As a first step in affording such protection to investors-in the over-

~he7counter markets, ,the entire subject of. the registration of brokers

1These rules were promulgated by the ComID1Bslonon Oct. 15, 1935.
ANNUAL REPORT OF THE SECURITIES AND EXCHANGE COMMISSION 19

and dealers received intensive study. A comprehensive survey was

made of the" blue sky laws" of the various States with special'.

reference to the provisions concerning the licensing or registration of

brokers and dealers. On the basis of the conclusions reached from

this study, and the experience with such" blue sky laws ", rules and

regulations for the registration of such brokers and dealers with the

Commission, were promulgated. Such rules prescribed in detail the

mechanics for registration, the effective date thereof, grounds for

denial or revocation of registration, cancelation of registration by

brokers or dealers, amendments to registration statements, a form

for registration and for amendments thereto, and included a prohibition against misrepresentations by brokers and dealers with

respect to the registration of any broker or dealer and, where a broker

is acting as agent for both the buyer and the seller, a requirement

that such fact be disclosed.

Such registration will become effective on January 1, 1936.

During the time which elapsed between the promulgation of these

rules on May 6 and the end of the fiscal year, 3,488 applications for

registration had been filed with the Commission," These applications

were' examined for deficiencies and inaccuracies in the information

submitted. All available records of public and voluntary law enforcement agencies throughout the country were utilized for the

purpose of ascertaining whether partners, proprietors, directors, or

branch office managers of firms applying for registration had been

convicted of a crime or enjoined from any practice in connection with

the purchase or sale of securities or arising out of the conduct of the

business of brokers or dealers. As a result of the evidence furnished

by these examinations, many hearings .will be requited to determine

whether any applications for registration should be denied.

As a second step in complying with the mandate of the act to

afford protection to investors in the over-the-counter markets, a comprehensive study was initiated with a view to the eventual formulation' of rules with respect to wash sales, fictitious quotations, matched

orders, misleading activities, false rumors, pegging, fixing, or stabilizing the prices of securities, extension of credit on securities, and

other activities in such markets which affect the prices of securities

traded on exchanges,

REGULATION OF MISCELLANEOUS EXCHANGE AND OTHER

PRACTICES

The Commission has received many complaints with respect to'

exchange practices such as commissions charged by brokers, methods of settlement, interest charges, and other matters, These com-

• .As of Nov. 1. 1935. 5.080 applications had been filed with the Commission.
20 ANNUAL REPORT OF THE SECURITIES AND EXCHANGE COMMISSION

plaints have been analyzed for possible use in the formulation of

rules on these subjects.

Several complaints were received with regard to the reporting

of transactions in securities of issuers which were in receivership,

bankruptcy, or in the process of reorganization. A careful study

was made of this matter for the purpose of drafting a rule requiring such transactions to be clearly designated so that investors will

be-informed. as to the financial status of issuers.

Section 19 (c) of the Securities Exchange Act of 1934 authorized

the Commission to make a study of the rules of national securities

exchanges with respect to the classification of members, the methods

of election of officers and committees to insure fair representation

of the membership, and the suspension, expulsion, and disciplining

of members of such exchanges. An exhaustive study of these matters was made and a report was prepared and submitted to the

Congress, together with 11 recommendations. The subject matter

of this report related to the classification of members of exchanges,

the methods of election of officers and committees, the machinery

of discipline, and a summary of recommendations. These recom,

mendations dealt with representation of commission brokers on the

governing committee, eligibility of office partners for membership

on the governing committee, nomination of the governing committee

by petition rather than by a nominating committee, election of onethird of the governing committee annually, nomination of the

president by petition, eligibility of nonmembers for the office of

president and other executive offices, membership of standing com- ..

mittees, expenses of arbitration, composition of the arbitral tribunal

in cases in which a nonmember is a party, appeals from the business

conduct committee to the governing committee, and handling of

customers' complaints against members. .

The New York Stock Exchange and the 'New York Curb Ex-

-change, as well as some other exchanges throughout the country, incorporated these recommendations, in whole or in part, in their constitutions and bylaws.

The report of the Commission to the Congress on the Government

of Securities Exchanges was transmitted on January 25, 1935, and

will be found in Document No. 85, Seventy-fourth Congress, First

session, House of Representatives.

REGISTRATION OF SECURITIES ON EXCHANGES

'TEMl'ORARY AND PROVISlQNAL REGISTRATION QF 8EC~}lUTIt:S ON ~XCHA-NOES

In August 1934, after holding a series of hearings at which representatives of exchanges had an opportunity to make.s:"gge$i,9n~,-~h~"

-Oomrnission promulgated rules and forms providing' 'for" the:~~-'
ANNUAL REPORT OF THE SEClJIUTIES AND E~C:a:AN~ CO;MMI$SION 21

porary registration of securities on national securities exchanges

under section 1~ (e) of the Securities Exchange Act of 1934.

Applications for temporary registration were filed for 2,910 stock

issues, covering over 2,000,000,000shares of stock, and 1,968 bond issues, involving nearly $29,000,000,000inface value. These temporary

registrations became effective on October 1, 1934.

Securities not temporarily registered on October 1, 1934, and

sought to be registered prior to the adoption of permanent registration forms of the Commission, were provisionally registered. These

provisional registrations expired 90 days after the promulgation of

the forms for permanent registration. Approximately 100 of such

provisional registration statements were filed and examined.

Temporary registration, under the terms of the act, expired on

June 30, 1935. A temporary exemption from permanent registration was granted all issuers until July 16, 1935, as of which date

all listed securities were required to be permanently registered, except in cases of securities of certain types of issuers for which registration forms were-still to be promulgated or had been promulgated

so recently as to make further temporary exemption necessary to

allow time for filing.

l'ERl\lANENT REGISTR.\TION OF SECUlUTIES OK EXCHANGES

Having provided for temporary registration of listed securities,

the Commission was faced with the problem of promulgating forms

for the filing of applications for permanent registration.

The Securities Exchange Act of 1934 specifies broadly the nature

and scope of information to be furnished by an issuer in an application for permanent registration. The problem, in general, was to

adapt these requirements to the circumstances of the various classes

of issuers through the adoption of a form of application for' each

class. Temporary registration was permitted to continue under the

act only until July 1, 1935. It was desirable to allow issuers ample

time before that date to prepare and file applications for permanent

registration. Consequently, the task of preparing these forms was

necessarily conducted under heavy pressure of time.

The Commission gave a great deal of time and thought to the requirements of permanent registration. Numerous conferences were

held with representatives of exchanges, corporate officials, accountants, and others, in the course of which the Commission received

valuable assistance in its efforts to formulate requirements that

would afford protection to the investor through the dissemination of

adequate information, without unduly burdening private industry.

As the first product of these efforts, a form for permanent registratiorr: of securities issued by corporations was -approved by the
22 ANNUAL REPORT OF THE SECURITIES AND EXCHANGE COMMISSION

Commission on December 20, 1934. Revised rules governing permanent registration were promulgated early in February 1935.

This general form for corporations, known as form 10, was applicable to a large majority of securities listed on the various exchanges,

and formed the groundwork and model for other forms appropriate

to special types of issues. Prior to July 1, 1935, eight additional

forms were published, designed for use by (1) unincorporated issuers; (2) railroads, including those in receivership or bankruptcy;

(3) insurance companies; (4) protective committees; (5) voting

trustees; (6) investment trusts, incorporated; (7) investment trusts,

unincorporated; and (8) foreign governments.s

As stated above, temporary registration of securities on exchanges

expired by the terms of the act on July 1, 1935. It then became unlawful to trade in nonexempt securities unless permanent registration had become effective. In order to avoid any confusion on the'

exchanges immediately after July 1, 1935, due to uncertainty as tothe registered or exempt status of any security, it was deemed advisable to allow an interval for the compilation and publication of complete lists of securities registered or exempt on that date. Accordingly, shortly before July 1, under authority conferred by the act,

the Commission adopted a rule granting to all listed but unregistered

securities an exemption from registration requirements during thefirst 15 days of July 1935.

Furthermore, the Commission considered that all issuers should be

allowed at least 90 days in which to secure effective registration of

their securities after publication of the form appropriate for such

securities. To provide this time the Commission granted exemptions for certain types of securities for various periods after July 1,

1935. The basic set of 12 forms was designed to meet the primary'

problem of securing original registration of the several thousand

issues of securities already listed on national securities exchanges

when the act became effective. These forms represented only the

beginning of the Commission's work in formulating the requirements

and methods of registration. On July 1, 1935, there remained the

problem of filling out this framework with additional forms to meet

certain complex and peculiar situations. To mention a few of these,.

it is contemplated that special forms will be prepared for corporations emerging from bankruptcy or receivership, corporations in--

volved in mergers and consolidations, corporations modifying their

existing securities or issuing, in a variety of transactions, additional

securities of a class already registered.

Tbree additional forms were pUblished during the first part of the fiscal year 1936,

namely, form 19, for American certificates against foreign issues and for tbe underlyingsecurities; form 20, for seeurttlea other tban bonds of foreign private issuers; and form'

21, for bonds of foreign private Issuers,

-

•
-ANNUAL REPORT OF THE SECURITIES AND EXCHANGE COMMISSION 23

Requirements must be formulated for annual and other periodic

reports from issuers, designed to keep reasonably current the information already filed with the Commission.

A guide to forms adopted by the Commission will be found in the

appendix.

Having devised and promulgated forms for the registration of

securities on exchanges, the Commission was next faced with the

problem of examining the registration statements and compiling

the report of securities registered or exempt from registration on

exchanges. Due to the voluminous material filed with most of the

statements and the large number of statements filed, and the limited

time available for the examination prior to July 15, the Commission

was compelled in the first instance to confine this examination to a

cursory study of the statements for obvious errors and deficiencies.

A detailed examination and analysis of the statements and all exhibits filed in connection therewith was subsequently undertaken.

Upon completion of the preliminary examination, a study and

compilation was made of the certifications by exchanges indicating

their approval of the registration, following which the lengthy report

of securities registered or exempt-from registration was prepared.

This report contains a list of all securities which have been permanently registered for trading on national securities exchanges as of

July 16,1935, and those securities which are provisionally registered

or reported by the exchanges to be temporarily exempted from

registration pending the time when registration forms promulgated

by the Commission for such securities became applicable.

The Commission intends to publish, at frequent intervals, supplements to keep this list up to date. Copies of the report of securities

registered or exempt from registration on exchanges and the supplements thereto may be secured at the offices of the Commission in

Washington, D. C.

Under the provisions of a rule promulgated by the Commission

relating to objections to the public disclosure of material filed with

the Commission, several hundred requests for confidential treatment of material in connection with applications for permanent

registration of securities on national securities exchanges were received.' This rule provides that if any person filing an application,

report or document with the Commission under any provision of

the Securities Exchange Act of 1934 wishes to object to the public

disclosure of any such material, he shall file that portion of the

application, report, or document which contains such information

separately from the remainder and plainly mark it "confidential."

'As of Nov. I, 1935, 529 applications for confidential treatment had been received.
24 ANNUAL REPORT OF THE SECURITIES AND EXCHANGE COMMISSION

The rule further provides that there shall also be filed with such

information written objection to its public disclosure stating therein the reasons why public disclosure is not in the public interest

and also stating whether or not a hearing is desired. Until and

unless the Commission determines that the disclosure of such information is in the public interest, it shall not be made available to the

public.

When requested by the applicants, hearings are scheduled and the

applicants afforded opportunity to appear in support of their application." The Commission considers all the facts, including the

reasons stated in the written objections and the informatron aeveloped in the course of hearings, if any,6 and makes its determination

on the merits of each individual case. Orders of the Oomnnssion

are then issued indicating the action taken,"

STATISTICS OF SECURITIES REGISTF.RED OR EXEMPT FROM REGISTRATION

ON EXCHANGES

As.of the opening of trading on July 16, 1935, permanent registrations were in effect covering 3,345 securities of 1,841 issuers.

These statements registered nearly 2,000,000,000 shares of .stock and

over $16,000,000,000 face amount in bonds. In addition there were

1,048 securities of 601 issuers, representing more than 400;000,000

shares of stock and over $10,000,000,000 face amount in bonds temporarilyexempt (or, in a few cases, provisionally registered) pending filing on or promulgation of the required forms.

REPORTS OF OFFICERS, DIRECTORS, AND PRINCIPAL

STOCKHOLDERS

Section 16 (a) of the Securities Exchange Act provides in part that

every person who is directly or indirectly the beneficial owner of

more than 10 per 'centum: of any class of any equity security' (other

than an exempted security) which is registered on a national securities exchange or who is a director or an officer of the issuer of such

security, shall file a statement of the amount of all equity securities

of such issues of which he is the beneficial owner, and within 10 days

after the close of each calendar month thereafter, if there has been

any change in such ownership during such month, shall file a statement indicating his ownership at the close of the month and such

changes in his ownership as have occurred during such calendar

month.

"As of Sept. 4, 1935, 266 requests for hearings were received.

GAsof Nov. 9, 1935, 124 such hearings have been held.

TAs of Nov. 9, 1935, 220 orders have been Issued.
ANNUAL REPORT OF THE SECURITIES AND EXCHANGE COMMISSION 25

.-

The Commission has devised and promulgated three forms for

use in submitting these reports of ownership, viz, form 4, for reporting changes in ownership of equity secutities; form 5, for reporting

ownership of an equity security which was registered during the

last calendar month; and form 6, for reporting ownership by persons who have just become officers, directors, or principal stockholders of a company having equity securities registered.

. During the period September 1, 1934, to June 30, 1935, inclusive,

'10,114 original and 2,524 amended reports were filed and examined.

The Commission compiles and publishes a monthly summary of

stock transactions and holdings of officers, directors, and principal

stockholders as reported on these forms 4, 5, and 6. Copies of these

summaries may be procured at the offices of the Commission in

Washington, D. C.

WITHDRAWAL OR STRIKING FROM LISTING AND REGISTRATION OF

SECURITIES ON A NATIONAL SECURITIES EXCHANGE

Section 12 (d) of the Securities Exchange Act of 1934 provides

tlL,atsecurities registered on national securities exchanges may be

withdrawn or stricken from listing and registration in' accordance

with the rules of the exchange and, upon such terms as the Commission may deem necessary to impose for the protection of investors,

upon application by the issuer or the exchange to the Commission.

Rules and regulations governing applications for the withdrawal

and striking from listing and registration of securities on national

securities exchanges have been promulgated. During the period

September 1, 1934, to June 30, 1935, 95 such applications were

received and acted upon by the Commission.

REGISTRATION OF SECURITIES UNDER THE SECURITIES ACT OF

1933

SECURITIES ACT FORMS

In order to encourage financing and remove the hesitancy on

the part of reputable companies to undertake new issues under the

Securities Act, immediately upon its creation, the Commission devoted intensive study to the classification and simplification of the

registration forms. Existing forms were revised and new forms

promulgated.

The outstanding accomplishment in this field was the promulgation of form A':"2for the registration of new security issues of seasoned corporations. This form was designed to provide a more

suitable method of protecting the investor but at the same time calculated to eliminate, as far as possible, needless burdens to new

•
26 ANNUAL REPORT OF THE SECURITIES AND EXCHANGE COMMISSION

capital financing. The burden to officers and directors of registered

.companies has been materially reduced and at the same time the

-value of the statement from the investor's viewpoint has been

increased. ,

This new form is used for the registration of security issues of

seasoned corporations with a record of operations. It cannot be

used for ventures of a promotional nature.

In addition, new forms have been promulgated for the registration of oil and gas securities, the form for the registration of securities sold or modified in the course of reorganization has been revised,

and a new form has been adopted for the registration of certificates

of deposit.

EXAMINATION OF SECURITIES ACT REGISTRATION STATEMENTS

The examination of registration statements filed pursuant to the

Securities Act of 1933, as amended, is one of the primary functions

of the Commission. These statements are filed by issuers who propose to publicly offer for sale or sell securities, except exempt securities in interstate commerce or through the mails.

, 'Registration statements are filed on: various forms promulgated

by' the Commission, each of which provides for the submission' of

data called for in the act and other information needed in determining whether the investing public is being apprized regarding

material facts relative to the issuer and the issue to be sold.

The examination of these registration statements requires the

services of expert financial examiners, attorneys, accountants, mining

engineers, petroleum engineers, and other persons expert in the fields

relating to the issuance of securities. When such examination discloses deficiencies in registration statements, registrants are so ad-

'vised by correspondence and in conference, and amendments are

requested or proceedings instituted under section 8 of the act, depending upon the circumstances of the .particular case. Amendments

filed pursuant to the suggestions contained in the deficiency letter,

or otherwise, are examined in a similar manner. Under the pro-

'visions of the act, a registration statement becomes effective 20 days

after filing, but the filing of an amendment before the effective date

starts a new 20-day period, unless such amendments are filed with

the consent of the Commission. An amendment filed after the

effective date of the registration statement, if such amendment, upon

its face, appears to the' Commission not to be incomplete or inaccurate in any material respect, becomes effective on. such date, as the

Commission may determine, having due regard to the public interest

and the protection of investors.
.NJlIUMiREPQRT' OF. TRE-SEQl.lfBlTIES,AND'F4CHANGE, COMMISSION '2:l.

_The examination of ~tion statements does not involve au

appraisal of and Is.not eoneeened with the merits of the security as

an investment. The Commission does not pass judgment upon the

soundness of any -security. The basic policy is that of informing

the investor of the facte concerning securities to be offered for sale

in interstate and foreign commerce, and the aim is to place adequate

and true information "before the investor and to prevent the sale

of securities through misrepresentation-perhaps the only way in

which fraudulent secUritIes can be sold to the public. The Coinmission's further aim is to accomplish this with the least possible

interference to honest business.

TYPICAL DlSCLOSUBES MADE AS A RESULT OF EXAMINA'J.'IONS OF SECWU1'

TIES ACT REGISTRATIONS

For the purpose of giving some indication of the nature of disclosures made as a result of examinations, a few typical cases are

briefly summarized below.

A large public utilities system filed a registration statement containing a balance sheet which showed that the company had a capital

surplus of approximately _$in,ooo,ooo and an earned surplus 9f

approximately $12,000,000. Appended to this balance sheet were 8:

great many pages of footnotes relating to the balance sheet, which

disclosed that many improper accounting and financial practices had

been followed. The footnotes were so long and complicated, how-'

ever, and contained so many technical terms, that it would be -vir;

tually impossible for an average investor to understand them. Furthermore, even a, trained investment analyst would have great diffi-'

cul.ty in .adjusting the balance sheet inaccordance with the footnotes

in order to obtain a true picture of the company's financial condition.

The.company was required to compute, the effect in dollars and cents,

as far as possible, of the improper accounting and financial practices

and to set up a balance sheet in a form permitting comparison with

the balance sheet as originally filed. The adjusted. balance sheet

indicated that if proper accounting and financial practices had been

followed; the' company's assets would have- been $153',000,000.'less

than those shown in the original balance sheet, and that in plaea

of the eapital surplus of $1-11,000,000 and the earned surplus '0£

$12,000,000, the company would have a eorporate deficit of $30,000,000"

" .A mining company 'seeking to register an' issue of- its. common

stock, .was required to amend its-prospectus to- disclose that it h,,,d

boon selling stock,to the public-for more than 20 years snd' that PIllF

a small percentag-e :(}f, receiW ~!OOl 'such .sales had been ~,-ill:

actual developrnent of rther-propeeties, the' balance having been lUJeQ

prineipally to 'pay- salesmen's-eommissions, office expenses; and isa,1'":

30062-35---3

"

'
aries.. : The company recently Nquested,p.rmission:to Withdraw!its

re~ation statement afteri"'a year~ unsuecessfulrattempt to sell its

seeurities by means of its amended prospeetus.> _." . .

:. :The sponsor, of- an investmeut.'truSt s~t to register $250,000

faee value of investment contractsJproviding'for. monthly payment

-6£ installments which were to be .invested.in securities:to be held in

tiust for .the benefit of .the investors.. -The fi1-at 20 payments, how"

e\Ter~were to accrue to the sponsor for its services and expenses. In-'

vestigation by the, Commission revealed that the registrant, before

tli6 .passage of the .Securities Act of 1933, had sponsored a similan

plan under which there had been received from the public $80,0001

of which only $2,400 had been invested in securities. The balance

Mid 'accrued to the sponsor because of -forfeitures for nonpayment of

installments. The ratio of; maintenance tcharges to income of the

trust had been over 2,300 percent. ..The registrant was required to

amend its prospectus to disclose the ~act that its previous experienoe

had been disastrous to investors. 'In the year that-has elapsed since

t~r; statement, thus amended; became e1fectf~e,.,~he registrant has sold

no contracts whatsoever to the public., .. '. _

~lAJ1oth~r company filed a,re~qwQn statement covering an 'issue,

Qf, so-called "endowment bonds" having a maturity value of

~oOO;OOo., The issuer had been s~ling, these bonds for several years,

principally to school teachers resident in the State where it was incorporated, and wished to extend its selling campaign to other States,

Stop-order. proceedings were ~ituted by the Commission and it

W,lJ-S .discovered that the issuer was actually insolvent, that it had

created a reserve of only $5,000 to meet a liability of $53,000, to its

seeurityholders, and that there was every likelihood. that .persons who

li8.d'~lready invested in its bonds would 108.epractically their entire

lnv.estment. The entry of the stop order will prevent the further

Yietimizing of the public, at Ieast In States other than that where

t~e issuer is incorporated. .. ,

).

EXEMPTI~NS ~OM REGI8TBATIO~ R~QUIBEMENT8 I

: "The- Commission has promulgated rules, under section 3 (b) of the

Seeiftities Act of 1933, exempting: certain. issuee. not. exeeeding

$100,000 from the registration requirements of the act. In order tosecure certain of these exemptions, it is necessary to file prospectuses,.

which. are examined for the purpose of.: determining whether the

fequirements of the rules have been met. From September 1, 1934,

through June 30, 1935, 193 -sueh prospectuses covering issues of

aeeunties amounting to $15,734,812 were filed and examined.

t -Spadal -regulations have also been -adopted, under section 3 (b)

of:.the -Securities Act -of 1933, pJ'O-viding .for the exemption of frac-

~ - -

~

•' ~
rmJar!U'AL~ORT,OF 1I.".HEiSECURlTIESAND:EXCHANGEiJOMMISSION 29

tional undivided interestS In' oil;-gas,- or other mineral rights, not

~~ding $1.00,000.,In order to secure such exemptions, the regulations require the filing of offering sheets. From September 1, 1934,

:to:Jfine '30, 1985, approximately 2,500 original and corrected offering

~g were filed and examined.

STATISTICS OF SECURITIES REGISTERED UNDER THE SECURITIES ACT

When the Securities and Exchange Commission took over the

administration of the Securities Act of 1933, there were 1,093 registration statements on file," Of these, 794 were effective," 49 were

under stop or refusal order, 153 had been withdrawn, and 97 were

under examination or pending the receipt of amendments.

During the period from September 1, 1934, to June 30, 1935, inclusive, 440 additional registration statements were filed. There

were 315 registration statements which became effective during the

period 10 and 1,094 were effective at the end of the period, 15 of

those effective at the beginning either having been withdrawn or

placed 'under stop order, r

The number of registrations withdrawn increased by 72 to 225

.011 June 30, 1935. Stop or refusal orders increased during the period

by'42, there being 91 of such orders in effect on June 30, 1935. As

of June 30,1935, there were 123 registration statements in the process

of examination or awaiting amendment .

. During the 10-month 'period ended on June 30, 1935, securities

with estimated gross proceeds of $909,387,000 have heeome effec-

:ti~y.;.registered. Of this amount, $805,698,000 represented new

._urities, while $103,689,000'were for securities in reorganization,

for voting trust certificates, for certificates of deposit, and for securities to be exchanged for registrants' or predecessors' securities

or certificates of deposit.

. Detailed statistical tables, showing gross proceeds, net proceeds.

costs of distribution and selling, and proposed use of funds for these

Securities are contained in the appendix. In interpreting the tables,

it should be kept in mind that these statistics are based solely on the

registration statements as filed by the registrants with the Securities

and Exchange Commission. All data, therefore, refer to registrants"

iii~Iitions as of the date of fi~g or of later amendments. .They thm

represent; in reality, statistics of intentions to sell securities rather

than statistics of actual sales of securities.'

, -Although llgu~s for Sept. I, 1~34, were included in the Federal Trade CommfAlll_

report' for June 30, 1984, that day Is b'ere Included for completeness.

Including registrations etlectlve under notice of deficiencies and etlectlve _4IeJr notrC'l!'

of .1Iearing. ,

, 'Jd InCluding 32 statements etI'~tlve und~r notice of deficiencies or hearlpgL , ,

•

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REGISTRA'fION FEES

Section 31 of the Securities Exchange Act of 1934 provides tliat

every national securities exchange shall pay 'to the Commission 'on

or before March 15 of each calendar year a registration fee for the

privilege of doing business as a national securities exchange during

the preceding calendar year or any part thereof. Such fee shall be

ill an amount equal to one five-hundredths of 1 percentum of the 'aggregate dollar amount of the sales of securities transacted on such national securities exchanges during the preceding calendar year and

subsequent to its registration as a. national securities exchange. .,

Pursuant to the provisions of this section, and as of June. 30,

1935, the Commission had collected $61,659.86 as fees from national

securities exchanges.

Each national securities exchange submits monthly reports to the

Commission indicating the volume and the dollar value of trading

in stocks and in bonds during the preceding month. In addition to

using these report-s as an aid in determining the accuracy of the

fees paid by the exchanges, the figures are compiled for distribution

to the general public in monthly releases and are reprinted in

detail in the appendix. It will be seen that from October 1, 1-934,

to June 30, 1935, the total volume of trading on national securities

exchanges (including some transactions which are not contained in

the usual reports of volume of trading, particularly odd-lot transactions on the New York Stock Exchange) amounts to $10,076,637,-

186, of which $7,283.039,072represents the value of trading in stocks

and $2,793,343,008that of trading in bonds. The New York Stock

Exchange accounts for 83.7 percent of the value of trading on' all

registered exchanges and the New York Curb Exchange is responsible for another 12.2,percent. '

Section 6 (b) of the Securities Act of 1933 provides that at,~

time of filing a registration statement the applicant shall pay' to

the Commission a fee of one one-hundredth of 1 percentum of the

maximum aggregate price at which such securities are proposed

'to be offered.ibut in no case shall .the fee be less than $25. ',\.

Pursuant to this section, during the fiscal year ended June 30,'193&.,

:$160,299.25were collected, ' .

COMPLAINTS, INVESTIGATIONS, HEARINGS, AND LITIGATION

Under the Securities Act of 1933 and the Securities Exch:inge

Act of 1934 the Commission has broad p'o~ers to enforce the :Mts

'and the- rules and :regulations. thereunder through ihv.~tigati.Qns,

llearings, and injunctions. ' ' ... :

During the y~r, fraudulent and, illegal activities v:i()~ati,llg:'fue

Securities Act 'or the Securities Exchange Act came to the attention
of the Commission through complaints or inquiries received from

thtt public, State securities commissions, State- and Federal prosecuting officials, and others, from the Commission's surveillance of

trading activities and examination of registration statements, and

.otherwise. Supposed. violations were investigated and during the

yeu approximately 2\300 cases were under investigation. Whenever

necessary, the investigative- powers of the Commission under sections 19 and 20 of the Securities Act and section 21 of the Securities

Exchange Act were involkd bY';1lCommission order for formal in-

> vestigation and hearing, -fIesignating an officer of the Commission

to conduct the hearings, .th power to take evidence, subpoena witnesses, and compel the production of records. In these hearings.

the Commission was represented by' members of the General Counsel's staff, who prepared the cases and presented the evidence.

If apparent violations of the acts were disclosed, suits for injunction were brought by the Commission in the Federal courts. During

th~ fiscal year the Commission brought 22 suits for injunction and

carried on 3 suits already brought by the Federal Trade Commission. As of June 30, 1935, permanent injunctions had been obtained against 32 defendants, temporary injunctions against 28 defendants, and temporary restraining orders against 19 defendants.

Suits involving 72 defendants were awaiting hearing.

Evidence of willful violations discovered in 30 of the cases investigated by the Commission was transmitted to the Attorney General for criminal prosecution. In certain cases, in the interest of

speedy justice, evidence of criminal violation was referred forthfor prosecution without bringing suit for injunction.

Among the more important matters investigated or litigated by

the Commission were the following:

On September 24, 1934, the United States District Court for the

District of New Jersey granted a permanent injunction against

fraudulent violations of the Securities Act by National Investment

Thanscript, Inc., Clement H. Congdon, and Marshall 'Vard, doing

business as Marshall Ward & Co. The Commission's bill charged a'

gigantic swindle in stock of Rayon Industries Corporation, effected

through a tipster sheet, a manipulated market, and fraudulent misrepresentations through wholesale long-distance telephone solicitation. The evidence obtained in the Commission's investigation was

referred to the Attorney General for criminal prosecution.

On' January 7, 1935, a permanent injunction was obtained by the

Commission in the United -States District Court for the District of

LOuiSiana. against fraudulent 'Violations 'of the Securities A-ct by'

''1'ucivas &; Co.., and others. The evidence was referred to the Attorney

Gtlneral.

~
. On January 15, 1935, the Commission filed a suit for injunction'

against Robert Collier & Co. and others in the United -States:Distrlet

Court for the Southern District- of New York, alleging fraudulent'

activities in violation of the' Securities Act. The United. States:

district court dismissed the Commission's suit on the ground that the:

Commission was not entitled to appear except by the United States

attorney or the Attorney General. On appeal, the United Btates,

Circuit Court of Appeals for the Second Circuit held that in preceedings brought under section 20 (b) of the Securities Act the Cammission was entitled to appear by-its own counsel. The case was

remanded to the district court and on June 30, 1935; had been sent

to a referee to take testimony."

_ On February 4, 1935, the Commission filed in the United States

District Court for the Southern District of New York a suit against.

J. Edward Jones and others to enjoin alleged fraudulent and illegal

activities in violation of the Securities Act. On 'February 8, 193'5,

the respondents consented to and the court 'granted a temporary iB,.'

junction. On May 4, 1935,Jones filed' a registration statement under.

the Securities Act relating to securities proposed to be issued bY'

Jones. Because of alleged material misstatements and- omissions'

in this registration statement, proceedings. under section 8 of thES

Securities Act were ordered by the Commission. A subpoena was'

issued for the appearance of Jones at a liearing on June 27, 1935.

Jones failed to appear at the hearing, and, through his' counsel'

appearing specially, refused to obey the subpoena. On June 28, 1935;'

Jones filed in the United States Circuit 'Court of Appeals for the

Second Circuit a petition purporting' to. be a petition under section

9 of the Securities Act for review of, the proceedings before' the

Commissicn.v ' ,

On February 28, 1935, the Commission obtained in the :U.nited.

States District Court for the Northern District of Illinois, with the

UAfter taking testimony before the master for approximately 8 weeks, during whICh'

time the Commission presented its case and the principal -wttness for the defendan~

were examined and cross-examined, the defendants consented to the entry of a permanent injunction and an order requiring the return of $50,000 to subscribers. This order.

W811 signed by Federal Judge Murray Hulburt on Oct. 16, 1935. The amount return~.

to subscribers amounted to about 80 percent of the total subscriptions.

1ll On July 3, 1935. tbe Commission applied to the United States District Court for thel

Southern District of New York for an order. compelling the attendance of Jones lI.8 a

witneBS in the proceedings before the Commission. After' considering argument 811d

extensive briefs, the district court granted the order on Aug. 13, 1935. Jones thereupon

appealed to the United States Circuit Conn of A.ppeals for the Second Circuit. -The

argument on this appeal was consolidated with the argument on the Commission's moti~n

to dismiBS the petition for review of the proceedings before the Commission, filed by

JoneR on June 28, 1935. Extensive briefs w~ again submitted, and on. Nov. ,5, 11l35,.thlf"

circuit court of appeals sustained the COmm1~sion,o~ al~ points, dismissi,n~ ,iTones': Pe~:,

don -for review and all1rm1ng the order- of the dl8trict court compelling' JODes te: apPlia~

and to testify before the Commission. The opinion by Clreult Judge Manton.I~~'"

upheld the constitutionality of the Securities Act.

-
/

~}rU~~B:J? nB.'fiBj1!lC~~_~J;IA~P-COM:MISSIO.N 13

defendants' consent;:~' ~Jhp{lr~t Jnjunetion' ltgainst violations, ef

the Securities A.ct by: :Waterman W. Porter, Wl1ij.Street Soo1,Jdty

~J.:Poration, and aftUiated companies, The evidence was referred.

to the Attor:qey General fo.!"criminal prosecution. . , ' .~

.Qn'May,17, 1935,'a permanent injunction' against fraudulent vi0-

lations of the Securities, A~t was obtained by the Commission in the

United States District Co.uft for tlie' District of Maryland against

Harrison Knight & Co., Inc." and 'othe11l. The defendants consented

to- this injunction. " .~ _, ;

_.In March ,1935, the Commission conducted an investigation: of

At;nerican. Bond .& Share Corporation and affiliated companies..iJl

Atlanta, Ga., Wilmington, Del.j. New York City, and Was~

D. C. The Commission met with refusal to answer subpoenas issued

by 01licersof the Commission and petitions to enforce these subpoenas

:were filed in the Federal. courts at Atlanta, Ga., and Wilmingtooi,

Del. The evidence obtained in the Commission's investigation: w~

immediately referred to the,Attorney General and indictments 'w~

returned by a Federal grand jury in Atlanta against B. R,~rad,.

ley, Robert E. Leer and J. C. Ingram, officials of the American.Bp.ntl

& Share Corporation" for violations of the Securities Act. . J : o s

.' On April 11" 19~5,Jihe Commission filed 'in ,tQ.~United Statea

District Court for the District of Nevada a suit against Colonial

Trading" Co., and .3~ affiliated persons alleging fraudulent activities

violationof the Securities~L -',Apreliminary-injunction ,w.8$

oktained on April 19, 193,g, against such defendanta-as had b~J).

served with process.-, The evidence was immediately referred,tO;:the

Attorney General and an indictment for violations of the Secw:it~

Act was returned on July 16, 1935, against 11 defendants.

On June 28, 1935, the Commission filed in the United States District Court for the orthern District of Texas a suit for injuncsion

a:iIeg~g illegal, acti~.ti~ in 'violation of the, Securities Act of.t.~~

by El Presidio Hotel Gnaranteed Syndicate and others, and. obt8,iii~

from that court a temporary restraining order. _ _ ' ',',:'

Following an extensive 'investigation by the Commission in Boston:

Mass., and elsewhere, evidence of fraudulent activities in violation

of-the Securities Act by William L. Jarvis, Samuel L. Gaines, A. E.

Gibbs, Joseph V. Barger, and others in stock of Polymet Manufacturing Co. was, referred to the Attorney General for cririllrlal

prosecution. ':1

: The pzincipal defellaants-hr~ther suits for injunction, and',the

~icts in which suit. was brought, were as follows: Carleton S'a-imd~ ,00.; district of- Ne:w,J~rseYj Stock Market Finance, hc.,

'~uthern .district -of -New Yorl.t;:Popular F'inanee, Inc., d.iStrict~of

~uset~; .Ald~~~h"~la~e, Inc .."D~st~~ _Qf P~lUt.nbia;,.\Ge()tge

Gallop, ,eastern -mstr,iot-Gf- Louisiana; Plymouth' Consolidated Gold

~

~

~

~

-
M ANNUAL hEron')? {)P 1'ilEtj~mlft.Eg 'A.}tl)-'gX()fM~G'EOOhll\ttsSIQN

Mines, Ltd., district of Delaware; M. E. Wilaox, Inc., northern-district of Indiana; Dill & Co., district, of Massachusetts; J a.ck Zimmerman, northern district of Georgia; Howard M. Roberts, District of Columbia; J. J. Donegan, District of Columbia; Frank J.

Hill, District of Columbia; K. W. Todd Co., Inc., western district

of 'Pennsylvania; Sterling Investment Corporation, western district

of Pennsylvania; Secord, Vanderpoel & Co., Inc., southern district

of New York; A. A. Durante & Oo., southern district of New York;

H. J. Kattleman & Co., eastern district of Missouri.

In addition, the Commission conducted hearings on applications

kr registration or exemption of exchanges.und applications to strike

securities from listing and registration. Among the more important matters so heard were the following: Applications for registration of New York Mining Exchange and Pacific Stock Exchange;

investigation following application for exemption by Boston Curb

Exchange; applications for exemption by Chicago Curb Exchange,

California Stock Exchange, San Francisco Mining Exchange; applications for temporary registration under the Securities Exchange

Act of 1934 of bonds of Brooklyn-Manhattan Transit Corporation

and common. stock of Knabb Barrel Co., Inc.; application to strike

from listing and registration oommon stock of Hupp Motor Car

Corporation.

Hearings were also conducted in connection with registrations of

securities under the Securities Act of 1933, involving stop-order and

refusal-order proceedings. These are cases in which untrue statements, misleading statements, Inaccurate statements, and omissions

of statements of material facts appear.

FORMAL OPINIONS

During the period September 1, 1934, to June 30, 1935, the Commission issued 12 formal opinions involving matters under the Securities Act of 1933 and the Securities Exchange Act of 1934. These

opinions were issued in the following cases:

Docket Promtdgated DO.

In the matter of- Haddam DIStillers Oorporatlon ._____________ 2-880 Oct. 24, 1ll3'l

2-993 Haddam Distillers Corporation • • .__________ 2-993 Dec. 19,1934

Continental Distillers -& Importers Oorporatlon ._ .2-jj61 hn. 2II..llla5 , American Gyro Co :~ 2-102' 'Mar: 26;11)36

. ~:we<tt:oo~~ds~~~c~:=:========::::::::::::::::::::::::::::::::::::: ;:~ t:: t~=

~~~~~ttgYng-Cjj::::::=:::=:=:::::::::::::::::::::::::::::::::: BraDdy-Wine Brewing 00 ._______ 2-11~ ~g t~: ,&.pr.~t-~= lll3li Plymouth Oousolidated Gold Mines, LtU___________________________________ t-llB'1 1lih1I 1,'1\l35

Brooklyn MQhattan Tranllit COrporatlon.. .~ .. .Jane IN!> HUPp Moter Car Corporatl6ll.______________________________________________ 1tu1tl'flI, mil

I. '4

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•__

• - • •

• ~

__• ~ ~ • ~ •

'
:A.NlfUAL REPORT OF THE SEOURITJ$B :A:}iDDCHANGE COMMISSION 36

SECURITIES VIOLATION RECORDS

The Commission continued negotiations begun by the Federal

Trade Commission with the United States Post Office Department,

State securities commissions, State and Federal prosecuting officials,

and other official and voluntary agencies, with a view to cooperation

in the enforcement of State and Federal laws against the fraudulent

sale of securities. On May 1, 1935, the securities violation records

were established to provide a central index and clearing house for

information relating to securities frauds in the United States and

Canada, both past and current. As a result of data furnished by the

above-mentioned official and unofficial agencies, the records of 15,351

persons against whom State or Federal action had been taken during

the past 10 years in connection with the sale of securities were compiled and indexed. The files so established contain with respect to

each such person the source of the information, and a brief statement

of the violation. Current information is published in a monthly confidential bulletin distributed to official and unofficial agencies engaged

in the prevention and punishment of security frauds.

PROTECTIVE COMMITTEE STUDY

Section 211 of the Securities Exchange Act of 1934 authorized and

directed the Commission to make. a study and investigation of the

work, activities, personnel, and functions of protective and reorganization committees in connection with the reorganization, readjustment, rehabilitation, liquidation, or consolidation of persons or

properties and to report the result of its studies and investigations

and its recommendations to the Congress on or before January 3,

1936.

A.t the close of the fiscal year, investigations had been completed

and public hearings held on the following organizations:

The Celotex Co.

R. Hoe & Co., Inc.

St. Louis-san FraneiSt'o Rallway Co.

Paramount-Publix Corporation.

The following reorganizations have been investigated and prepared for public hearings;

Kreuger & Toll Co.

McLellan Stores Co.

Cuban Cane Products Co., Inc.

CUba Cane Sugar Corporation.

The following studies and investigations of reorganizations are

under way and nearing completion:
36 ANNUAL-REPORT OF THE SECURITIES AND EXCHANGE COMMISSION

1. Real estate issues, which include:'

(a) S. W. Straus & Co. issues in New York, illinois, and California. '

(b) American Bond & Mortgage Co. issues.

(c) Issues with which the Chicago Title & Trust Co. was

associated.

These real-estate issues involve many protective committees and

have entailed examination of files of numerous committees in New

York, Detroit, Chicago, San Francisco, and Los Angeles.

2. Foreign bonds.

(a) Foreign bondholders protective counsel.

(71) American council of foreign bondholders.

(c) Latin-American Bondholders Association.

(d) Protective committee for Cuba public works bonds.

(e) EI Salvador protective committee.

(I) Brazilian debt readjustment.

(g) Peruvian protective committees.

(h) Chilean protective committees.

(i) Chase National Bank, re Cuban public works bonds.

The investigations of most of these foreign bonds have been

completed.

3. Municipal issues.

A study of municipal issues is in progress, with particular reference to Coral Gables, Fla., and Asbury Park, N. J. Additional aspects of municipal bond reorganization, will be completed in time

for inclusion in the report to the Congress.

A series of other studies and investigations have been started and

are in various stages of completion. The results of the foregoing

studies will be included, together with recommendations in the Commission's report to Congress.

PUBLIC REFERENCE ROOM

A public reference room was established for the purpose of furnishing registered public information to the general public who

visit the officesof the Commission seeking public information. For

those members of the public who desire copies of public information,

estimates of the cost of photostatic copies are given and orders

accepted.

During the year ended June 30, 1935, more than 2,000 members

of the public visited the public reference room and many hundreds

of letters and telephone calls relating to the furnishing of public

information were received.
PUBLICATIONS

The Securities Act of 1933 and the Securities..Exchange Act of 1934

specifically direct the Commission to give publicity to its rules,

regulations, opinions, and findings, as well as to the filings of registration stlttements, to effective registrations, to public hearings, and to

rep"o~ and statements filed with the Commission by security issuers,

.offlcers, directors, and principal stockholders.

1 This information is made available to the public through releases

---issuedto the press and through the medium of a mailing list established for the convenience of those who wish to receive releases currently. Releases of the Commission are divided into eight classifications according to .subjeet. Members of the public may have their

names placed upon the mailing list, without cost, to receive any or allclasses of releases.. To aid the general public in following the legal

rulings of the Commission, there is published with each ruling an

announcement describing the ruling in nontechnical terms. These

descriptive releases may be obtained separately from the legal rulings.

\. ... During the year ending June 30, 1935, the Commission published

301 releases under the Securities Exchange Act of 1934 and 230

.releases under the Securities Act of 1933. There has also been prepared for publication 5 issues of the Official Summary of Stock

Transactions and Holdings, as well as a compilation of securities

which, as of July 16, 1935, had been registered on national securities

exchanges under the Securities Exchange Act of 1934. Of the 531

releases- published under both acts, 278 dealt with the filing of

registration statements by security issuers, 97 were announcements

..f rules and regulations, and the balance was divided among stop

orders, public hearings, findings, legal opinions, effective registrations, statistical analyses, and announcements on a few miscellaneous

subjeets,

REPORT ON THE SEGREGATION OF FUNCTIONS OF DEALERS

AND BROKERS

Section 11 (e) of the Securities Exchange Act directs the Commission to make a study of the feasibility and advisability of the complete segregation of the funceions of dealer and broker and to report

-the results of its study and its recommendations to the Congress on

or before January 3; 1936.

Questionnaires were prepared and sent to representative firms

and individuals in the securities business. These questionnaires are

now being analyzed and tabulated.

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38 ANNUAL REPqR.T OF THE, SECURITIES ..uw liJX(}JIANGE CQMMilSSmlf

SEAL OF THE COMMISSION

During the year, the Commission adopted a seal for its -<>fficial

use, a facsimile of which will be found on the COverpage.

PERSONNEL

The Commission and its staff, at the close of the fiscal year.iconsisted of 696 persons. This total comprised 4 Commissioners .end

692 employees, 450 of 'whom were men and 246 were women.

Statistics

COmmissionet's______________ 4

Departmental:

Permanent__________________________________________ 488

Temporar~' 85

Regional offices:

Perrnanent__________________________________________ 116

~emporary ~__________________ 3

Subject to retirement act., .:.___________________ 346

The Commission reports with appreciation the very effective

service of personnel of all ranks. More than 72,000 hours of overtime were given by the personnel and the morale has been such that

the additional work was given freely by the employees in the inter.

of the work.

FISCAL AFFAIRS

FUNDS TRANSFERRED AND APPROPRIATED

There was available to the Commission, during the fiscal year 1936,

lj:1.545,337 for personal services and other obligations. This amoiit\'t

was derived from the following sources: .

Transferred from Federal fiade COmmission

Appropriations:

Deficiency Appropriation Act, fiscal year 1934

Defletency Act of 1935:

Salalies and expenses $900,000

Printing and binding____________________________ 21, 000

<.1 <

$264,337

. 300.000

921,000

Sec. 21 (e), act of Mar. 28, 1004 (48 St1tt:522) and sec. 2 (d), act

of Feb. 13, 1935, to cover the cost of pay l'(lstoration__________ ,60, ()lX) . TotaL__ 1,'Ml);~337 ,..

, EXPENDITURES AND OBLIGATIONS

The expenditures and obligations for the fiscal year ended June

30, 1935, are as follows:

_

_

_
ANNUAL REPORT OF THE SECURITIES AND EXCHANGE COMMISSION 39

Salaries:

Departmental: Pernuunent

~mporary

~eld

llileage and vritness fees

Supplies and materials

Communication service

Travel expense

~sportation of things

Printing and binding (paid from regular appropriation) lteporting hearings

Heat, light, and power

ltents

Repairs and alterations

Special and tn~llaDeollS expenses

~rchase of equipment

$955,068

?/l,520

98,917

4,713-

92,445-

21,611:

51,970'

1,566

12, 071

6,706

540,

86,178

10,850

232

145,060

Subtotal 1,515,447

Printing and blnding_____________________________________________ 20,496

(lrand total ob~tion~--------__ 1,535,943

Transferred to reserve for impounded balance under sec, 34,

'a~t of !dar. 28, 1934 $5,000

1'tansfel'red to Division of Disbursements, Treasury Depart . m~nt 2,200

7,2()()

~otal_--- 1,043,143

trnobligated balance______________________________________________ 2,194

~able~funds- 1, 545,33T

ESTIMATED AND AC'l'UAL MISCELLANEOUS RECEIPTS

The receipts for the fiscal year ended June 30, 1935, are as follows

Held in

Covered Into special deTreasury posit with

Treasury

Bevenue reeelpts:

Interest, exchange, llIld dividends: Gain by exchange $0.47 .._-_ .. .. .. .... Pees:

==:~~: ~~~~~:::::::::::::: ::::::::::::::::::::89,032.87 $71,266.38-

-----4;ioi:i5- 61,659.86

gf~i~natjons:::::::::::::::::::::::::::::::::::::::::::::::: 1,037.00-

.48 .. Tota!. ._. ._ 98,735,(11 133,963.74

Grand total of estimated and actual miscellaneous receipts,.

$227,698.81. .

~~>n~ of these receipts are available for expenditure by the Commission. They are deposited in the Treasury as "Miscellaneous

receipts."

-----------------------------

---

_

_

_

_

_

_

_

_

_

_

_

_

_

_

-

•

-------

=

______•___•• __••• __ -- - - -

______________________________________________ •________

------------ -

"
-,

.

1)ART itl.-APPENDICES 1

APPENDIX I

RULES FOR THE REGULATION OF TRADING ON EXCHANGES AS

RECOMMl!1NDED BY-THE SECURITIES AND EXCHANGE CO.MJriI8iS);~

TO NATIONAL SECURITIES EXCHANGES FOR ADOPTION

Frssr RULE. Eeoeseioe tradz"ng by 11umwers.-No member, and po

firm of which he is a partner and no partner of such firm shall e1fect

on the exchange purchases or sales for any account in which such

member, firm, or partner is directly or indirectly interested, which

purchases or sales are excessive in view of the financial resources of

such member, firm, or partner, or in view of the market for such

security.

SECONDRULE. Trading for joint acoownt.-(a) No member, while

on the floor, shall, without the prior approval of the exchange, initiate

the purchase or sale on the exchange of any security classified for,

trading as a stock by the exchange for any account in which he, or

the firm of which he is a partner or any partner of such firm, 'is

directly or indirectly interested with any person other than such

firm or partner.

(b) The provisions of this rule shall not apply to any purchase or

sale (1) by any member for any joint account maintained solely fo~

effecting bona fide domestic or foreign arbitrage transactions, or (2)'

by an odd-lot dealer or a specialist for any joint account in which

he is expressly permitted to have an interest or participation by the

eleventh or fourteenth rules, respectively.

TmRD RULE. Report of joint accownt8.--(a) No member, and 'no

firm of which he is a partner and no partner of such firm, shall,

directly or indirectly, hold any interest or participation in any joint

account for buying or selling any security on the exchange, unless

such joint account is reported to and not disapproved by the exchange.

(b) Such report shall be filed with the exchange by any member,

firm, or partner participating in such joint account before any transactions are effected on the' exchange for such joint account and shall

include in substance the following:

(1) Names of persons participating in such account and their

respective interests therein.

(2) Purpose of such account.

(3) Amount of commitments in such account.

1Copies ~f the rules and regulations not included in these appendixes may be secured

!from 1:he OomullllBion's offices In Washington, D. C.

40

'

'

'
, .: (4)" A copy of any written agreement or instrumentin writing

, relating to sueh aeeonnt, . ' .

(c) Every member, the firm of which he is a. partner and every

partner of such firm, shall file with the exchange not later than

Saturday of each week with respect to every joint account existing

at the close of business on the-preceding Wednesday in which Such

member, firm, or partner is directly or indirectly interested, a report

containing in: substance the following information, unless 'SUchinformation is reported to the exchange by some other member, firm, 'or

partner.

(1) Name and amount 6£ each security purchased-or sold during the week ending on such Wedilesday. . ,

(2) Amount of eonunitnrents in such account at the close' of'

business on 'such Wednesday. .

(3) Any change which renders no longer accurate any portion

of the- original statement filed. ' ,,- .:

(d) Every member, the firm of which he is It partner and every:

partner of such firm, shall file with the exchange not later than

Saturday of each week with respect to every joint account existing'

at the close of business on the preceding Wednesday of which such

member, firm, or partner has kriowledge by reason of transactions

executed by or through such member, firm, or partner for such a-ccount, a report containing in substance the following information,

unless such information has previously been reported to the

exchange: .

(1) Names of persons participating in such account and theirrespective interests therein.

(2) Purpose of such account.

(3) Name and amount of each security purchased 01" sold

during the week ending on such Wednesday.

(4) Amount of commitments in such account at the close of

business on such Wednesday.

FOURTH RULE. Diecretionaru tramuctions.-(a) No member,

while on the floor, shall execute or cause to be executed on' the ex."

change any transaction 'for the purchase or sale of any securityclassified for trading as a stock by the exchange with respect 00

which transaction such member is vested with discretion as to (1)

the choice of security to be bought or sold, (2) the total amount of

any security to be bought Or sold, or (3) whether any such transaction shall be one of purchase or sale.

(b) The provisions of paragraph (a) of this rule shall not apply

(1) to any discretionary transaction-executed by such member for

any bona fide cash investment account or for the account of any

person, who, due to illness, absence, or similar circumstances, is ac'-

tually unable to effect transactions for his own account; provided

-
1~ ~NNVAL-~~T Q¥-XlQll {mQ~~-\~D.~QlJA~~Wl4~~ON

tMt ~llc4 member shall .keep, av~jlabl~ tor inspection a.. detailed record of any such transaction and the gr,qpP,qs for. exercising such

~C.rftWn and shall file with, the ~<;ha:pge on.August 1, 1935, ~nd

ql,l~nterannually ther~fWJ:: a ;rop,6rt,'c~g,j,tlw, preceding, q\l~~

~y, period showing the n~qJ,e ~f each 'CCQ~t for which any such

trft.~~tie~ was exeeuted, 1Jw- Wl-QV.llt of such disoretionary pur~

or sales, and the grounds for exercising such discretion, with

!"~{>,ectt~ each account, or (2.) to AAY, transllC1iion permitted under

~p.esecond J'Ul~for any account in which t4e member executing $uch

transaction is directly or indirectly interested.

(e) :N9 memher, and IlQ .urm. of w.hich be is a partner and no

partner of such firm shall e~"~ qr cause W, be executed on the ex-

~4a);lg~purchases or sales of llny; ~.i.(;~ clas~fied fOll trading as

a stock by the exchange for any aoccuru, wi.(;h respect, to, which such

~W",. firm, or partner is vested with aDy.discretiollaJ;y power,

which purchases or sales are excessive in Si:G0 or b;eqwmcJf in view

p:( tile flnancial resoJJr6e~;~n_SU9.q,,~~t~

: Fr1,FrH RituJ. Z'radi,ng "by member wlJ,ile fl.IJ~inga8 WQk.e7'.~(a) Nn

~b{}r shall (1) personally bu.y or iuitia..t(} the purchase ef any

s~uritx on, the exchange fro; his own account, w for 8J;l.yaccount in

which he, or the firm of which he is lJ, partner or any partner of

~1Whfirm, is directly or indirectly interested, while such member

personally holds or has knowledge, that his firm or any partner

~rep.f holds an, unexecuted market order to buy such security in

the unit of trading for a customer, or (2) personally sell or initiate

~,~le of any security on the ~~cha;nge for any such account, while

he personally holds or has knowledge, that. his, fum or any partner

thereof holds an unexecuted market order to sell such security in

~h~.unit o~ trading fw: customer;

(b) No member shall (1), personally buy or initiate the purchase

Qf, aJ1Ysecurity on the exchange for any such account, at 0l below

the price at which he personally holds O,lt has-knowledge that his firm

01: ~y partner thereof holds an unexecuted, Iimited price ~J;der to

buy such security in the, unit of tradiI,Jg for a, customer, or (2). perso,I,l~llysell or initiate the sale of any security on the ex.cllange fmp

~y such account at or above th,e.pri,oo.(!lt,w;hich~he,,~J)ally holds

Qr:' has knowledge that his. fir~ or any partner thereof holds an

unexecuted limited price order to sell such security in. the unit of

tI:a.ding for a customer.

(0) The provisions of this rule shall not ll;pply (1;), to any' purc~ or sale of ~ny security ill an. a,moUJ;l.tof 1eB$than the unit of

twading made by an. odd-lot dealen. to offset odd-lot orders of' CW3"

tp~eI:s,. or (2) to any purchase or sale of.any securlty, delivery of

w,Qich is. to be upon a. day other than. .the. day' of delive.ry provided

such unexecuted market or limited pniee order.

~

~

~~
U~:"~'"Q.1' ~1!f¥ 4IJl0.~.rUl) EJ(ClU;NG~ COlW\tISSIQN 4~

. SInn )lm:"E. 81VJcesBifVftt:crmsactions by 'llUJIm1Jers.-No member,

aftd no firm of which he ia a. partner and no partner of such firm shall

e~ecute tU"- eanse to be executed on the exchange the purchase of any

security at successively higher prices or the sale of any security at

suceessively lower prices" for .th.e-.purpose of creating or inducing a.

f~I$6,nWileading or artificial appearance of activity in such security,

or fox the purpose of UllduJ.:yor improperly influencing the market

price o£ sueh security, 01' for the purpose of making a price which

does not reflect the true state of the market in sueh security.

SE~NT:a: RULE. Trodwg by nwm.hers holdilng opti(m,/J.- No member, while on the floor, shall initiate the purchase or sale on the exehange fer his ewn account or for any account in which he, or the

firm of which he is a partner or any partner of such firm, is directly

61' indirectly interested, of any security classified for trading as a

stock by the exchange, in which he holds or has granted .any put,

call, straddle, O.l' option, or in which he has knowledge that the firm

of which he is a. partner or any partner of such firm holds or has

geanted any-put, call, straddle, or option .

. EIGH'l'H RVLE. Record of 01'ller8.-(a) Every member or the firm

Q1which he is a partner or any partner of such firm shall preserve

fox' at least :m. months a. record of every order transmitted by such

member, firm, or partner to the floor of the exchange, which record'

shall include the name, amount, and price of the security and the

time when such order was. so.transmitted.

, (~) Every member shall preserve for at least 12 months a record

of ev~ry' order originating on the floor of the exchange given to such

Ul~er f()~.exec.u.tion,~and-of. every, order orig~a.ting. off.the-floe»,

iJransmitted by any person other than a member, firm, or partner,

to such member on the floor, which record shall include the name.

amount, and price. of the security, and the time when such order 'Was

sa given or transmitted, -;

NINTH RULE. ReflisM'ation 01 spf:ciolists.-No member shall act as'

a specialist in any security unless such member is registered as "a

specialist ill such security by the exchange.

T,E;N'm RDL:E. Traihng by specUilists.-No specialist shall effect 'on

the eschapge purchases or sales of any security in which such SJ?eeialist, is registeeed, for any account in which he, or the firm of which

he is a partner, 01' any partner of such firm, is directly Or indirectly

interested, unless- such dealings are reasonably necessary to permit

sqeh specialist to maintain a fair and orderly market, or to act as

an odd-lot dealer in such security. .

E~ BULE. loint accounts of speciolists.-No specialist, and

no firm of which he is a partner, and no partner of such firm, shan,

directly or indirectly, acquire or hold any interest or participation

30662-35--4

-
in any joint account for buying or selling on the 'exchange any security classifiedfor trading by the exchange as a stock in which sueh

specialist is registered, except a joint account with a partner of-such

specialist, a member of the exchange, or a firm of which .. member

is a partner.

1'w:ELFTH RULE.Records of specialist.-Every specialist shall-keep

a legible record of all orders placed 'with him in the securities in

which he is registered as a specialist and of all executions,modiflcations and cancelations of such orders, and shall preserve such record

and all memoranda relating thereto for a period of at least 12

months.

T1nRTEENTH RULE. Regist'Mtion of odd-lot deak'1's.-No member

of the exchange shall act as an odd-lot dealer in a security unless

such member is registered as an odd-lot dealer in such security by the

exchange.

FOURTEENTH RULE. Joint accounts of odd-lot dealers ..,.....;Nooddlot dealer, and no firm of which he is a partner, and no partner of

such firm, shall, directly or indirectly, acquire or hold any:interest

or participation in any joint account for buying or selling on the

exchange any security in which such odd-lot dealer is registered,

except It joint account with a partner of such odd-lot dealer, .. Member of the exchange, or a firm of which a member is a. partner .. .:

FIFTEENTH RULE. Opti011.8of specialists and odd-lot deolers.-No

specialist or odd-lot dealer, and no firm of which such specialist or

odd-lot dealer is a partner and no partner of such firm, shall acquire,

hold, or grant, directly or indirectly, any interest in any put, call,

straddle, or option in any security classified for trading as a stock:

by the exchange in which such specialist or odd-lot d.ealer -is

registered.

SIXTEENTHRULE.'short selling.-(a) No member shall use any.

"facility of the exchange to effect on the' exchange a short sale of

any security in the unit of trading at a price belowthe last sale price

of such security on the exchange.

(b) The provisions of this rule.shall not apply to any short sale

(1) by an odd-lot dealer to offset odd-lot orders of customers, (2)

by an odd-lot dealer to liquidate a long position which is less than

the unit of trading, provided the net change in the position of such

odd-lot dealer after any such short sale is not more than the unit

of trading in such security, or (3) by any member,with the approval

of the exchange, for-the purpose of equalizing the price of a security

on the exchange with the price of the same security on another.

national securities.exchange which is the principal market lot' such

securi~. . .

-
APPENDIX II

:RULES OF PRACTICE, SECURITIES AND EXCHANGE COMMISSION,

EFFECTIVE SEPTEMBER 13, 1935

RULE I

BUSINESS HOUR~IONAL OFFICES

The principal office of the Commission at Washington, D. C., is

-open on each business day, excepting Saturdays, .from 9 a. m, to

4 :30 p. m., and on Saturdays from 9 a. ill. to 1 p. ill. Regional offices

are maintained at New York, Boston, Atlanta, Chicago, Fort Worth,

Denver, San Francisco, and Seattle.

RULE II

.APPEARANCE AND PRaCTICE BEFORE THE COMMISSION UNDER THE SECURITIES ACT OF 1933 AND THE SECURITIES EXCHANGE ACT OF 1934

(a) This rule does not relate to the statements required by section

12 (i) of the Public Utility Act of 1935.

-(1)) Any individual or member of a partnership which is a party

to any proceeding before the Commission may represent himself or

such partnership in such proceeding, and a corporation, trust, or association may be represented by a bona fide officer thereof.

(e) A party may be represented in any proceeding by an attorney

:at law duly admitted to practice before -the Commission.

(d) A party shall not be represented at any hearing before the.

Commission or a trial examiner except as stated in paragraphs (1))

and (e) of this rule.

.. ~e)In. all matters other than hearingS before the Commission or atrial examiner, a party may be represented by an agent who is duly

admitted to practice before the Commission.

(f) All persons appearing before or transacting business with the

OlmmiSsion in a representative eapacitymay be required to file

powers of attorney with the Commission showing their authority to

act in such capacity.

(g) Commencing November 1, 1935, a register will be maintained

by the Commission in which will be entered the names and addresses

of all persons admitted to practice before the Commission. Only

individual members of firms will be admitted,

(h) Subject to the provisions of paragraphs (d) and (e) of this

rule, the following classes 'of persons whom the Commission finds,

on consideration of their application, to be of good moral character

-

-
and to possess the requisite qulilification to represent others, may be

admitted to practice before the Commission:

. , (1)' Attorneys at Iaw who 'are admitted to practice before 'tHy

court of the United States, the District of Columbia, or the

highest court of any State .01' Territory.

(2) Any person, not an attorney, to be designated as, agent,

who shall be a citizen- ~f t~ United States and who shall, in

the opinion of the Commission, possess the necessary education,

training, experience, and teehnieal qualifications which would

enable him properly to represent others before the Commlssioa,

(i) An application for admission to practice shall be addressed

to the Commission, Wa~hington, D. C., stating under oath the name,

residence address, and business address of the applicant, In the

case of an attorney, the time and place of admission to the bar and

whether the applicant has ever been suspended or disbarred as an

attorney in any court or jurisdiction shall be stated. In the c!1S~of

an agent, the application shall state briefly his education, training,

experience, and other legal' or technical qualifications.

(j) In the discretion of the Commission or trial examiner J an

attorney at law may be permitted to appear for the purpose of all}'

proceeding, though not theretofore admitted to practice in the w'Ry

prescribed.

(k) All persons appearing in any proceeding shall conform to the

standards of conduct generally required. of practitioners at law.

(l) The Commission may, in its discretion, deny admission to,

suspend, or disbar, any person who does not possess the requisite

qUl~lificati0ns to repr~t"o~. or who is-laeking in character, in~

tegrity, or proper professional conduct. Except as provided iiJi

paragraph (m) of this rule, a person who has boon admitted to praotice may be suspended or disbarred only after he has been afforded

an opportunity to be heard.

(m) Contemptuous conduct at any hearing before the Commission

or a trial examiner shall be ground for exclusion frem said hearing

and. for summary suspension without a. hearing for the duratioo of

the proceeding.

RULE III

XOTICE OF HE4R~GS IN CERT-AIN PROCEEDIKGS

(a) Whenever a hearing is ordered by the Commission ill,anI.

proceeding under section 8 of the Securities Act of 1933, notice. of

such hearing shall be given by the secretary of the Commission to

the person designated in the registration statement as being authoi-'~

ized to receive service and notice of orders and notices issued 'by the'

Commission relating to such registration statement. Such notice
..&lNNlJAL:REP.l:i>RT OF IDHE.SECURITlES AND EKCHANGE COMMISSION 47

~ll: state the time and place of hearing and shall include a statement of the items-in the registration.statement by number or name

which appear to be incomplete or inaccurate in any material respect

'Or ..to include any untrue statements of a material fact or to omit

to state any material fact required to be stated therein or necessary

to make the statements therein not misleading. Such notice shall be

given either by personal service ei- :by confirmed telegraphic notice

and shall be given a reasonable time before the hearing. The personal notice or the confirmation of the telegraphic notice shall be

accompanied by a short and simple statement of the matters to be

considered and determined at the hearing.

. (li) Whenever a hearing is ordered by the Commission in any

'proceeding under sections 6 (e), 11 (c), 12, 15, 19 (a) (1),19 (a) (3),

~r 19 (b) of the Securities Exchange Act of 1934, notice of such

~ea!ing .shall be given to the registrant, applicant, or other person

pl'. persons entitled to receive such notice by the Secretary of the

Commission or any other duly designated officer. Such notice shall

st~te' the time and place of hearing and shall include a short and

simple statement of the matters to be considered and determined at

the hearing. Such notice shall be given by personal service, registered mail, or confirmed telegraphic notice, and shall be given a

reasonable time before the hearing.

RULE IV

HEARINGS; EVIDEN"CE

.(-lIt) Hearings shall be held as ordered by the Commission .

.(b) All hearings, except .heaeings, if ordered, on objections to

public disclosure of information pursuant to the provisions of clause

"30 of. schedule A of the Secllrities,Act -of 1933 or section 24 (b) of

the Securities Exchange Act of 1934, shall be public, unless otherwise ordered by the Commission, and shall be held before the Commission, one or more of its members, or a duly designated officer

herein referred to as the trial examiner. References herein to hearIngs before the Commission shall include hearings before one or

more members of the Commission .

. (c) Hearings shall be stenographically r-eported and a transcript

!,~~~oofshall be made which shall be a part of the record of the

I?:l'~.eding. Transcripts will be supplied to the parties by the official

reporter at such rates as may be fixed by contract between the Commission and the reporter.

'~l~ (~): phjections to evidence before !J1eCommission or triitl exam-

~p.eF.shallbe in.short form, stating' ~~Jl~ds of objections relied

upon and the transcript shall not include argument or debate thereon

~~
48 ANNUAL REPORT Olr THE BEOURITIES AND-EXORANGE' OOMM:I88ION:

except as ordered by the Commission or the trial examiner. .Bulinga.

by the Commission or trial examiner on such objections shall be '3.

part of the transcript.

(e) In any proceeding the Commission or the trial examiner may

call for the production of further evidence upon any issue.

RULE V

MOTIONS

(a) Motions 'before 1the Commission or the trial examiner shall

state briefly the purpose thereof and all supporting affidavits, records, and other papers, except such as have been previously filed,

shall be filed with such motions and clearly referred to therein.

(b) Motions in any proceeding before a trial examiner which

relate to the introduction or striking of evidence may be ruled on

by the trial examiner. Exception to any such ruling must be noted

before the trial examiner, in order to be urged before the Commission. All other motions, including motions to dismiss, in any proceeding before a trial examiner shall be reserved and shall be ruled

upon by the Commission.

RULE VI

EXTENSIONS OF TIME; OONTINUANCES AND ADJOURNMENTS

Except as otherwise expressly provided .by law, the Commission

for cause shown may extend any time limits prescribed by theserules for filing any papers, and may continue or adjourn any hearing. A hearing before a trial examiner shall begin' at the time' and

place ordered by the Commission, but thereafter may be adjourned

from time to time by the Commission or trial examiner.

RULE VII

DEPOSITIONS

(a) The Commission may, for cause shown, order testimony to be

taken by deposition.

(b) Any party desiring to take a deposition shall make application in writing, setting forth the reasons why such .deposition should

be taken, the' name and residence of the witness, and the matters concerning which it is expected the witness will testify. Thereupon

the Commission may, in its discretion, issue an order which will

name the witness whose deposition is to be taken and specify thetime when, the place where, and the designated officer before whom.
:ANNUAL REPORT Oll' THE BEOURITmS AND EXOHANGE COMMISSION 49

the Witness is to testify. Such order shall be served by the Secretary of the Commission upon all parties a reasonable time before

the time fixed for taking testimony.

(c Witnesses whose testimony is taken by deposition shall be

sworn or shall affirm before any questions are put to such witnesses.

Each question propounded shall be recorded and the answers shall

be taken down in the words of the witness.

(d) Objections to the form' of questions or answers must be made

before the officer taking the deposition and if not so made, shall be

deemed waived.

(e) The testimony shall be reduced to writing by the officer, or

under his direction, after which the deposition shall be subscribed

by the witness and certified in usual form by the officer. The original

deposition and exhibits shall be forwarded under seal to the Secretary of the Commission with such number of copies as may be requested by the Secretary of the Commission. Upon receipt thereof

the Secretary shall file the original in the proceedings and shall

forward a copy to each party or his attorney of record.

(f) Such depositions shall conform to the specifications of rule

XIV.

(g) No deposition shall constitute a part of the record in any

proceeding until received in evidence at a hearing before the Commission or the trial examiner unless otherwise ordered or agreed

upon by the parties.

(h) Depositions may also be taken and submitted on written

interrogatories in substantially the same manner as depositions taken

by oral examination. The interrogatories shall be filed with the

application in triplicate, and copies thereof shall be served on all

other parties by the Secretary. Within 5 days any other party may

file with the Secretary his objections, if any, to such interrogatories,

and may file such cross-interrogatories as he desires to submit.

Cross-interrogatories shall be filed in triplicate, and copies shall be

served on all other parties, who shall have 3 days thereafter to file

their objections, if any, to such cross-interrogatories. Objections

to interrogatories or cross-interrogatories shall be settled by the

Commission or trial examiner. Objections to interrogatories shall

be made before the order for taking the deposition issues and if not

so made, shall be deemed waived. When a deposition is taken upon

written interrogatories and cross-interrogatories, neither party shall

be present or represented, and no person other than the witness, a

stenographic reporter, and the officer,shall be present at the examination of the witness, which fact shall be certified by the officer,

who shall propound the interrogatories and cross-interrogatories to
the witness in their order and reduce the testimony to writing in the

witness' own words.

RULE VIII

TRIAL EXAMINER'S REPORT

(a) Following any hearing before a trial examiner, the latter

shall, within 10 days after receipt of the transcript of the testimony,

file with the Secretary of the Commission his report containing his

findings of fact.

(b) Such report shall be advisory only, and the findings of fact

therein contained shall not be binding upon the Commission.

(a) A copy of such report shall be forthwith served by the Secretary of the Commission on each party.

(d) The trial examiner in his discretion may request from each

party or his attorney a statement in writing in terse outline setting

forth proposed findings of fact. Such statements shall not be exchanged between counsel and shall not be argued before, the trial

examiner. Any such statement shall be submitted within 5 days

after the transcript has been filed with the Secretary of the Commission,

(e) The provisions of this rule and of rules IX, X, and XI shall

not be applicable to investigations pursuant to section 19 (b) of the

Securities Act of 1933, or section 21 (a) of the Securities Exchange

Act of 1934, or hearings pursuant to clause 30 of schedule A of the

Securities Act of 1933, or hearings pursuant to section 24 (b) of the

Securities Exchange Act of 1934.

RULE IX

EXCEPTIONS

Any party may, within 5 days after receipt of a copy of the trial

examiner's report, file exceptions to the findings of the trial examiner or his failure to make findings, or to the admission or exclusion

of evidence. A copy of such exceptions shall be forthwith served

by the Secretary of the Commission on each party. Exceptions shall

be argued only at the final hearing on the merits.

RULE X

BRIEFS

(a) Any party to a proceeding may file a brief in support of his

contentions within 15 day:s from the date of service on such party

• • >
jlNwU.A1fR~POBT OF THE'SEOUltiTIES AND EXC:B:~NaEOOMMle&ION 51

of a copy of the trial examiner's report, or in the case of hearings

before the Commission within 15 days from the time the transcript

is filed with the Secretary of the Commission.

(b) All briefs shall be confined to the particular matters in issue.

Reply briefs shall be confined to matters in original briefs of opp~-

ing parties. Any scandalous or impertinent matter contained in any

brief may be stricken on order of the Commission.

(0) All briefs containing more than 10 pages shall include an

index and table of cases. The date of each brief must appear 011

its front cover or title page. If briefs are typewritten or mimeographed, 10 copies shall be filed; if printed, 20 copies. No briefs

shall exceed 60 pages in length, except with the permission of the

Commission.

(d) Copies of briefs shall be served by the Secretary of the Commission on the opposing party or parties and reply briefs may be

filed within 5 days thereafter. Briefs not filed on or before the time

fixed in these rules will be received only by special permission of the

Commission.

RULE XI

H.E.A:lUNGS ON REVIEW BEFORE THE COMl\USSION

(a) Upon written request of any party, which must be made within

the time provided for filing the original briefs, the matter will be

set down for oral argument before the Commission.

(b) If 01!'&1 argument before the Commission is not requested, the

matter will be considered without argument by the Commission on

the record of the hearing before the Commission or trial examiner,

the trial examiner's repor~' exceptions thereto, and the respective

briefs submitted.

(0) No exception to a trial examiner's report need be considered

by the Commission, unless such exception shall have been filed with

the Commission within the time prescribed in these rules. ExcepMOOS not briefed may be treated as waived. In the absence of exceptions that are sustained or of ascertained error, the findings of

fact in the report of the trial examiner, if supported by the evidence,

may be taken by the Commission as the basis of the findings of the

Commission.

(d) If any party shall apply to the Commission for leave to adduce

~di,tion~l ey,idenee,.and: shall.show oto the .satisfaction of the. ComJh'issioIl'that such additional evidence is material aD:dthat there were

reR89fiable grounds for failure to adduce such evidence at the hearing before the Commission or the trial examiner, the Commission

may hear such additional evidence or may refer the proceeding to

the trial examiner for the taking of such additional evidence.
RULE XII

FILING PAPERS; DOOKET; OOMP~ATION o~ TIKE

I' 4-'

e-

"', , I I.

(a) All reports, exceptions, briefs, and other papers required to

be filed with the Commission in any proceeding shall be filed with

the Secretary, except papers filed in connection with a hearing-under

section 24 (b) of the Securities Exchange Act of 193~,'ex,c~pt"pltp,Bts

filed in connection with a hearing under section 24 (b) of the

Securities Exchange Act of 1934. Any such papers may be sent

by mail or express to the Secretary, put must be received by the

Secretary at the office of the Commission in Washington, D. C.;

within the time limit, if any, for such filing, except that in ani

-ease when the hearing has been held in a district within which a

regional office has been established, papers filed under rules

VIII (d), IX, X, and XI (a) may be filed with the regional adminfstrator for the District, within the times prescribed. The regional

administrator shall immediately transmit such papers to the Secretary of the Commission. --

(b) The Secretary shall maintain a docket of all proceedings and

each proceeding shall be assigned a number.

(a) When the time prescribed by these rules or by the Commission

{-or doing any act expires on a Sunday or legal holiday, such. time

shall be, extended to include the next succeeding .day that is, not -a

Sunday or a legal holiday, but Sundays and legal holidays shall be

included in computing the time allowed for doing any act.

., (d) Unless otherwise specifically provided in these rules, an original and 5 copies of all papers shall be filed, unless the same be

,printed, in which case 20 copies shall be filed.

RULE XIII

SERVICE OF REPORTS, EXCEPTIONS, BRIEFS, AND OTHER PAPERS

Except as otherwise specifically provided by law or by these

.rules, all reports, exceptions, briefs, or other documents or papers

required by these rules to be served on any party to a proceeding,

shall be served by the Secretary of the Commission as follows:

(1) Service, except on counsel for the Commission, shall be made

by personal service on the party or his attorney of reeerd or by

registered mail addressed to the party or his attorney of record.

" (2) Service on counsel for the Commission shall be made by deliv-

-ery to the head of the division to which such counsel is assigned,'

.....

.

'j

.. ~ • _ .....

"

'
, . RULEXIY

, ,

.' ":FoRMAL REQUIREMENTS AS TO PAP'ER8 FILED IN PROCEEDINGS

'i.(a.):'All'papel'S filed under these rules shall be typewritten, mime-

-ographed, or printed, shall be plainly legible, shall be on one grade

,oi good unglazed white.ipaper approximately 8 inches wide and

'. .inches long, with left-hand margin l:1h inches wide, and shall

be..bound at the upper left-hand corner. They shall be double

spaced, except that quotations shall be single spaced and indented.

If printed, they shall be in either 10- or 12-point type with double-

.leaded text and single-leaded quotations.

, ('b) All papers must be signed by the party filing the same, or

'his duly authorized attorney or agent, and must show the address

.of the signer.

(0) All papers filed must include at the head thereof, or on a title

page, the name of the Commission, the names of the parties, and

the subject of the particular paper or pleading, and the docket

number assigned to the proceeding.

APPENDIX III

..(JtJIt)E' -TO .FORMS: ADOPTED' BY. THE SEOURITIES AND EXOHANGE-

;'()()MMISSION UNDER THE SEOURITIES ACT OF 1933, AS AMENDED,

AND THE SECURITIES EXCHANGE ACT OF 1934 COMPILED TO

.NOVEMBER 5, '1935

GUIDE TO FORMS ADOPTED UNDER THE SECURITIES ACT OF 19331

Form A-i. General form.-To be used in all cases for which no

--ootil@-form is specifically provided.

sPECIAL RULE AS TO THE USE OF FORM A-l

. 'Notwithstanding the rules for the use of form A-2 for corpora-

.tions, form A-I may be used by any incorporated investment trust

'for registration under the Securities Act of 1933, as amended, of

-securities comprising an additional block of securities of a class part

'of which has previously been registered Oil form A-l.

.FONnA-~. For corporations.-This form is to be used for registrati~nstatements, except such statements as to which a special form

is specifically prescribed, under the Securities Act of 1933, as

1This guide Is deslgued to aid In the Be1ect1onsof appropriate forms and Is revised from

:1:ime to time as circumstances require. Copies of the forms herein referred to will be

tamished- ~1thout charge opon request. .

~~
amended, by any corporation which files profit and loss statements

for 3 years and which meets' either- one of the following conditions.

(a) Such corporation has made annually available to its securityholders, for at least 10 years, financial reports (which may be reports

consolidating the reports of the. corporation and its subsidiaries} including at least a balance sheet and a profit and loss or income

statement, or (b) such corperation had 8. net income Tor llny 2 fiscal,

years of the 5 fiscal years preceding the date of the latest balance'

sheet filed with the registration statement. If such corporation has

subsidiaries, such income shall be determined on the basis of consolidated reports for such. corporation and its subsidiaries. Notwithstanding what is hereinabove prescribed in this paragraph, however, this form shall not be used by any corporation organized within

10 years, if the majority of the capital stock thereof was issued to

promoters of the corporation in consideration of property or services,

or if more than one-half of the proceeds of the sale of securities of

such corporation has been used to purchase property acquired by the

corporation from the promoters of the corporation.

This form may also be used for registration statements (except

such statements as to which a special form is specifically prescribed)

by a corporation organized' for the purpose of distributing to its

stockholders only, water, electl"ieity, or gas, and prohibited from

pa.ying any dividends to its stockholders except upon its dissolatien

or liquidation, provided that1. The corporation has been in existence at least 15 years prior

to the date of the filing of the registration statement;

2. There has been no default by the corporation upon any of

its funded indebtedness within the period of 15 years prior to

the date of the filing of the registration statement; .

3. The registrant will have a total indebtedness, upon the

issuance of the seourities registered, not exceeding 50 percent of

the amount, less valuation reserves, at which the total assets- of

the registrant are carried on the latest balance sheet of the registrant filed with the registration statement, giving effect to tQ,e

proceeds of the securities registered; and

4. Within the period of 10 years preceding the date of, th.~

filing of the registration. statement, the corporation shall not

have failed to levy and collect assessments in amounts sufficient

to meet all current c~~rges. '

SPECIAL Rl'LES _\S TO THE USE OF FOR~I A-2 FOR CORPORATIONS '. . .,.. ,j 'Co",' "I. ,

1. Notwithstanding that form E-1 is speeiflcally prescribed .fOl"

Usein cases involving an exchange of securities by the issurer thereof"

for others of its securities or a modification of the terms of securities.

" ' ' ~ i •
~N1iI~AL REPORT OF THE SECURITIES A,NJ),EiK:CHANGE {'.()MMISSION 55

by agreement between the issuer a.nd its security holders, a registrant

otherwise entitled to use form A-2 may, at its option, use form A-2

in any such case if the registrant is not in. reorganization pursuant

to section 7'7B of the Bankruptcy Act.or in bankruptcy or receivership and if no default exists on any outstanding funded debt (other

than a default in sinking fund payments which has been waived by

the holders of at least 80 percent in principal amount of the issue

outstanding). If form A-2 is used pursuant to.this rule the fee payable for registration shall be .calculated .in. accordance with instruction 7 in form E-1, and the table setting forth the calculation shall

be prepared as prescribed in such form. The following requirements

shall also be complied with:

. (a) There shall be furnished in answer to item 24 information

'as to the basis upon which the outstanding securities of the

registrant are to be modified or exchanged .

. (b). A copy of the plan or agreement, if any, pursuant to

which the outstanding securities are to be modified or exchanged

, . shall be filed as an exhibit to the registration statement.

" 2. In case all the following conditions exist:

(a) Within the past 10 years the registrant was organized as

the successor to a single predecessor, all of the assets of which

were transferred by such predecessor to the registrant and all

of the liabilities of such predecessor were assumed by the regis-

,tr8J!t; and

',' '. (b) The capital structure of the registrant, at the time of

such succession, was substantially the same as that of the predecessor, other than for such change as may have resulted from

, changing the capital stock liability per share;

the {registrant and such a predecessor shall be deemed one person

the purpose of determining whether.the-conditions of the general

rule as to the use of form A-2 for corporations, as set forth under

the first paragraph of the" rule as to the use of form A-2 for corporations "exist. In such case, however, wherever the word " regis4:aJ,lt" occurs in the registration statement, it shall be deemed to

include such predecessor unless the context clearly shows otherwise.

_ .3. ,N-otwithstanding the provisions of the' last sentence of the rule

for the use of form A-2 for.corporations, that form may be used

by: a corporation otherwise entitled to use the form, if the property

.aeqQir:ed from .promoters under the circumstances stated in such last

sentence consisted principally of one or more going businesses, or of

~ties'representing directly' or.indirectlg more than 50 percent of

,the .voting po-wer-controlling such .busiaesses,

Any corporation filing on form A-2 by virtue of this special rule

.3 shall set forth in its registration statement the following addi-

~~
56 'ANNUAL REPORTO'FTrm'sBdjRiTiEsAN'rjExcHANfm COMMIssItnr

tional item; designated as item' 45:8.,' arid 'shall, furnish 'the ,info1rin8,i,

tion required thereby: ;,. ' , , ,

Item 45a: .A2, to each business acquired by the registrant; di~

rectly or through the acquisition "Of securities in eire~ s ;

which would have -prevented. the' use' -of farm' A-2 e~pt;.for ,.

the operation 0:11 special -rule 3 as to the use of form A-2: ' ,

(a) Describe briefly the transaction by which such business or such securities were acquired, including a statement

as to any write-up or write-down in investments, in' prOI>~

erty, plant, and equipment, or in intangible assets, effected

in connection with or in the course of the transaction. ,1

(b) Ifthe business or the securities representative 'thereof

were acquired by tlie promoter looking to their transfer to.

the registrant, or within 6 months prior to their transfer tothe registrant, state the cost of such business or securities.

to the promoter and the total amount of securities and

other consideration given to the promoter therefor. ''-

Notwithstanding the 'rules 'as to the use of form E-1, or the rule

as to the use of form A-2 for corporations, form A-2 may be used.'in

the situation described below for registration statements, except thosefor which a special form' (other than form E-1) is specifically prescribed, by corporations which file profit and loss statements of their

own or of their predecessors for 3 years and which, or the predecessors of which, have in the past 1~ years paid dividends upon any class

of common stock for at least "2 consecutive years. The situation in

which form A-2 may thus be used is that of registration of securities!

issued or sold in the course of a ":r~organization ", as defined iD.:rti:l:e1>-

(1) as to the use of form E-l, 'where the only operation which brings

the transaction within the definition is the acquisition of assets of

a subsidiary by the registrant in consideration of securities of theregistrant, or the exchange of securities of the registrant for outstanding securities of a subsidiary; .

Where form A-2 for corporations is used in accordance with the

above rule, certain additional information is required. This is specified in Release 309 (Class C), dated March 7,1935. '

, Form 0-1. For securities of ''Unincf?1'P.oratedinvestment trusts.-

This form is to be used for -the' registration of securities of unincorporated investment trusts not having a board of directors': (urpersons performing similar functions) of the fixed or restricted man:"

agement type having a depositor or sponsor. ,

Form O.:-~.For certain t'!lP~ of certificates of interest in 1J6()'UNties.-This form is to be used :f?r:registration under the Seeurities , , I Flo

, .~ . ,",
:ANlif.tJ.ADREPORT OF'THB'SECURlTIES AND,EXCHANGE :COMMISSION 51

Act of 1933 of certificates.of interest in securities of a single class

of a-single issuer, if the following conditionsexist: .

(1) The major part of the certificates are to be sold to the

"publiC:for cash;

'(2). 'Under the terms.of the depositragwamtWt.the'Jdeposioor,

(as defined below) has no rights or duties as depositor, subsequent to the deposit of the securities with the depositary;

(3) Under the terms of the deposit agreement the power tovote' or give a consent with respect to the deposited securities

.: may he exercised only by, or pursuant to the instructions' of,

:the holders of the certificates of interest, except a power, if

any, to vote to effecta split-up of deposited stock in such man..

ner as to cause no change in the aggregate capital stock liability'()f the issuer of the depositedsecurities;

(4) The securities deposited by the depositor are registered

under the SecueitiesAct of 1933in connectionwith the sale of

. 'the certificatesof interest.

Form D-1. For certificates of deposit (er.cceptthose for which

101'1fI, D-1A: is speCified).-In registering certificatesof deposit issued

in anticipation of or in connectionwith a plan of reorganization orreadjustment, form D-1 shall be used. If a plan of reorganization

or readjustment is proposed at the time the call for depositsis to be

made, parts I and II of form D-l should be filed at the same time.

If no such plan is proposed at the time the call for deposits is to be

made, 'part 1may be filed alone, and part II must then be filed

before the-plan is submitted to the security holders or deposits are

solicited under the plan. Part II is an amendment,of part I, -and

as such shall becomeeffectiveon such date as the Commissionmay

determine, having due regard to the public interest, and the protection of investors.

In the event that a registrant is exempted from the necessity for

filing part I, he may neverthelessfile part II.

Before the issuanceof the securities provided in the plan of readjustment or reorganization, form E-1 is to be filed hy the issuer of

such securities, unless exempted from the necessity of sueh filing ,by

the act.

;Form D-1X For certificates of deposit.-This form is to be used '

only where the issuer of the certificates of deposit is the original

issuer of the securities called for deposit, and only if the certificates

of deposit are issued in connectionwith a plan of reorganization or

readjustment which involvesthe issueof new securitieSto- the holders

of certificatesof deposit.

Form E-1. F01' 8etlUritie8 in re01'ganizatitm..-This form is to be

used to register securities (including contracts of guaranty but ex-

-
58 :ANNUAL REPORT OF THE SECURITIES AND EXCHANGE COMMISSION

cepting voting trust certificates, certificates of deposit, and oertifi",

cates of interest or shares in unincorporated investment trusts. of

the fixed or restricted management type, not having a board of directors or a board of persons performing similar functions, but having

1L depositor or sponsor) sold or modified in the course of reorganization.

Reference should be had to form E-l itself for a full statement

of the rules governing its use.

In the, case of any guaranty of, or assumption of li3bility on,

securities heretofore registered on form D-2, registration of-.such

guaranty or assumption of liability may, at the option of the issuer,

be effected on form D-2 or form E-l.

. NOTE.-Attention is called to the rules as to the use of form' A-2

which permit the use of that form in certain instances for securities

in reorganization .

. Form F-1. For uotinq trust certificates.-This form is to be used

to register voting trust certificates issued in the course of reorganization or otherwise.

Form- G-1. For fractional. undivided' gas ond. oil 1'Oyaity interests.-Form G-l is to be used to register fractional undivided producing oil arid gas royalty interests.' "

The term " producing royalty interest" means any royalty interest

in a tract of land from which oil and gas was being produced in

commercial quantities within 7 days prior to the filing of the registration statement and from which the production of oil or gas had

not permanently ceased.ito the knowledge of the issuer, on the date

on which the statement became effective.

" Form G-$. For fraotional wrulivided 1wnproducing gas and oil

royalty interests.-Form G-2 is to be used to register fractional

undivided nonproducing oil and gas royalty interests.

The term "nonproducing royalty interest" means any royalty

interest not included in the definition of " producing royalty interest" above.'

-.'.NOTE.-Forin A-l should be used for overriding royalties and

working interests, .as distinct from landowners' royalties for which

forms ~-l and G-2 ~re appropriate. In the care of overriding royalties or' ,,;orking interests, however, the information specified by

form G-l or ,G-2 should be added to the statement on form A-t by

way of Supplemen~l material.

. F07'1'I!'l-Q!,For-confld,entrialstate,11wnt.of ~qle oroiJ OP,'f/(l;fJ i"!lt.er..

e8t.-T~is form is to be used for confidential: statements of sales, of

qil Qr gas mterests, . . . ' '.' .. : .~....

. \ : 1 . . .'1
ANNUAL REPORT OF THE SECURITIES AND EXCHANGE COMMISSION 59

INFORMATION AND DOCUMENTS REQUIRED IN THE CASE OF CERTAIN

SECURITIES EXEMPTED UNDER SECTION 3 (B) OF THE SECURITIES ACT

Certain issues of securities having an aggregate offering price to

the public not exceeding $100,000 are exempted from the registration provisions of the act by regulations of the Commission pursuant

to section 3 (b) of the act upon compliance with certain conditions

provided in the regulations. The pertinent regulations are as

follows:

Release No. 182.-Exemption of certain types of issues other than

those specified below.

Release No. 218.-Exemption of issues of securities issued to depositors, creditors, or stockholders pursuant to a plan of reorganization under the Bank Conservation Act of 1933.

NOTE.-The particular conditions to be complied with for exemption under Releases Nos. 182 and 218 are set out in Compilation of

Regulations, under the Securities Act of 1933, as amended, available

on request without charge.

Release No. 355 (Olass 0), as amended by Release No. 373 (Olass

O).-Exemption of issues of fractional undivided oil and gas interests.

Release No. 390 (Olass 0) .-Exemption of fractional undivided

mineral rights other than oil or gas interests.

GUIDE TO FORMS ADOPTED UNDER THE SEOURITIES EXCHANGE

ACT O}j~1934'

A. FOR REGISTRATION OF SECURITIES

Form 2. For temporary registration of eecuritie« by the issuer.-

This form is to be used by the issuer to apply for temporary registration of securities which were listed on an exchange at the time the

registration of the exchange as a national securities exchange became

('ffective.

Form. 7.-Where the form for permanent registration of any other

particular class of security has not yet been authorized, and for a

period of 90 days after the filing of applications on such form is

authorized, a provisional application for registration of a security

of such class may be filed on form "{pursuant to rule JB2. (Rule

JB2 sets forth the requirements of an application filed on form 7.)

This' guide Is designed to aid in the selections of appropriate forms and is revised

from time to time as circumstances require. Copies of the forms herein referred to will

be furnished without charge upon request.

30662-35-5

•
60 ANNUAL REPORT OF THE SECURITIES AND EXCHANGE COMMISSION

Form 8. For amendment» to applications for registration.-This

form shall be used for amendments to applications for registration of

securities pursuant to section 12 (b) or (c) of the Securities Exchange

Act of 1934.

Form 8.A. For seeuritiee is81.JJeiln ewchange for registered securities.-This form may be used for applications filed on and after

October 24, 1935, for the registration of securities, for which the

filing of applications for registration of forms 10, 11, 13, 15, or 17

is authorized, issued exclusively in exchange for securities of the

registrant registered, pursuant to an application on one of said forms,

on the exchange on which registration is applied for on this form.

Securities resulting from a modification of other securities shall be

deemed to have been issued in exchange for such other securities.

Form 10. For cOl'porations.-This form shall be used for applications for the permanent registration of securities of corporations,

filed on and after February 13, 1935,except the following: Securities

of companies making annual reports under section 20 of the Interstate Commerce Act, as amended, or under section 219 of the Communications Act of 1934; certificates of deposit; American certificates

against foreign issues, either government or corporate; securities

of insurance companies, other than companies engaged primarily

in the title insurance business; securities of banks and bank holding

companies; securities of investment trusts; securities issued by any

corporation organized under the laws of any foreign country other

than. a North American country or Cuba; bonds issued by any corporation organized under the laws of a North American country

or Cuba, which are guaranteed by any foreign government; securities

issued by any corporation, foreign or domestic, which is directly or

indirectly owned or controlled by any foreign government; securities

of corporations in process of reorganization pursuant to section 77

or 77B of the Bankruptcy Act; securities of corporations in bankruptcy or receivership; securities of a corporation which, at or immediately prior to the revesting of title hereinafter mentioned, shall

have been in bankruptcy or in the process of reorganization pursuant

to section 77 or 77B of the Bankruptcy Act, if a trustee or trustees

shall have been appointed in such proceedings, and if, within 6

months prior to the filing of the application, title to an or substantially all of the assets of such corporation shall have been revested

in such corporation; securities of a corporation which, at the date of

entry of the order hereinafter mentioned, shall have been in the

process of reorganization pursuant to said section 77 or 77B, if no

trustee shall have been appointed in such proceedings, and if, within

6 months prior to the filing of the application, a plan pursuant to

which such corporation is to retain all or substantially all of its
ANNUAL REPORT OF THE SECURITIES AND EXCHANGE COMMISSION 61

assets has been confirmed by order pursuant to said section 77 or

finally confirmed by order pursuant to said section 77B; securities

of a corporation which, at or immediately prior to revesting of possession hereinafter mentioned, shall have been in receivership, if,

within 6 months prior to the filing of the application, possession of

all or substantially all of the assets of such corporation shall have

been revested in such corporation; and securities of a corporation

organized for the purpose of acquiring all or substantially all of the

assets of another issuer, and which, within 6 months prior to the

filing of the application, acquired such assets. Any foreign issuer

which by this paragraph is to file on form 10 as to any class of

securities other than bonds may also file on such form for such bonds;

and any issuer of bonds which is organized under the laws of any

foreign country may at its option file on form 10 until 90 days after

the proper form applicable to such foreign issuer shall have been

published.

Form 11. For unincorporated issuers.-This form shall be used for

applications filed on or after March 30, 1934, for the 'permanent

registration of securities of unincorporated issuers, except the following: Securities of companies making annual reports under section

20 of the Interstate Commerce Act, as amended, or under section

219 of the Communications Act of 1934; certificates of deposit, voting trusts certificates; American certificates against foreign issues,

either government or private; securities of insurance companies;

securities of banks and bank holding companies; securities of investment trusts; securities issued by a national of a foreign country

other than a North American country or Cuba; bonds issued by a

national of a North American country or Cuba, which are guaranteed by any foreign government; securities of any issuer, foreign or

domestic, which is directly or indirectly owned or controlled by any

foreign government; securities of an issuer in process of reorganization pursuant to section 77 or 77B of the Bankruptcy Act; securities

of an issuer in bankruptcy or receivership; securities of an issuer

which, at or immediately prior to the revesting of title hereinafter

mentioned, shall have been in bankruptcy or in the process of reorganization pursuant to section 77 or 77B of the Bankruptcy Act,

if a trustee or trustees shall have been appointed in such proceedings,

and if, within 6 months prior to the filing of the application, title

to all or substantially all of the assets of such issuer shall have been

revested in such issuer; securities of an issuer which, at the date of

entry of the order hereinafter mentioned, shall have been in the

process of reorganization pursuant to said section 77 or 77B, if no

trustee shall have been appointed in'such proceedings, and if, within

6 months prior to the filing of the application, a plan pursuant to
62 ANNUAL REPORT OF THE SECURITIES AND EXCHANGE COMMISSION

which such issuer is to retain all or substantially all of its assets has

been confirmed by order pursuant to said section 77 or finally confirmed by order pursuant to said section 77B; securities of an issuer which, at or immediately prior to the revesting of possession

hereinafter mentioned, shall have been in receivership, if, within 6

months prior to the filing of the application, possession of all or

substantially all of the assets of such issuer shall have been revested

in such issuer; and securities of an issuer organized for the purpose

of acquiring all or substantially all of the assets of another issuer,

and which, within 6 months prior to the filing of the application,

acquired such assets. .

FO'J'111l12.For compomies making annual reports under section:

of the Interstate Oommeroe Act, as amende&, or tIllUkr section 219

of the 001n7nwnicati0'n8 Act of 193.4, except 8'WChoompaniee in receivership or in process of reorganization pur8UU1Tlltto section 17 of the

Ba~pt<J!f Act.- This form shall be used for applications filed on

or after April 10, 1935, for the permanent registration of securities

. of companies making annual reports under section 20 of the Interstate Commerce Act, as amended, or under section 219 of the Communications Act of 1934, except such companies in receivership or

in process of reorganization pursuant to section 77 of the Bankruptcy Act.

Fo7Wb113-A. For companies in receioerehip or bankruptcy and maleing an'llflUilreports under section: of the Interstate Oommerce Act,

as amended, or under section. 219 of the OomtrrlJl1l11i,cationsAct 01

193.4.- This form shall be used for applications filed on or after

June 17, 1935, for the permanent registration of securities of companies making annual reports under section 20 of the Interstate

Commerce Act, as amended, or under section 219 of the Communications Act of 1934, and in receivership or in bankruptcy (including

proceedings under sec. 77 or 77B of the Bankruptcy Act).

Fo-'I'111I13.For ineueanoe companies other than life- and title-insurance oonuponies>« This form shall be used for applications filed on

or after May 7, 1935, for permanet registration of securities of corporations engaged, directly or through subsidiaries, primarily in the

insurance business, except corporations engaged primarily in the lifeor title-insurance business. This form shall not be used by corporations engaged primarily in the business of guaranteeing mortgages

or mortgage participation certificates.

Pending the authorization of a form for registration of securities

of corporations engaged primarily in the life-insurance business, and

for a period of 30 days after the filing of applications on such form

is authorized, such corporations may file application on form 13 for

insurance companies other than life- and title-insurance companies.

~

~
ANNUAL REPORT OF THE SECURITIES AND EXCHANGE COMMISSION 63

Insofar as form 13 may be inappropriate to the life-insurance business, a corporation engaged in the life-insurance business filing on

form 13, pursuant to this rule, shall furnish information comparable

to that required by form 13; and, in lieu of financial statements

required under the instructions as to financial statements in the

instruction book for form 13, such corporation may file a copy of its

last annual statement filed with its State regulatory authority.

Form 14. For certificates of deposit issued by a committe e.-This

form shall be used for applications on or after May 10, 1935, for

the permanent registration of certificates of deposit issued by a

committee.

Form 15. For incorporated investment c01npanies.-This form

shall be used for applications filed on or after May 15, 1935, for the

permanent registration of securities of any corporation which is engaged, either directly or through subsidiaries, primarily in the business of investing and reinvesting, or trading, in securities, for the

purpose of revenue and for profit, and not in general for the purpose,

or with the effect, of exercising control; except securities of such

corporations in process of reorganization pursuant to section 77B

of the Bankruptcy Act or securities of such corporations in bankruptcy or receivership.

Form 16. For votin!! t1'U8tcertificates 0JJU1 underlying seawrities.-

This form shall be used for applications filed on or after May 18,

1935, for the permanent registration of voting trust certificates and

underlying securities.

Form 17. For unincorporated issuers engaged pri7TU1ll'ilyin the

business of investing 01' trading in seaurities.-This form shall be

used for applications filed on or after May 31, 1935, for the permanent registration of securities of any unincorporated issuer which is

engaged, either directly or through subsidiaries, primarily in the

business of investing and reinvesting, or trading, in securities, for

the purpose of revenue and for profit, and not in general for the

purpose, or with the effect, of exercising control; except securities

of such issuers in process of reorganization pursuant to section 77B

of the Bankruptcy Act or securities of such issuers in bankruptcy

or receivership.

Form 18. F071 foreign governments and political subdivisions

thereof.-This form shall be used for applications for the permanent

registration of securities of foreign governments and political subdivisions thereof, filed on or after July 1, 1935; provided, however, that

any public corporation or other autonomous entity in the nature of

a political subdivision, except a State, province, county, or municipality or similar body politic, may, at its option, use form 21 in lieu

of this form.
64 _\NNUAL REPORT OF THE SECURITIES AND EXCHANGE COMMISSION

Form 19. For Amerioam. certificates against foreign issue'S and for

the underlying securities.-This form shall be used for applications

filed on or after July 15, 1935, for the permanent registration of

American certificates (for example, so-called American depositary

receipts for foreign shares or American participation certificates in

foreign bonds or notes) issued against securities of foreign issuers

deposited with an American depositary (whether physically held by

such depositary in America or abroad) and of the foreign securities

so deposited.

Form fZO.For securities other than bonds of foreign private is8uel's.-This form shall be used for applications filed on or after

July 15, 1935, for the permanent registration of securities other than

bonds or other evidences of indebtedness (1) issued by a national

of a foreign country other than a North American country or Cuba,

or (2) issued by any corporation or unincorporated association, foreign or domestic, which is directly or indirectly owned or controlled

by any foreign government.

Form fZ1.For bonds of foreign private issuers.-This form shall

be used for applications filed on or after July 15, 1935, for the permanent registration of bonds or other evidences of indebtedness (1)

issued by a national of a foreign country other than a North American country or Cuba, (2) issued by a national of a North American

country or Cuba which are guaranteed by any foreign government,

(3) issued by any corporation or unincorporated association, foreign

or domestic, which is directly or indirectly owned or controlled by

any foreign government, or (4) issued by any public corporation or

other autonomous entity in the nature of a political subdivision

which shall at its option elect to use this form in lieu of form 18,

except that this form is not to be used by a State, Province, county,

or municipality or similar body politic.

Form I-J.-This form is to be used for applications for registration of unissued warrants or certificates pursuant to section 12 (d)

of the Securities Exchange Act of 1934 for" when issued" on a national securities exchange.

Form fZ-J.-This form is to be used for applications for registration of unissued securities, other than unissued warrants or certificates, pursuant to section 12 (d) of the Securities Exchange Act

of 1934 for" when issued" dealing on a national securities exchange.

Form 3-J.-Form 3-J must be used to report any inaccuracy, omission, or other deficiency in the information contained in the application for registration on form 1-J or form 2-J, or in any supplemental

statement filed by an issuer or an exchange, and to report changes

which have occurred since the filing of the application for registration or the last supplemental statement, and which render no longer

accurate the information contained therein.
ANNUAL REPORT OF THE SECURITIES AND EXCHANGE COMMISSION 65

Form 4--J.-This form is to be used for statements in respect of

exemption of issued warrants or certificates pursuant to section.

3 (a) (12) of the Securities Exchange Act of 1934.

Form 5-J.-Form 5-J must be used to report any inaccuracy,

omission, or other deficiency in the information contained in the

statement filed on form 4-J or in any supplemental statement filed

by an issuer or an exchange and to report changes which have occurred since the filing of form 4-J or the last supplemental statement and which render no longer accurate the information contained

therein.

B. FOR REPORTS TO BE FILED BY OFFICERS, DIRECTORS, AND SECURITY

HOLDERS

Form 4-. For reporting changes in ownership of equity securities.-Every person who at any time during any month has been directly or indirectly the beneficial owner of more than 10 percent of

any class of any equity security (other than an exempted security)

which is listed on a national securities exchange, or a director or an

officer of the issuer of such security, shall, if there has been any

change during such month in his ownership of any equity security

of such issuer, whether registered or not, file with each exchange on

which any equity security of the issuer is Iisted and registered a

statement on form 4 (and a single duplicate original thereof with

the Commission) indicating his ownership at the close of the calendar month and such changes in his ownership as have occurred during such calendar month. Such statements must be received by the

Commission and the exchange on or before the 10th day of the

month following that which they cover.

Form 5. For reporting oumership of equity seeurities.-In the case

of an equity security (other than an exempted security) which is listed

subsequent to February 15, on a national securities exchange, every

person who at the time such registration becomes effective is directly

or indirectly the beneficial owner of more than 10 percent of any class

of such security or a director or an officer of the issuer of such security, shall file with each exchange on which any equity security

of the issuer is listed and registered a statement on form 5 (and a

single duplicate original thereof with the Commission) of the amount

of all equity securities of such issuer, whether registered or not, so

beneficially owned by him at the time such registration became effective. Such statement must be received by the Commission and the

exchange on or before the tenth day of the following calendar month.

If such person files a statement pursuant to paragraph (b) of this

rule for the same calendar month in respect of the same securities,

he need not file an additional statement pursuant to this paragraph.
66 ANNUAL REPORT OF THE SECURITIES AND EXCHANGE COMMISSION

Form 6. For reports by persons who ha'IJeju8t become offieers or

directors or security holders of more than 10 percent of any class of

equity security.-Every person who becomes directly or indirectly the

beneficial owner of more than 10 percent of any class of any equity

security (other than an exempted security), which is listed on a

national securities exchange, or becomes a director or an officer of

the issuer of such security, shall file with each exchange on which

any equity security of the issuer is listed and registered a statement

on form 6 (and a single duplicate original thereof with the Commission) of the amount of all equity securities of such issuer, whether

registered or not, so beneficially owned by him immediately after

becoming such beneficial owner, director, or officer. Such statement

must be received by the Commission and the exchange on or before

the tenth day following the day on which such person became such

beneficial owner, director, or officer. Such person need not file the

statement required by this paragraph, if prior to such tenth day and

during the calendar month in which he has become such beneficial

owner, director, or officer, there has been a change in his beneficial

ownership which will require him to file a statement. pursuant to

paragraph (b) of this rule with respect to the same securities.

C. FOR REGISTRATION OF BROKERS AND DEALERS

Form i-N. For brokers fIfJU1 dealers t'l'ansacting business on overthe-coumier markets.- This form is to be used for the registration

statements of brokers and dealers transacting business on over-thecounter markets.

Form ~N. For supplementary statements of brokers ana dealen-Form 2-M must be used to report inaccuracies in the information contained in the registration statement filed on form 1-M or

in any supplemental statement filed by a broker or dealer and to

report changes which have occurred since the filing of the registration statement or the last supplemental statement and which render

no longer accurate the information contained therein.
ANNUAL REPORT OF THE SECURITI1iJSAND EXCHANGE COMMISSION 67

APPENDIX IV

SECURITIES ACT REGISTRATION STATEMENTS AS TO WHICH

STOP ORDERSt.,CONSENT REFUSAL ORDERS, AND WITHDRAWAL

ORDERS WER~ ISSUED SEPT. 1, 1934 TO JUNE 30, 19351

Docket

no. Form Amount Type of

order' Date

Mar. 26, 1935

May 17,1935

Oct. 17,1934

Nov. 19,1934

May 7,1935

Apr. 24, 1935

June 3, 1935

Oct. 25,1934

Mar. 14,1935

Ian. 15,1935

Apr. 22, 1935

Feb. 1,1935

June 21,1935

Ian. 12,1935

May 10,1935

Sept. 17,1934

Jan. 26, 1935

June 10,1935

June 15,1935

Dec. 5,1934

Nov. 5,1934

Aug. 26,1935

Nov. 17,1934

June 17,1935

June 13,1935

Sept. 13,1934

Apr. 3,1935

Apr. 20,1935

June 30,1935

lune 15,1935

Sept. 26, 1934

Jan. 30,1935

Oct. 10,1934

Feb. 18,1935

W

W

W

W

W

W

SO

CRO

SO

W

CRO

W

W

SO

CRO

W

SO

80

SO

CRO

W

$270,000 CRO' Dee. 12, 1934

$800,000_______________SO Apr. 4, 1935

$350,000_______________ W Dec. 21,1934

$296,562.50.____________CRO lune 14,1935

$331,250 ._

face, $164,566.67 $12,500 ._ $31,250

$275,000

$27,000

$200,000

$43,666.67(~face)

$400,000

$250,000

$500,000

}$6,300 .___ W

$123,998 {

}

face ($830,000), or } CRO $110,000.

$281,250_______________ W

$141,780_______________ W

$408,571_______________ W

$200,000_______________CRO

$240,000_______________ W

A-I

E-1

G-1

G-l

A-I

D-1

rr.m

A-I

2-1446

2-913

2-908

2-1393

2-1373

2-1152

2-1155

2-1335

2-1168

2-519

2-1101 Alliance Brick Oo., AllIance, Ohio______ A-I $320,000

2-1176 American Credit Corporation, San A-I $625,50(1..

Francisco. Cabf.

2-102 American Gyro Oo., Denver, Colo______ A-I $18,839.53.

2-1095 Amer1can Irrigation Oo., Wilmington, A-I $415,000

Del.

2-876 American Participations. Inc., of Dela- A-I $5,000,000._____________SO lune 7,1935 ware, WilImngton, Del. 2-1205 Arroyo Seco Gold Dredging Oo., San A-I $450,000

FranCISCO,Calif.

2-1151 Atwood Multiple Writer, Detroit, Mieh, A-I $432,500 2-1382 Automatic Signal Acceptance Corpora- A-I $900,000

tion, Dover, Del.

2-1192 Basin Gold & Silver Mining Corpora- A-I

tion, Ine., Basin, Mont.

2-1103 Big Wedge Gold Mining oe., Los A-I

Angeles, Oahf,

2-892 Bill-O-Type Corporation, St. Louis, Mo_ A-I

2-1815 Boulder Gold Mines, Ine., Oakland, A-I

Calif.

2-1148 Brandy-Wme Brewmg Co., Brandy- A-I $1,295,000

wme,Md. 2-763 California-New York Mining Oo., Inc., A-I $375,000

Yreka, Calif.

2-1371 Canadian American Mining Co., Love- A-I

lock, Nev.

2-1224 Caribbean Fisheries, Ine., New York A-I

CitY,N. Y.

2-976 Edwin Carson and Clara Carson, B. P.

Comm., 6429-6437 Stewart Avenue, Chicago, Dl.

2-232 Chattanooga Brewing Co. ,Chattanooga,

Tenn.

2-1139 Ohristman Brewing Oo., New Lisbon, A-I $175,000_______________ W

Wis.

2-1353 L. E. Cooper, Tulsa, Okla______________ A-I $100,000_______________ W 2-ll54 Co-operative Investing Group, Fort A-I $500,000_______________ W

Worth, Tex.

2-561 Continental Distillers & Importers Cor- A-I $3,307,500 .

poration, New York City, N. Y.

Corporate Leaders Reserve Fund, Ine.,

New York, N. Y.

W. T. Culver Oo., North Bend, Oreg W. R. Curry, Oklahoma City, Okla do

Darwin Gold Mmes, Ltd., Toronto,

Ontario, Canada.

The Delte Oil oo., Ine., Cooper, Tex___ A-I

Divide Gold Mining Corporation, Lar- A-I

amie, Wyo.

2-1093 vr.s. Dobbs, Dallas, Tex { <t~

2-1349 Woris Ruby Mining oe., Buena Vista, } A-I l Colo.

{

Bondholders' protective committee for } D-1

first-mortgage sinking-fund gold bonds I and

of John E. DuBois, Chicago, Dl. II.

Elizabeth Brewing Corporatlon_________ A-I

Empire State Refining Corporation, A-I

Iric, Bolivar, N. Y.

2--941 Fada Radio & Electric Corporation, A-I

Long Island City, N. Y.

2-1278 Federal Wood Products Corporation, A-I

Pikeville, Tenn.

2-1425' Federated Mining Corporation, Ltd., A-I

Toronto, Ontario, Canada.

{

Bondholders protective committee of } D-1 } {CRO N 27 1934

2-1183 ~~~bee Bros. Co., Philadelphia, (I) $770,000_______________ (.) Ja~~' 1935

I List includes 22 stop orders, 25 consent refusal orders, and 83 withdrawal orders. 2 stop orders and 3

refusal orders were lifted during the period making a net increase of 42. 11withdrawn statements were re1lled making 72 net increase in number of statements withdrawn. J W-Wlthdrawn. CRO-Donsent refusal order. So-Btop order

Effective as amended, Mar. 26, 1935. 4 Reftled. I Pending amendment.

_

_

_

_

• _

_

_

_

__-- -- --

_

_

_

_

_____

_

__

~~

__•

__ •

•

_

_

_

_

_

__• _ • _

__• •__ ~

~

~

• •
68 ANNUAL REPORT OF THE SEOURITIES AND EXCHANGE COMMISSION

Date Type of

order Issuer Form Amount

SECURITIES ACT REGISTRATION STATEMENTS AS TO WHICH

STOP ORDERS, CONSENT REFUSAL ORDERS, AND WITHDRAWAL

ORDERS WERE ISSUED SEPT. 1, 1934 TO JUNE 30, 1935-Continued

I

Docket no.

Oct. 8, 1934

Apr. 15,1935

May 25,1935

Sept. 10,1934

Dec. 18,1934

May 9,1935

Jan. 26,1935

Nov. 24,1934

Oct. 1,1934

Apr. 1,1935

May 15,1935

Dec. 12, 1934

June 14,1935

Oct. 4,1934

Do.

}

Feb. 20,1935

Mar. 1,1935

Nov. 3,1934

Jan. 4,1935

Oct. 6,1934

June 8,1935

Sept. 25,1934

Oct. 6,1934

Jan. 28.1935

Apr. 24,1935

Oct. 24, 1934

Do.

Dee. 26,1934

Dec. 24, 1934

June 11,1935

Apr. 26,1935

Dec. 1,1934

May 15,1935

Mar. 14,1935

Apr. 15,1935

Do

}

oct. I, 1934

Oct. 16,1934

Nov. 10,1934

Mar. 25,1935

Nov. 8, 1934

Jan. 4,1935

June 27,1935

May 21,1935

Jnne 26,1935

W

W

W

W

W

W

CRO

Refiled.

$200,000_______________ W

$1,100,000______________CRO

$288,750 {

$200,000.. W

$337,500

$400,000

$45,000.

$1,000,000

$162,500 { 610

$1,000,000 ._________ SO

$274,750_______________ SO

{ face ($222,500), or } SO

$74,166.67.

} face ($316,700), or } SO

$105,566.67.

$1,000,000 . { ~.~

$125,000_______________ W

$600,000

$118,800

$1,275,000

$175,000 ._________ SO

$23,301.25______________SO

$175,000_ SO

{~~sJ~~~~~~!-~~~:::} W $500,000_______________ W

$450,000_______________ W

$439,000.50_____________W

$3,051,000______________W

$75,000________________ W

$195,000_______________ W

55 precent of par ($4,- W

000,000)or $2,200,000. $300,000_______________ W

$900,000_______________ W

} D-l

}

D-l

(I)

} A-I

0-1

Fremont Gold Mines, Inc., New York, A-I

N.Y.

Foundation Petroleum Corporation, A-I

San Diego, Calif.

{

Bondholders' committee for Gatzert Co.

mumcipal securities trust certificates.

series CC, K, KK, M06, and T,

Ohicago, TIl.

{

Assessment Bond serviee, Ine., calling Gatzert Co. municipal securities trust certlflcates, Chicago, ill.

{

General Banknote Corporation, New

Rochelle, N. Y.

General Industries Corporation, Ltd., Los Angeles, Calll.

General Potash Oo., Denver, Colo______ A-I

Gilcrease Oil oe., Tulse, Okla__________ A-I

Goldfield Deep Mines Co. of Nevada, A-I

Goldfield, Nev.

}Great Dike Gold Mines, Ino., San } A 1

Francisco, Calif.

Gyro A1r Lines, Ine., Denver, Colo_____ A-I

Haddam Distillers Oorporatron, A-I

Moodus, Conn. do A-I

Hiawatha Brewing Co., Minneapolis, A-I Minn. Idaho Gold Corporation, Boise, Idaho.; A-I

illinois Malleable Iron, Chicago, ill_____ A-I

Chester Imes, Oklahoma City, Okla____ G-l

Insured Investors, Inc., Kausas City, 0-1

Mo.

Interstate Mining Corporation, Twin A-I $500,000_______________ W

Falls, Idaho.

K~~,C¥ly.Rock Asphalt Co., Louis- {(I~ii)}$204,333.33_____________W

do, D-2 $394,587.17_____________W

L~=~~p~.eer & Ale Corporation, } A-I }$150,000 { n

(.)

Lafayette Apartments, first mortgage } D 1 } bondholders' committee, Los Angeles, (I II) $19,800________________ W

Calll. L!nprint, Inc, C!llumbus, Ohio :____ A-I $25.000:_______________ W

Little Pepper Distillery, Ine., Lexing- A-I $382,000_______________ W

ton, Ky. Macjoe Sturgeon Gold Mines Ltd., A-I

Toronto, Ontario, Canada.

Mancos Canyon Gold, Inc., Denver, A-I

Colo.

Manley Quebec Gold Mines, Ltd., A-I

Toronto, Ontario, Canada.

Medico-Deutal Building, Ine., San } E-l

DIegO, CalIf.

Metropolltan District New Homes Cor- A-I

poration, New York, N. Y.

Midcontment Carey Trust, Tnlsa, A-I Okla.

Mineral Machines, Ine., Boulder, Oolo., A-I

Mitten Bank Securities Corporation, A-I

Philadelphia, Pa.

Montgomery Industrial Mills, Ine., A-I

Perktomenville, Pa.

Morning Star Gold Mines, Ine., Sacra- A-I

mento, Calif.

Mortgage Bond Co. of Maryland, Inc., D-2

Baltimore, Md.

Monlded Pnlp Corporation, New York, A-I N.Y.

Mount Kelso Consolidated Mlnlng Oo., A-I

Georgetown, Colo.

The R. G. Mueller, et al., as Mary~d } n-i }~ face ($128,000)} W

Court Apartlnents protective C01DIlllt- (I m $42,666,

tee, Chicago, TIL

I ElIectlve as amended, Mar. 26, 1935.

2-985

2-1l13

2-1112

2-1060

2-1437

2-993

2-987

2-1109

2-1133

2-1189

2-1388

2-1191

2-969

2-971

2-1063

2-1099

2-1279

2-880

2-1023

2-1022

2-1348

2-1201

2-1160

2-345

2-1389

2-1334

2-1374

2-1087

2-1340

2-1370

2-1020

2-710

2-984

2-1193

2-978

2-812

2-122

2-1083

~

~

__

• _

_

_

-

_____ _ __________ __ ________ ~~

_•

_

_

_

_

_____

'

'

•
ANNUAL REPORT OF THE SECURITIES AND EXCHANGE COMMISSION 69

SECURITIES ACT REGISTRATION STATEMENTS AS TO WHICH

STOP ORDERS, CONSENT REFUSAL ORDERS, AND WITHDRAWAL

ORDERS WERE ISSUED SEPT. 1, 1934 TO JUNE 30, 1935-Continued

Docket

no. Issuer Form Amount Type of

order Date

Jan. 10,1935

Do.

Apr. 19.1935

Apr. 9,1935

Apr. 15,1935

Nov. 16,1934

June 20.1935

June 13. 1935

Aug. 5,1934

Oct. 5.1934

June 10.1935

June 20,1935

June 19, 1935

Feb. 8,1935

Dec. 28, 1934

Mar. 14, 1935

May 15.1935 Dec. 28, 1934 Mar. 14, 1935

May 15,1935

Jan. 4, 1935

June 1,1935

'''4 May 2, 1935

Apr. 17,1935

Apr. ~,1935

Sept 18, 1934

Dec. 6,1934

June 27,1935

Apr. 18,1935

June 14, 1935

Apr. 24,1935

May 21,1935

Sept. 26, 1934

Do.

Do.

Jan. 8, 1935

Mar. 29,1935

Oct. 8,19M

Oct. 25, 19M

Nov. 19,1934

Sept. 21, 19M

Oct. 20, 1934

Apr. 20, 1935

Dec. 22, 1934

Apr. 15,1935

Sept. 28, 19M

W

W

W

W

$2,000,000 .__________ SO

$336,000_______________ W

$150,000 .___________ CRO

$487,500 {

$475,000 { ~:l

$249,000_______________ W

$200,000_ CRO

$2,828,002.50___________ SO

$300,000_______________ CRO

$653,628_ W

}$775,OOO_______________ W

}$505,000_______________ W

}$156,000_______________ W

$250,000_______________ CRO

$225,000_______________ CRO

$250,000 { ri10

$250,000 { m

$500,000_______________ CRO

} A-I

A-I

Protective committee for Municipal {D-l }J.3 face ($539,500) 1\ W Bond oo., Los An!(eles, Calif. rr.rn $179,833.33. :.r Protective COIDIDlttee for Municipal {D-l }J.3 face ($538,500)} W Bond Co. rr, II) $179,500.

Bondholders' protective committee for } {J.3 f ($900 (00) }

~~t}~nalB8DkOfPanama,NewYork, n-i $300~. CRO

Neustandtl Brewing Corporation, New A-I $359,325_______________ SO

York,N. Y. North American Bond & Share Corpora. C-l $1,349,760

tion, Joplin Mo. Paradise Gold Mines Co________________ A-I $50,000

Pathfinders Gold Producers, Ine., Min. A-I $49.500

neapolis, Minn. Pavore Gold M:nes Limited, Toronto, A-I $35,000

Ontario, Canada. _____do., A-I $190,000 ._________ W

Peacock Speeial, MRchme &- Drilling A-I $500,000_______________ W

Co., Paola, Kana.

Pennsylvania Engineermg Oorporation, 11 A 1 Pittsburgh, Pa, J

Pennsylvania Engineering Works, New

Castle, Pa,

Perry Oil & Gas Corporation, Saxon. burg, Pa,

Plymouth Consolidated Gold Mines, A-I

Ltd., Wilmmgton, Del.

Potomac Maryland Debenture Corpor- D-2

ation, Baltimore, Md.

Progress Baking Equipment Oo., Inc., A-I

Saginaw, MIch. Providence Consolidated Gold Mines A-I $187.500_______________ eRO

Co., Reno, Nev. Queen City Textile Corporation, Allen- A-I $500,000_______________ W

town, Pa. The Real Del Monte Metals Co, Car- A-I $455,000_______________ CRO

rizozo, N. Mex, Refiners Petroleum Corporation, De. E-l $345,560_ W

troit, Micb. Renotex, Ine., New York, N. Y A-I

Republic DIStillers, Ine., Wilmington, A-I

Del.

Riverview-Cumberland Mining Cor- A-I

poration, Searchlight, Nev.

Sabine Royalty Corporation, Tyler, Tex_ A-I

N L

i

D-I Saenger Theatres, Inc., ew Orleans, 8- (1, II)

Saenger Realty Corporation, Inc._______ (Pib .-- .do -. {crib San Francisco (Oaxaca) Mining Cor- A-I

poranon, Inc., Mexico City, Mexico. Schotz Safety Razor Corporation, De- A-I

troit, Mich.

{

Signa Manganese Corporation, NeW} A-I York City, N. Y.

{

Southland Investment Co., Shreveport.} A-I La.

Standard Depositors Corporation, Den- C-l

ver, Colo. Strong Leasing & Mining Co., Denver, A-I $648.705.50____________ SO

Colo. Stephen A. Ingersoll, John W. Stipes, D-l $629,586_______________ W

and James W. Parker, trustees (Tax

Security Corporation), Chicago, Ill.

Texas Centeunial Central Exposition, A-I $2,000,000______________ W

Dallas, Tex. 'I'ravis Holding Corporation, Travis, A-I $512,175_______________ CRO

N.Y.

Treasure Hill Extension MIDes Oo., A-I $750,000_______________ CRO

Ely, Nev. United States Banking Corporation, A-I $425,000_______________ W

NewYorkCitY,N. Y.

2-1217

2-1218

z..950

2-1187

2-804

2-1202

2-1343

2-571

2-1179

2-1316

2-1301

2-883

2-1377

2-1097

2-929

2-930

2-931

2-1238

2-1232

2-1117

2-1203

2-1207

2-1433

2-M3

2-1062

2-107

2-1164

2-1080

2-1247

2-1266

2-1094

2-1208

z..935

2-1017

2-1375

2-1347

2-1357

2-1159

, Effective as amended, March 26, 1935. 4 Rellied.

'

_

_

_

_

~ -

_

_

- •- ------- --- ---- --- --- --- -
70 ANNUAL REPORT OF THE SECURITIES AND EXCHANGE COMMISSION

SECURITIES ACT REGISTRATION STATEMENTS AS TO WHICH

STOP ORDERS, CONSENT REFUSAL ORDERS AND WITHDRAWAL

ORDERS WERE ISSUED SEPT. 1, 1934 TO JUNE 30, 1935-Continued

Docket Issuer Form Amount Typeo! Date no. order

2-1200 fhe United Telephone Co. of Pennsyl-} A-I $256,592.50_____________{CRO Dec. 17,1934

vania, Harrisburg, Pa. (3) May 24, 1935

2-1273 Valora Gold Exploration Co., Ltd., A-I $75,00(1-_______________ SO June 14,1935

Toronto, Ontario, Canada.

2-104 F. G. Vogt & SODS,Ine., Philadelphia, A-I $217,400_______________ W June 5,1935

Pa.

2-1376 W=eld Mining ce., Ine., Nogales, A-I $115,000_______________ W June 7,1935

2-1331 Westarn Auto Supply Co., Kansas City, A-2 $3,440,000______________ W May 15,1935

Mo,

2-1157 Wbealton Co., Inc., Philadelphia, Pa ____ o-r $100,000_______________ W Mar. 25,1935

2-1169 _____do _________________________________o-i $100,000_______________ W Mar. 22,1935

2-1170 _____do __________________________________C-l $100,000_______________ W Do.

2-1171 _____do __________________________________0-1 $100,000_______________ W Do.

2-1172 _____do__________________________________o-r $100,000_______________ W Do.

2-1356 H. F. Wilcox, Tulsa, Okla. ______________ A-I $100,000_______________ W May 25,1931i

2-1009 Winand- Pikesville Distillery oe., Bal- A-I $788,996 _______________ W Jan. 30,1935

tImore, Md.

2-1107 Young's Chemical Laboratories, Inc., A-I May 25,1935 $355,250 _______________ W

Baltimore, Md.

I Effective as amended, March 26, 1935.
ANNUAL REPORT OF THE SECURITIES AND EXCHANGE COMMISSION 71

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