Third Annual Report

of the

.~s.Securities and Exchange

1/

Commission

_Fiscal Year Ended June 30, 1937

UNITED STATES

GOVERNMENT PRINTING OFFICE

WASHINGTON: IlI-3T

For sale by the Snperintendent or Documents. Wash1nllton. D. C. • - • - • - - • PrIce 25 cents
n

SECURITIES AND EXCHANGE COMMISSION

Office: 1778 Pennsylvada Avenue NW.

WashUIgton, D. C.

COMMISSIONERS

WILLIAM O. DOUGLAS, Chairman

GEORGE C. MATHEWS

ROBERT E. HEALY

J. D. Ross

FRANCIS P. BRASSOR, Secretary

Address All Communications

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C.
tI (f ~.!) 8fc

,USA3

/~'3q

CxJfl3 .

LETTER OF TRANSMITTAL

SECURITIES AND EXCHANGE COMMISSroNI'

~ashi~on,January3,19S~

Sm: I have the honor to transmit to you the Third .Annual Report of the Securities and Exc~e Commission, in compliance with

the provisions of Section 23 (b) of the Securities Exchange .Act of

1934, approved June 6, 1934, and Section 23 of the Public Utility

Holding Company .Act of 1935, approved .August 26, 1935.

Respectfully,

WILLIAM O. DOUGLAS,

Chairman.

The PRESIDENT OF THE SENATE,

The SPEAKER OF THE HOUSE OF REPRESENTATIVES,

Washi~on,D. O.

m

""I

t

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CONTENTS

Functions of the Commission

Commissioners and Staff Officers

Registration of Securities Under the Securities Act of 1933

Examination of Securities Act Registration Statements

Securities Act Forms, Rules and Regulations

Statistics of Securities Registered under the Securities Act.

Statistics of Private Placings .

Exemption From Registration Requirements of Securities Act

Exemptions of Fractional Undivided Interests in Oil or Gas Rights;

Exemptions Other Than Those Relating to Oil and Gas Interests __

Registration of National Securities Exchanges

Exchanges Registered

Exchanges Exempted from Registration

Registration of Securities on Exchanges

Applications for the Registration of Securities on Exchanges

Applications for the Withdrawal 01' Striking from Listing and

Registration of Securities on Exchanges

Applications ,for the Granting, Extension and Termination of Unlisted Trading Privileges on Exchanges

Forms for the Registration of Securities on Exchanges

Statistics of Securities Registered or Exempt from Registration on

Exc~nges---------------_-------------------------------_

Registration of Brokers and Dealers Transacting Business in Over-The- Counter ]darkets

Registration of Public Utility Holding Companies

Exemptions From Registration Under the Public Utility Holding Company . Act of 1935

Rules, Regulations, and Forms Under the Public Utility Holding Company Act of 1935____ ___ ________ _ _

Uniform System of Accounts for Public Utility Holding Companies

Issuance of Securities by Registered Holding Companies

Acquisition of Securities, Utility Assets and Other Interests by RegisteredHolding Companies or Their Subsidiaries

Statements Required Pursuant to Section 12 (i) of the Public Utility Holding Company Act of 1935

Control of Service Companies

Voluntary Compliance With the Purposes of Section 11 of the Public

Utility Holding Company Act of 1935 by Registered Holding Companies and Subsidiaries

Transformation of Holding Companies Into Operating Companies

by Acquisition of the Utility Assets of Subsidiaries

Exchange of Control of Properties for the Purpose of Creating Integrated Public Utility Systems

Simplification of Corporate Structure of Holding Company Systems

-by Merger of Subsidiaries Operating in the Same Area

Commission -Reports' on Reorganization PIans

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VI CONTENTS

Pap

General Policies With Respect to Administration of Public Utility Holding

CODlpanyAct___________________________________________________ 42

Complaints, Informal and Formal Investigations______________________ 43

PubliclIearings___________________________________________________ 44

Litigation Under the Securities Act of 1933 and the Securities Exchange Act of 1934________________ 45

Injunctions Against Violation of the Securities Act and the Securities

Exchange Act____________________________________________ 46

Suits to Enforce Subpenas____________________________________ 48

Petitions for Review of Oommlsalon's DeterDlination on Applications for Confidential TTeatDlent ._____________ 48

References to The Attorney General for CriDlinal Prosecution.L;., 48

Litigation Under the Public Utility Holding Company Act of 1935______ 49

Suits by Holding Companies to Enj.pin EnforceDlent_____________ 49

Petitions by Trustees of Holding Oompsnles in Bankruptcy_______ 51

Stockholders' Suits___ _ __ 51

Validity of Section 30 of Public Utility Holding Company Act of 1935 52

Securities Violations Files_ 52

FOrD1a1 Opinions__________________________________________________ 52

Securities Act of 1933, As Amended 52

Securities Exchange Act of 1934_______________________________ 54

Public Utility Holding Company Act of 1935___________________ 55

Advisory and Interpretative Assistance '-___________ 59

Reports of Officers, Directors, and Principal StockhoIders .:___________ 60

Solicitation of Proxies, Consents, and Authorizations___________________ 61

Confidential TTeatDlent of Applications, Reports or DOcuDlentB_________ 62

AdDlissions to Practice as Attorney or Agent Before the CoDlDlission____ 63

Report on the Study and Investigation of Protective and Reorganization

CoDlDlittees_____________________________________________________ 64

Study of Investment Trusts and Investment CODlpanies________________ 65

)larginRegulations________________________________________________ 69

Detection of Manipulative and Deceptive Practices____________________ 69

.special Studies and Researches______________________________________ 72

Study of Exchange Rules Governing Miscellaneous Exchange Practices ~___________ 72

Study of Over-the-Counter Practices and ProbleDlS______________ 73

Formulation of Rules to Define Manipulative, Djlfeptive and

Other Fraudulent Devices in the Over-the-Counter MarketB__ 74

Study of "When Issued" Trading Rules________________________ 7~

Further Study of the Segregation of the Functions of Broker and Dealer ~_______ 74

Summary of All Rules Affecting Exchange Trading Promulgated by the

Commission or Adopted by Exchanges at Request of CoDlDlission 74

A. Rules Regulating Trading Practices upon Exchanges Promulgated by the CoDlDlission_______________________________ 75

B. Trading Rules Adopted by Exchanges at the Request of the CoDlDlission_____ __ _ ____ __ ___ __ _____ 75

(1) The Sixteen Trading Rules_______________________ 75

(2) Interpretation of the Tenth of the Sixteen Rules____ 78

(3) "When Issued" Margin Rules____________________ 78

(4) "Daylight Trading" Margin Rules; 78

ltegion~ Offices___________________________________________________ 79

Public Reference RooDlS_________________________________________ __ 8o.

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CONTENTS

Publications

Registration Record, Securities Act of 1933 Releases

AccountingOpinions

Other Publications

Personnel

FlscalAJfairs

APPENDIXES

VII

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ApPENDIX I. Rules of Practice____________________________________ 87

APPENDIXII. Guide to FOrIDS_____________________________________ 97

ApPENDIX.III. Securities Act Registration Statements as to which stop

orders, consent refusal orders, and withdrawal orders

were issued July 1, 1936 to June 30, 1937__________ 119

ApPENDIXIV. List of Publications available as of November 1,1937____ 124

ApPENDIX V. Statistical tables:

Table 1. Statistics, by months, of new securities, included in registration statements fully effective September 1, 1934-June 30,

1937_____________________________________________________126

Table 2. Type classification, by months, of new securities, included in registration statements fully effective July 1, 1936-

June 30, 1937____________________________________________ 127

Table 3. Group classification, by months, of issuers of new securities fully effective July 1, 1936-June 30, 1937_______________ 129

Table 4. Reduction of estimated gross proceeds to net proceeds, by

months, of new securities registered for account of issuers and

fully effective July 1, 1936-June 30, 1937___________________ 132

Table 5. Proposed uses of net proceeds, by months, of new securities registered for account of issuers and ful1y effective July 1,

1936-June30, 1937________________________________________ 133

Table 6. Statistics, by industries, of new securities fully effective

under the Securities Act of 1933 from July 1, 1936 to June 30,

1937_____________________________________________________136

Table 7. Channels of distribution of new securities registered for

account of issuers and fully effective July 1, 1936-June 30, 1937__ 144

Table 8. Type classification, by months, of securities included in

registration statements for reorganization and exchange issues

fully effective July 1, 1936-June 30, 1937___________________ 148

Table 9. Industry group classification, by months, of securities

included in registration statements for reorganization and exchange issues fully effective July 1,.l936-June 30,1937________ 149

Table 10. Private placings ofsecurities July 1, 1934-June 30, 1937__ 150

Table 11:

Transactions in all stocks for account of members, New York

Stock Exchange, by weeks, March 2, 1936-June 26,1937___ 152

Transactions in all stocks for account of members, New York

Curb Exchange, by weeks, March 16, 1936-June 26, 1937__ 154

Table 12. Value and volume of sales on registered exchanges, by

months, July I, 1936-June 30, 1937:

Part 1. Total market value of all sales Facing 156

Part 2. Market value of stock sales Facing 156

Part 3. Market value of bond sales Facing 156

Part 4. Volume of stock sales . Facing 156

Part 5. Principal amount of bond sales Facing 156

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VIII CO~'TENTS

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ApPENDIX VI. Litigation Involving Statutes Administered by the Commission___________________________________________ 157

I. Securities Act of 1933, as amended________________________ 157

Suits to enjoin enforcement of the Securities Act________ 157

Miscellaneous injunction proceedings__________________ 158

Proceedings against brokers and dealers operating "Bucket Shops" 163

"Sell and Switch" device; _ _ ________ ______ _ 164

Cases involving the definition of "security" 165

Criminal prosecutions under the Securities Act of 1933, as

amended_________________________________________ 166

Ci~illitigation under the Securities Act of which the Commission is informed________________________________ 173

II. The Securities Exchange Act of 1934, as amended___________ 173

Miscellaneous injunction proceedings__________________ 173

Criminal prosecutions involving the Securities Exchange

Act______________________________________________ 176

Cases involving subpena powers_______________________ 176

Appeals from Orders of the Commission promulgated under

the Securities Exchange Act________________________ 178

Third Avenue Railway Company 179

Suits to enjoin enforcement of the Securities Exchange Act ~_______________________________________ 180

III. The Public Utility Holding Company Act of 1935___________ 180

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THIRD ANNUAL REPORT OF THE SECURITIES

AND EXCHANGE COMMISSION

WASHINGTON, D. C.

Section 23 (b) of the Securities Exchange Act of 1934 and Section 23

of the Public Utility Holding Company Act of 1935 provide that the

Securities and Exchange Commission shall submit annually a report

to the Congress covering the work of the Commission for the preceding

year and such information, data, and recommendations for further

legislation as it may find advisable. The following report, made

pursuant to these provisions, covers the fiscal year ended June 30,1937.

FUNCTIONS OF THE COMMISSION

The Securities and Exchange Commission is responsible for the

administration and enforcement of the Securities Act of 1933, as

amended, the Securities Exchange Act of 1934,1 as amended, and the

Public Utility Holding Company Act of 1935. In general, it may be

stated that the Securities Act of 1933 is designed to require a complete

and accurate disclosure of the material facts concerning securities

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

and to prevent fraud in the sale of securities; the Securities Exchange

Act of 1934 is designed to provide for regulation of trading upon

national securities exchanges and in the over-the-counter markets;

and the Public Utility Holding Company Act of 1935 is designed to

provide for the regulation of gas and electric utility holding company

systems.

A fuller description of the purposes and the objectives sought in the

passage of these enactments, together with detailed statements of the

functions of the various divisions of the Commission, may be found

in the first and second annual reports of the Commission.

COMMISSIONERS AND STAFF OFFICERS

Commissioners:

Douglas, William 0., Chairman 2

Mathews, George C., Commissioner

Healy, Robert E., Commissioner

Ross, J. D., Commissioner

1 Under Section 7 of this Act, jurtsdietton to regulate the extension and maintenance of credit on exchanges

Is vested exclusively in the Board of Governors of the Federal Reserve System.

2 Commissioner William o. Douglas, W88 elected Chairman of the Commission on September 21. 1937.

for the period ending lune 30. 1938. vice lames M. Landis. who resigned 88 Chairman and Commissioner.

eftectlve September 15. 1937.

1
2 SECURITIES AND EXCHANGE COMMISSION

Staft' Officers:

Bane, Baldwin B., Director of Registration Division

Blough, Carman G., Chief Accountant

Brassor, Francis P., Secretary of the Commission

Gilman, Wm. C.,8 Director of the Public Utilities Division

Gourrich, Paul P., Director of Research Division

Katz, Milton, Executive Assistant to the Chairman

Neff, Harold H., Director of the Division of Forms and Regulations

Saperstein, David, Director of Trading and Exchange Division

Sheridan, Edwin A., Supervisor of Information Research

Simpson, Kemper,' Economic Adviser

Smith, C. Roy,S Chief, Oil and Gas Unit

Throop, Allen A., General Counsel

Regional Administrators:

Allred, Oran H., Fort Worth Regional Office

Angell, Ernest, New York Regional Office

Caffrey, James J., Boston Regional Office

Cline, Foster, Denver Regional Office

Green, William, Atlanta Regional Office

Judy, Howard A., San Francisco Regional Office

Karr, Day, Seattle Regional Office

Kennedy, W. McNeill, Chicago Regional Office

Malone, William M., Washington Field Office

REGISTRATION OF SECURITIES UNDER THE SECURITIES ACT OF 1933

Examination of Securities Act Registration Statements

Under the Securities Act of 1933, as amended, with certain exceptions, securities may not be publicly offered for sale or sold in interstate

commerce or through the mails unless a registration statement has

been filed with the Commission and is effective. A prospectus, containing the more material ultimate facts set forth in the registration

statement, is also required to be filed as part of the registration. statement. The law provides that a copy of the prospectus to be used in

connection with the sale of registered securities must be given to

every person to whom the securities are offered for sale and to every

purchaser at or before the time of the sale.

The registration statement serves a two-fold purpose: (1) it discloses

to investors material facts concerning an issue of securities that is

offered for sale to the public, and (2) it stands as a record of the representations made at the time the securities were sold, and thus, if any

such representation should be false, simplifies the problem of proof in

I In September 1937,Mr. GDmanreslgned; Mr. C. Roy Smith was appointed Director of the Public Utlli.

tleB Division, and Mr. W.l. Kenney W.8S appointed Chief ofthe on and Gas Unit.

I To September 80, 1937.
'THIRD:!.NNWAL REPORT' 3

any legal proceedings which may result. The statement must be filed

on the particular form prescribed by the Commission as appropriate to

the type of the security proposed to be offered and each form provides for the submission of information essential to a fair disclosure

of material facts relative to the issuer and the securities offered for

sale.

. With certain exceptions, the Act provides for the lapse of a period

of twenty days after :filing before the registration statement becomes

effective. This provision gives the investors a reasonable period of

time in which to look into the facts concerning the issue and the issuer

before the issue is offered for sale, and, in addition, allows the Commission to make an examination of the statement for omissions,

inaccuracies, and untruths. If the examination of the statement discloses deficiencies, but nevertheless indicates a sincere and honest

effort to comply with the requirements, the registrant is so advised.

The deficiencies may be corrected by the filing of amendments. If,

on the other hand, the examination reveals that the registration statement includes untrue statements or omissions Of material facts in

intentional or reckless disregard of .the standard of disclosure prescribed by the Act, stop order proceedings may be instituted immediately. The Commission is empowered also to refuse registration

in those instances where the information given is incomplete or inaccurate on its face .and to undertake investigations involving examination of the issuer, underwriters, or any other person for the purpose of

determining whether a stop order should issue. Further, the Commission may suspend registration after a registration statement becomes effective if it develops that the information furnished in the

statement is untrue or misleading in any material particulars.

. N either the fact that a registration statement for a security has been

filed or is in effect, nor the fact that a stop order is not in effect with

respect to that particular statement, can be treated as an indication

that the Commission considers the registration statement to be true

and accurate on its face or that it does not contain an untrue statement

of fact or omits to state a material fact, or be held to mean that the

Commission has in any way passed upon the merits of, or given approval to, the security. To represent otherwise is made a criminal

act by the statute.

The annual reports filed with the Commission pursuant to the provisions of Section 15 (d) of the Securities Exchange Act of 1934, as

amended, by issuers having securities registered under the Securities

Act of 1933, are examined and analyzed in the same manner as registration statements.

, 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.

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4 SECURITIES'ANDEX!1:HA'NGE.OOl\DIISSION

A company engaged in the business of creating and selling to the

public a class of securities known as investment contracts sought to

register $10,000,000 face amount of certificates to be offered under a socalled investment trust accumulation plan. These contracts provided

for either a lump sum payment or monthly installment payments on

the part of the purchaser, the net proceeds being used for the purchase

of shares of an underlying investment trust which were to be deposited

with a trustee, who was to hold them for the account of certificate

holders. The plan of investment thus involved a trust upon a trust

with two sets of loading or service charges, one on the underlying trust

shares and the other on the investment certificates.

The certificates to be issued under the periodic or installment

investment plans were stated on the face thereof and in the prospectus

as having a "maturity value" of $2,000 for each $1,200 agreed to be

paid by the investor. The prospectus did not disclose the fact that

this figure of $2,000 was purely arbitrary, representing nothing more

than the sum which the investor would obtain only when, as, and if

the value of the underlying trust shares purchased with the funds paid

in, less the charges and reductions, had reached $2,000. The investor

had no assurance that the so-called "maturity value" would ever be

reached. In fact, by reason of the substantial charges deducted from

the $1,200 paid in bY,the investor, amounting to approximately $200,

the attainment of the stated "maturity value" would require a total

appreciation of almost 100% of the market value of the under1~

securities. This element of contingency was artfully concealed and

the use of this term, appearing in the prospectus no less than twenty

times, indicated an endeavor to import to the concept of "maturity

value" a specious reality for apparently no purpose other than to

mislead prospective investors. The prospectus, further, in connection with an elaborate recital of the routine duties of the trustee under

the plan, gave unwarranted prominence to the name of the trustee,

which was a well-known financial institution, in what appeared to be

an unjustified attempt to trade on its reputation. In consequence

of such misleading representations and the failure of the prospectus

in certain other respects to set forth clearly the information required

to be furnished, the Commission instituted stop-order proceedings.

The registrant subsequently amended its registration statement and

prospectus, eliminating all reference to "maturity value" and otherwise revising the prospectus in keeping with the requirements of full

and fair disclosure of the material facts relating to the investment plan.

A registration statement filed by a bottling company in connection

with a proposed public offering of common stock contained a balance

sheet of the issuer which included among its assets franchise rights

at a stated valuation of $2,500,000. It appearing from information

contained in the registration statement that the valuation ascribed

to the franchise rights was excessive, the Commission proceeded to a
THIRD AN1'o"UALREPORT 5

hearing under Section 8 (e) of the Act. At this hearing, evidence was

adduced to indicate that no basis existed for the valuation placed

upon this intangible asset, whereupon stop-order proceedings were

instituted under Section 8 (d) of the Act. Upon notice of hearing the

registrant filed an amended balance sheet reducing the valuation of

the franchise rights from $2,500,000 to $1.

In a similar case involving the matter of property valuation, the

balance sheet of a newly organized manufacturing company set forth

its fixed assets at a valuation of approximately $700,000. The properties in question had recently been acquired at a cost of $200,000 and

were appraised, on the basis of reproduction cost new less depreciatjon, at approximately $1,200,000. For balance sheet purposes the

company placed an arbitrary valuation of $700,000 on the properties,

thus creating a "surplus" of approximately $500,000. The Commission instituted stop-order proceedings on the grounds that the balance:

sheet representations were misleading and that, in this instance,

reproduction cost less depreciation did not constitute a criterion of

value since the issuer had not demonstrated successful use of the

.properties warranting such valuation. As a result of the proceedings,

the issuer amended its balance sheet to show the properties at cost,

$200,000, thereby eliminating the "surplus" of one-half million dollars

which appeared on the balance sheet as originally filed.

A business trust filed a registration statement covering an issue of

$800,000 of certificates of beneficial interest, proposing to use the

proceeds from their public sale to acquire oil properties which it had

previously contracted to purchase from an oil operator in the MidContinent Field. Shortly after the effective date of the registration

statement a preliminary investigation was undertaken which disclosed

that the income of the properties was insufficient to support the dividends paid during the promotional period and, in addition, that the

sponsors of the trust were misappropriating the proceeds from the

sale of securities offered to the public instead of applying these proceeds on the purchase price of the properties. Injunction proceedings

were instituted in the Federal Court, as a result of which the promoters

were forced to restore the funds which had been diverted and the

company was required to make full disclosure to prospective investors

regarding the current earnings of the properties. Further investigation established that the estimates contained in the registration

statement regarding the value, productivity, and income of the properties had been grossly exaggerated, the estimate of recoverable oil

being overstated almost 500 percent. In addition, it was revealed

that a certain over-the-counter dealer was selling the trust certificates

in a nation-wide campaign involving willful and reckless misrepresentation.s Stop-order proceedings have been instituted under the

IOn July 7, 1937,proceedings to revoke the registration of this- dealer were Insntuted pursuant to SectIon 15 Cb)of the SecuritIes Exchange Act ofl934.
6 SECURITIES AND EXCHANGE COMMISSION

Securities .Act of 1933 to suspend the effectiveness of the registration

statement and proceedings under the Securities Exchange .Act of 1934

have also been instituted with a view to revocation of thp dealer's

license.

An express trust, created in accordance with the laws of the State

of Oklahoma with assets consisting of oil and gas interests in Oklahoma and Texas, filed a registration statement with the Commission

on Form .A-Ion December 12, 1935. The statement became effective, as amended, on February 19, 1936. Some $1,070,000 of certificates of interest in the trust were sold to the public. In January,

1937, stop-order proceedings were instituted under Section 8 (d) of

the Securities .Act. .After full and complete hearings before an examiner and argument before the Commission on exceptions to the exaIiJ.-

iner's findings, the Commission 6 issued its order stopping the effectiveness of the registration statement. The registration statement

'was found to be deficient in the following respects:

(a) The registration statement failed to disclose the identity

of the one promoter and failed to disclose. the amount of profit

that he had made. .Agreat majority of the assets of the trust

had been purchased from him. '

(b) The statement that quarterly reports would be furnished,

when at the time of the hearing no reports at all had been

issued. ,

(c) The failure to disclose certain pending litigation relative

to certain of the properties in the trust.

(d) The engineer's reports attached as exhibits to the registration statement were found to include misstatements of material physical facts and td omit facts necessary to prevent the

estimate arrived at from being misleading. The reports also,

in some instances, failed to follow methods approved in the

profession.

(e) The statement of the present monthly income in the

registration statement was found to be erroneous. Motions to

dismiss the proceedings and to withdraw the registration statement were made in the proceedings, but were both denied by

the Commission .

.A manufacturing company filed a registration statement with the

Commission for the purpose of registering a large block of its common

stock of which approximately 80% was outstanding and to be offered

for the account of certain stockholders and 20% represented unissued

stock to be offered for the account of the issuer. The registration

statement stated that approximately 60% of the company's output

was sold to one customer, a large automobile manufacturer. The reg-

• The Commlss!OD'8 order Issued after the close of the 1Iacal year, OD september 23, 1937.
THIRD ANNUAL REPORT 7

istration 'statement contained also, as part of the required financial

information, a profit and loss statement covering a six months period

subsequent to the close of the issuer's last fiscal year which apparently

indicated, in comparison with profit and loss statements for the three

years preceding, a pronounced upward trend in its profits. Investigation by the Commission revealed that the principal customer of

the registrant intended in the immediate future to reduce substantially its purchases from the issuer in consequence of certain changes

effected in the design of its own product and, further, that this customer. purchased most of its annual requirements during that portion

of the year covered by the aforementioned six months profit and loss

statement, a circumstance which would render such statement misleading unless the seasonal nature of the business were clearly indicated. Since full and fair disclosure respecting these matters had not

been made in the registration statement, the Commission instituted

stop-order proceedings whereupon the registrant, upon notice of hearing, withdrew its registration statement. The issuer later :filedanother

registration statement. This statement properly set forth the limitations attached to tho six months profit and loss statement and indicated clearly the possibility that a large portion of the issuer's business which had accounted for its profits in recent years might be lost

as a result of an adverse change which appeared imminent in' the

business relationship between the registrant and its principal customer.

Securities Act Forms, Rules and Regulations

During the past year, the Commission adopted a new form (Form

A-o-l) for the registration of securities under the Securities Act of

1933 for promotional mining companies. Theretofore, mining issues

had been registered on the more general forms, A-I and A-2. It had

been found, however, that a number of the requirements. of these

forms were not well adapted to the problems of a newly organized

mining enterprise. To meet the problem, the Commission prepared

the new Form A-o-l, which is specifically designed to meet the needs

of such new mining enterprises. In preparing this new form, the

Commission not only drew heavily upon the services of its own experts,

but also, in accordance with "its usual practice, invited criticism and

suggestions from many interested persons throughout the country,

including the principal mining and engineering societies, and many

engineers, lawyers, accountants, and other technicians experienced in

the field. '

The preparation of a general form having specialized alternative

questions to be answered by particular categories of issuers has been

undertaken. Experience gained from the registration statements on

:filewith the Commission indicates that a form of this type will promote standardization of requirements and should materially lessen the
8 SECURITIES AND EXCHANGE COMMISSION

problems confronting the prospective registrant. For certain special,

types of securities, revised forms are in course of preparation. One

of these forms, i. e., Form 0-3, For American Certificates Against

Foreign Issues and For the Underlying Securities, was adopted shortly

after the close of the fiscal year,? In connection with this program, the

instructions as to financial statements to be filed are being appropriately modified to conform to the other changes.

A considerable number of improving amendments have been made

to the basic forms for registration under the Securities Act. These

amendments are designed to clarify the requirements of the several

forms and to extend the use of certain basic forms to additional classes

of issuers upon the furnishing of appropriate specialized information.

Section 15 (d) of the Securities Exchange Act of 1934, as amended

on May 27, 1936, requires registrants under the Securities Act of 1933

to file annual reports with the Commission under certain circumstances. During the year, the Commission adopted rules and regulations prescribing the nature of the information to be filed pursuant to

this legislation. For the purpose of filing such annual reports, the

Commission adopted a new general form (Form I-MD), modeled

after the basic form for annual reports of issuers having securities

listed on national securities exchanges. Additional special forms for

this purpose have also been adopted, i. e., Form 2-MD, For Investment Trusts having Securities Registered on Form o-r, Form 3-MD,

For Voting Trust Certificates; and Form 4-MD, For Certificates of

Deposit Issued by a Committee.

Revisions of numerous rules and regulations have been made from

time to time to perfect the mechanics of registration and to provide

for special situations.

In connection with the preparation of forms and rules, representatives of the Commission have been in close touch, through conferences

and correspondence, with various accountants, lawyers, and other

interested persons. Many of the suggestions received from such

persons have been incorporated in the forms and rules and regulations

as finally promulgated. Numerous legal opinions and interpretations

have been preparedjn connection with the application of the existing

forms and rules to the individual problems of prospective registrants.

Several interpretative opinions by the Director of the Forms and

Regulations Division have been published by the Commission.

These opinions have been concerned primarily with the form in

which information is to be given in the prospectus. They are designed to be the first of a series interpreting the requirements of the

Commission as to the mode of furnishing information and are intended

to assist registrants in making a prospectus a concise and legible presentation of the material facts of the particular offering.

, Published July 8. 1937.
THIRD ANNUAL REPORT 9

Statistics of Securities Registered Under the Securities Act

At the beginning of the fiscal year, there were 2,314 registration

statements on file. Of these, 1,757 were effective, 129 were under stop

or refusal order, 294 had been withdrawn, and 134 were under examination or held pending the receipt of amendments.

During the period of July 1, 1936 to June 30, 1937, inclusive, 967

additional registration statements were filed. There were 887 registration statements which became effective during this period (of

which all but 17 were fully effective); a total of 2,571 statements were

effective at the end of the period, 73 of those effective at the beginning

of the period or during the period either having been withdrawn or

placed under stop order.

The net number of registration statements withdrawn increased by

128, to a total of 422 on June 30, 1937. The net number of stop or

refusal orders increased during the period by 14, a total of 143 of such

orders being in effect on June 30, 1937. As of June 30, 1937, there

were 145 registration statements in the process of examination or

awaiting amendments.

Appendix III contains a list of the registration statements as to

which stop orders, consent refusal orders, and withdrawal orders were

issued during the year.

During the fiscal year ended June 30, 1937, new securities with

estimated gross proceeds of $4,686,296,000 became fully effective.

This total compares with $4,677,302,000 effectively registered in the

year ended June 30, 1936, $948,471,000 during the year ended June

30, 1935, and $759,406,000 from July 27, 1933, when the first statement became effective, to June 30, 1934.

In addition to these new issues, there were effectively registered,

during the year ended June 30, 1937, $164,462,000 of voting trust

certificates, certificates of deposit and securities proposed to be

offered in exchange for registrants' or predecessors' securities. This

amount compares with $157,747,000 of similar securities registered

during the previous fiscal year.

Of the $4,686,296,000 of new securities effectively registered during

the past fiscal year, about $298,515,000 were registered for reserve

against the conversion of other securities, so that a total of $4,387,-

781,000 was available for present or future sale-for cash or other considerations for the accounts of the registrants or other persons. While

the total of all new securities registered during the year ended June 30,

1937, was higher than for any fiscal year under the Securities Act, the

total of securities other than amounts reserved for conversion

amounted to $4,387,781,000 or approximately $45,000,000 less than

the comparable figure for the year ended June 30, 1936.

In addition to the securities registered for reserve against conversion, there were other securities which were registered but not in21123-37-2
10 SECURITIES AND EXCHANGE COMMISSION

tended to be immediately offered for sale for cash for the benefit of the

registrants. Approximately $374,395,000 of securities were registered

during the past fiscal year "for the account of others". These represented securities already issued by the registrants and outstanding

with security-holders at the time of registration; for the most part

their registration was undertaken in connection with proposed resale

to the general public, no part of the proceeds to accrue to the registrants. In addition, a total of $245,587,000 of securities was proposed to be issued in exchange for other securities-$120,843,000 to

retire outstanding preferred stock issues by replacement, $11,813,000

to payoff indebtedness through issuance of other securities, and

$112,931,000 for various other purposes. Finally, $103,243,000 were

reserved against the exercise of options and warrants, $23,099,000

were reserved for other subsequent issuance and $8,372,000 were

intended to be issued for various assets, claims, and selling commissions. Thus, including the securities reserved against conversion, a

total of $1,053,210,000 of new securities effectively registered during

the fiscal year, or 22.5% of total registrations, was intended for purposes other than immediate cash sale for the account of the-registrants .

.After deducting this amount, registered securities with estimated

gross proceeds of $3,633,086,000 remained available for cash offering

for the account of the registrants. Of these securities all but 3.1%

represented issues of already established enterprises. In connection

with the sale of these securities the registrants estimated that they

, would incur $140,963,0008 of expense; $114,950,0008 (3.2% of estimated gross proceeds) for .commissions and discounts to underwriters and agents, and $26,013,000 (0.7% of estimated gross proceeds) for other expenses in connection with flotation and" issuance.

The registrants estimated that upon the sale of their securities as

contemplated in their registration statements and after 'payment of

these expenses, they would retain as net cash proceeds $3,492,123,000.

A comparison of the uses to which the registrants during the past

fiscal year proposed to apply their net proceeds with the intentions

of the registrants during the preceding fiscal period, indicates the

declining importance of repayment of Indebtedness and the increasing

significance of the needs for additional working capital and expanded

plant and equipment. Nevertheless, the main use proposed to be

made of these cash funds still was the repayment of indebtedness.

The table below shows the proposed employment of the net cash

proceeds as indicated by the registrants of the year ended June 30,

1937, and of the preceding period .

Not Including $2,215,000or compeDS8tion given to underwriters or agents in the rorm or registered

secaritfes.

•
THIRD ANNUAL REPORT 11

Year ended June 30, 1937 Year ended June 30,1936

($000) Percent of ($000) Per cant of

total total

Repayment of indebtedness_________1,933,849 55.4 2,805,442 74. 2

Retirement of preferred stock_______ 225, 136 6. 5 213,369 5.6

Increase of working capitaL ________ 633,278 18. 1 207,308 5. 5

Plant and equipment expenditures___ 256,979 7.4 120,489 3.2

Purchase of securities for investment 352,097 10. 1 3.82,753 10. 1

Other purposes____________________ 90,784 2. 5 52, 782 1.4

Total ______________________3,492,123 100.0 3,782,143 100.0

The registration statements disclosed that $3,021,647,000, or 83.1 %,

of the $3,633,086,000 of securities proposed for cash offering for the

account of registrants were to be offered to the public generally,

$456,603,000, or 12.6%, to the registrants' security-holders and

$154,836,000, or 4.3%, to special persons. About $2,839,375,000, or

78.2%, of the securities were underwritten while $411,990,000, or

11.3%, were to be offered by the registrants themselves, and

$381,721,000, or 10.5%, were to be offered by various selling agents.

The last fiscal year witnessed an increase in the number of offerings

by registrants to their own security-holders. Such offerings were

chiefly effected through the issuance of rights to stockholders to

purchase common shares at a price below the market. More than

65% of the, securities offered to security-holders was common stock,

and slightly more than 48% of the common stock registered for cash

sale was offered to the registrants' own security-holders.

Of the total of $4,387,781;000 of securities effectively registered

(after, deducting amounts reserved against conversion) $1,091,816,000,

or 24.9%, were for common stock issues; $569,371,000, or 13.0%,

were for preferred stock issues; $247,958,000, or 5.6%, were for

certificates of participation, beneficial interest, and warrants; $1,552,-

871,000, or 35.4%, were for secured bonds; $921,186,000, or 21.0%,

were for debentures, and $4,579,000, or 0.1 %, were for short term

notes. Interest bearing obligations, then, totaled 56.5%, stock

issues 37.9%, and other types of securities 5.6%.

Approximately $1,249,333,000, or 28.5%, of the registrations (after

deducting amounts reserved against conversion) were for manufacturing companies; $1,175,468,000, or 26.8%, were for the electric light

and power, gas and water utility companies; $771,888,000, or 17.6%,

were for financial and investment companies; $557,477,000, or 12.7%,

were for transportation and communication companies (exclusive of
12 SECURITIES AND EXCHANGE COMMISSION

common carriers exempt under the Securities Act of 1933); -$276,-

058,000, or 6.3%, for merchandising companies; $61,068,000, or 1.4%,

were for companies in the extractive industries; and $296,489,000, or

6.7%, were for all other registrants including foreign governments.

Detailed statistical tables showing number of issues, type of security,

classification of issuers, gross proceeds, cost of distribution and selling,

channels of distribution, and proposed use of funds for the securities

registered with the Securities and Exchange Commission are contained

in Appendix V. In interpreting the tables, as well as the summary

figures quoted above, 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' intentions and estimates as they appear

in the registration statements on the effective dates. They thus

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

than statistics of actual sales of securities.

The statute does not provide for the ~ccumulation of data showing

the extent to which securities registered have actually been sold by

the registrant. Although the Commission has endeavored to obtain

such data, it does not yet have exact knowledge upon this subject.

However, in cases where securities are underwritten by responsible

banking houses, it is certain that the issuing corporation has received

the stipulated sales price. As indicated above, of the $3,633,086,000

of new securities proposed to be offered for cash about $2,839,375,000,

or 78.2%, were intended to be sold to underwriters and may, therefore, be assumed to have netted the issuing corporations the contemplated amount of funds.

For the purpose of ascertaining the proportion of registered

securities not sold to underwriters which were actually disposed of

by registrants through contracts with selling agents or their own

facilities, follow-up questionnaires were sent to registrants, other

than investment companies, who have registered on Form A-I and

whose registrations had become effective before April 30, 1936.

Approximately 435 replies, inclusive of the 270 replies mentioned in

the annual report of 1936, were received up to June 30, 1937. From

these replies it appeared that only about 20% of the total estimated

gross proceeds of the securities registered by this group of registrants

which consists almost entirely of unseasoned companies disposing of

their securities without the aid of underwriters, has actually been

sold. About one third of the registrants reported no sales whatever

of registered securities, while the remaining registrants reported sales

of slightly more than one fourth of the amount registered.
-r'~ "THIRD-ANNUAL REPORT 13

Statistics of Private Pfaeings

Registered securities, of course, constitute only a part of all new

securities offered for sale to investors in the United States. The

Commission has no authoritative knowledge of the offerings of

securities exempt under the Securities Act of 1933.9 However, in

view of the importance of private placings and of their affinity to

certain types of registered offerings the Commission is keeping So

record of unregistered private placings based on information published in the financial press and supplemented by short questionnaires

sent to the issuers of securities reported as privately placed.

During the fiscal year ended June 30, 1937, 28 unregistered private

placings with total estimated gross proceeds of almost $296,000,000

came to the attention of the Commission comparing with 37 issues

with estimated gross proceeds of over $213,000,000 during the preceding fiscal year. The proceeds of these privately placed issues

were equivalent to approximately 8% of the securities effectively

registered for cash offering with the Commission during the fiscal

year ended June 30, 1937, comparing with the corresponding ratio

of approximately 5% during the preceding fiscal year. Industrial

corporations sold slightly over one half of the reported private placings,

public utilities accounting for about 80% of the rest. Repayment of

indebtedness continued the chief purpose for which the proceeds of

the securities placed privately were to be used but the proportion to

total proceeds declined to 58% compared with 85% during the fiscal

year ended .-rune 30, 1936. The amounts to be used for working

capital and plant and equipment rose to $119,000,000 compared with

slightly over $30,000,000 during the preceding year. Monthly data

on the type of securities, the classification of the issuers and the use

of proceeds of the privately placed securities on which the Commission has information are presented in Table 10 of Appendix V.

Securities placed privately according to the information supplied

by the issuer of the registration statements, but registered either on

issuance or later under the Securities Act of 1933, (such securities

are, of course, included in the statistics of the registered issues) were

very small during the fiscal year ended June 30, 1937, amounting to

less than $12,000,000 in 4 issues compared to $211,000,000 in 20

issues during the preceding fiscal year. .

g The chief categories of exempt securities are: Securities Issued or guaranteed by the United States

Government; securities Issued by any State or by any political subdivision or any public instrumentality

-ofany State; securities issued by any banking institution; securlnes of common or contract carriers the

issuance of which is subject to section 20 (8) of the Interstate Commerce Act; securities of a noncommerical

character Issued by eleemosynary institutions; secunties which are part of an issue sold only to residents

within 8 single Stste where the Issuer is incorporated by and doing business In such State; securities ex.

changed exclusively with security-holders of the issuer where no commission Is psld for soliciting tbe

.exchange; and securities sold to 8 small number of purchasers not involving 8 public offermg' (so-called

private plaelngs),

-
14 SECURITIES AND EXCHANGE COMMISSION

EXEMPTION FROM REGISTRATION REQIDREMENTS OF SECURITIES

ACT

Exemptions of Fractional Undivided Interests in Oil 'or Gas Rights. '

In order to secure a more effective supervision over the class of

exemptions involving offerings relating to the sale. of fractional

undivided interests in oil or gas rights filed pursuant to Regulation B

of the Commission's General Rules and Regulations under the Securi ...

ties Act of 1933, as amended, on July 1, 1936, the Commission established the Oil and Gas Unit. The functions of this Unit are to

examine all offering sheets and amendments thereto; to examine

prospectuses involving oil and gas issues filed pursuant to Rule 202

of the Commission's General Rules and Regulations; to assist in the

examination of and to furnish technical, engineering and valuation

advice on registrations involving oil or gas properties; and to conduct

formal investigations into the activities of oil royalty trusts and

investigations to verify the representations made as to properties

offered and the recoveries estimated to be realized therefrom,

Of the 1,720 offering sheets examined, suspension orders were

issued in 443 cases. In 294 of these cases, the defects pointed out by

the Commission were cured by amendment and the suspension orders

lifted. The following statistics indicate the number of original

offering sheets filed and the actions with respect thereto from July

1, 1936 to June 30, 1937:

Offering sheets filed 1,720

Suspension orders entered______________________________ 44S

Offering sheets withdrawn______________________________ 94

Offering sheets amended .__________________ 295

Number of hearings held and completed to determine whether

temporary suspensions should be made permanent________ 25

(a) Resulting in withdrawals____________________ 2

(b) Resulting in amendments to correct deflcieneiea, 1

(c) Resulting in permanent suspensions ..____ 22

Temporary suspensions pending Juq.e 30,1937 29

Exemptions Other Than Those Relating to Oil and Gas Interests

Under the rules and regulations of the Commission adopted pursuant to Section 3 (b) of the Securities Act of 1933, which provide

for conditional exemptions from registration for certain issues not in

excess of $100,000, the Commission, during the past year, received and

examined 475 prospectuses, relating mostly to offerings of stock

issues. Numerous amendments, which were required to correct the

deficiencies found in the prospectuses as originally filed, were also

examined. The aggregate offerings, as disclosed by the' prospectuses,

amounted to $37,734,416. -
15 TRffiD ANNUAL REPORT-: .

REGISTRATION OF NATIONAL SE-CURITIES EXCHANGES

Exchanges Registered

The 22 national securities exchanges as of June 30, 1937, are as

follows:

Baltimore Stock Exchange New York Real Estate Securities

Board ofTrade ofthe City of Chicago Exchange,Inc.

Boston Stock Exchange NewYork StockExchange.

Chicago Curb Exchange. Philadelphia StockExchange

Chicago Stock Exchange Pittsburgh StockExchange

Cincinnati Stock Exchange St. LouisStock Exchange Salt Lake StockExchange Cleveland Stock Exchange San FranciscoCurb Exchange

Detroit Stock Exchange San Francisco MiningExchange

Los AngelesStock Exchange San FranciscoStock Exchange

New Orleans Stock Exchange Standard Stock Exchangeof Spokane

New York Curb Exchange Washington (D. C.) Stock Exchange

The Buffalo Stock Exchange and the. Denver Stock Exchange, .

which had been permitted to withdraw their applications for registration as national securities exchanges with leave to apply for reinstatement before April 1, 1937, and May 1, 1937, respectively, requested

extensions of time within which to apply for reinstatement as national

securities exchanges. By order of the Commission, the Buffalo

Stock Exchange was granted an extension to April 1, 1938 within

which it might apply for reinstatement as a national securities

exchange. The application of the Denver Stock Exchange was

denied.

The Commission, during the year, revised its rules specifying the

manner in which registered and exempt exchanges should file amendments and supplements in order to keep their applications for registration or exemption up to date. These revised rules eliminate the

necessity for the filing of formal supplements containing certain

information regularly published by the exchanges and require the

submission to the Commission of annual financial statements for

each exchange and its affiliates.

The amendments and financial statements are examined for the

purpose of ascertaining compliance with the Securities Exchange Act

of 1934 and the Rules and Regulations of the Commission. During

the year, more than 250 amendments were filed.

Exchanges Exempted From Registration

As of June 30, 1937, the 7 exchanges granted exemption from registration as national securities exchanges remain the same as last year

and are as follows:

ColoradoSpringsStockExchange

HonmwuStockExchange

MilwaukeeGrain and Stock Exchange

Minneapolis-St.Paul Stock Exchange

RiohmondStock Exchange

Seattle Stock Exchange

WheelingStock Exchange
16 SECURITIES ANl? EXCHANGE COMMISSION

REGISTRATION OF SECURITIES ON EXCHANGES

Applications for the Registration of Securities on Exchanges

One of the main objectives of the Securities Exchange Act of

1934 is to make available for the investor, reliable, current, and comprehensive information regarding the affairs of the company whose

securities are listed, or are to be listed, on a national securities

exchange. Certain information is also required to be furnished by

companies whose securities are listed, or are to. be listed, on exempt

exchanges.

A company which seeks to list its securities on national securities

exchanges may accomplish such listing by conforming to the requirements of the exchange to which it applies, and by :filing, on the appropriate form, an application for the registration of such securities with

the Commission and with the exchange on which the registration is

sought. For the purpose of the basic registration, several forms have

been adopted and each one provides for the submission of data of the

character called for in the Act and appropriate to the particular type

of issuer or security. These forms in general require non-financial

as well as financial information. Data is required concerning the

organization of the registrant and of the system of which it may be

an integral part, its capital structure, its authorized outstanding

funded debt, the debt structure of its subsidiaries, its authorized,

issued and outstanding capital stock, the amount of securities of

other corporations that it may have guaranteed, its position with

reference to outstanding warrants-and rights, an adequate description of the actual securities being registered, recent financing, control

and management, stock options, balance sheets, profit and loss statements, together with supporting schedules, the remuneration of

officers and directors, and other pertinent information.

The continuance of registration upon an exchange is conditioned

upon the filing of interim reports covering material changes occurring

from time to time, and the filing, within 120 days after the close of

the fiscal year of the registrant, of an annual report. These reports

are designed to bring up to date the information contained in the

applications for permanent registration of securities.

A detailed examination is made of each of these applications,

annual reports, and current reports for the purpose of determining

whether they contain full and adequate disclosure of the information

required by the Act and the rules and regulations promulgated thereunder. Deficiencies which are revealed by such examinations are

communicated to the registrant and amendments correcting such

deficiencies are required to be filed. Upon receipt, the correcting

amendments are examined in the same manner as the applications

and reports.
THIRD ANNUAL 'REPORT 17

.Applicationsfor 'the Withdrawal or Striking from Listing and Registration of

Securities on Exchanges

In accordance with the provisions of Section 12 (d) of the Securities

Exchange Act of 1934 and Rule JD2-(b) promulgated thereunder, the

Commission received 78 applications for withdrawal or striking from

listing of securities fully-listed and registered on exchanges. Public

hearings were held on these applications and 56 of them were granted.

The remaining 22 were pending as of June 30, 1937.

Pursuant to Rule _JD3 (a) of the Commission, 433 certifications

were received from national securities exchanges relative to the

withdrawal from listing and registration of maturing securities and

securities redeemed or retired.

Application for the Granting, Extension and Termination of Unlisted Trading

Privlleges on Exchanges.

The Commission, during the year, amended its rules governing

unlisted trading privileges on national securities exchanges pursuant

to Section 12 (f) of the Securities Exchange Act of 1934, as amended

on May 27, 1936.10 These rules permit the continuation of unlisted

trading privileges in a security without further application to the

Commission if only minor changes have occurred in such security

such as changes in the title thereof, the interest rate, the par value,

the amount outstanding, etc. The exchanges are required to notify

the Commission in writing of any changes promptly after they have

knowledge thereof. During the fiscal year ended June 30, 1937

the Commission received 424 such notifications.

If more substantial changes are made in securities, an application

must be filed' by the exchange supporting the contention that the

altered security is substantially equivalent to the security admitted

to unlisted trading privileges. Before the altered security may be

traded on an exchange, the application must be approved by the

Commission. During the past year, 50 such applications were

received, of which 24 were granted and 26 were denied.

It may be interesting at this point to sum up the record of reduction in the total number of securities admitted to unlisted trading

privileges since October 1, 1934. The total number of securities

originally admitted to unlisted trading privileges, pursuant to Clause

1 of Section 12 (f) of the Securities Exchange Act of 1934 amounted to: , Stoeks 2,685

Bonds 1,288

Touu 3,973

10Fot 8 discussion of background of this Amendment, see the CommiBslon's Second Annual Report.

p.l7.

~

~

-
18 SECURITIES AND EXCHANGE COMMISSION

On June 30, 1937, the number of securities still enjoying unlisted

trading privileges, pursuant to Clause 1 of Section 12 (f) was:

Stocks 1,656

Bonds ' 615

Touu 2,271

Thus, there has been a net decline of:

Stocks 1,029

Bonds_______________________________________ 673

Touu 1,,70211

During the fiscal year, 69 applications for the extension of unlisted

trading privileges to securities duly listed and registered on other

national securities exchanges were received. Of these, 11 were

granted, 13 were denied and 45 were pending as of June 30, 1937.

During the fiscal year, the Commission received 22 applications for

the extension of unlisted trading privileges to securities in respect of

which there is claimed to be available from registration statements

and periodic reports or other data filed pursuant to rules or regulations prescribed by the Commission under the Securities Act of 1933,

as amended, or the Securities Exchange Act of 1934, as amended,

information substantially equivalent to that available pursuant to

rules or regulations of the Commission in respect of a security duly

listed and registered on a national securities exchange. These

applications were still pending as of June 30, 1937.

The Commission received 5 applications from persons other than

exchanges for the termination of unlisted trading. privileges on

national securities exchanges. O~these, 2 were granted, 1.was denied

and 2 were pending as of June 30, 1937. ,

During the fiscal year; the Commissipn was notified of the removal

by exchanges from unlisted trading privileges of 327 issues of

securities. ,

As of June 30, 1931, 14 national securities exchanges traded in

securities on ltD, unlisted basis. ,Of this number, ,5 exchanges traded

in both stocks and bonds on an unlisted basis and the other 9 traded

in stocks only. As of June 30, 1937, 2,282 issues of securities were

U We wish to emphasize that tbls reduction applies only to secnrlties for which nnJlsted trading privileges

have been continued pursuant to Clause 1 of Section 12 (f). Tbls category of securities constitutes an

anomaly In exchange tredlng, In that full and continuing Information concernlng the Issners thereof Is not

made available pursuant to law. SJnce an abrupt termination of trading In these secnrltles might have

TBSn1tedIn serions dislocation. moo trading W88 permitted to continue, In the bellef that there would be 8

gradual decline therein. The statistical record jnstl1les this expectation.

Seonrities adnntted to so-called nnlIsted trading privIleges pursuant to 'Clanse 2 or Cla~;I. e>.fl:l~.t1!?~ l~

(f) ~f the Becnrltles Exchange Act of 1934,88 amended, present an entirely di1ferent situation Inasmuch as

(ull and continuing Information concerning these secnrltiesls filed pursuant to law. . '1
THmD :AN1Ii"UALREPORT 19

:admitted to unlisted trading privileges on the 14 registered exchanges,

-of which 1,666 were stock issues and 616 were bond issues."

As of June 30, 1937, 3 exempted exchanges traded in securities on

an unlisted basis, of which 2 traded in both stocks and bonds and 1

in stocks only. Approximately 164 issues of securities were admitted

to unlisted trading privileges on exempted exchanges, of which 137

were stock issues and 27 were bond issues.

Forms Corthe Registration of Securities on Exchanges

During the past year, the Commission added three forms to the

initial series of forms for registration of securities on national securities exchanges, i. e., Form 22, For Issuers Reorganized in Insolvency

Proceedings or which have Succeeded to a Person in Insolvency Pro-

-ceedings; Form 23, For Successor Issuers; and Form 24, For Bank

Holding Companies. A form (Form 8-C) has also been adopted to

facilitate the registration of securities on additional exchanges." In

connection with the promulgation of these forms, previously existing

exemptions with respect to such issuers have in large part been

repealed.

, To the series of forms for annual reports, and as-companion forms

to the forms for registration previously adopted, the Commission has

added four annual report forms, i. e., Form 18-K, For Foreign Governments and Political Subdivisions Thereof; Form 19-K, For American Certificates Against Foreign Issuers and for the Underlying

Securities; Form 2o-K, For Securities other than Bonds of Foreign

Private Issuers ; and Form 21-K, For Bonds of Foreign Private

.Issuers.

To supplement the information required in the annual reports ana

to provide a mechanism for making important events known to investors with as little delay as possible,' a new form (Form 8-K) has

been 'adopted for reporting shortly' alter the close of each month

certain important events occurring during the month within which

the specified events occur. In addition, the' problem of obtaining

financial information more frequently than once each year is being

studied to determine whether a forin for quarterly reports of listed

companies should be adopted.

At the present time, there is in progress a complete revision of the

existing forms with a view to coordination of their requirements with

each other and with the requirements of forms' for registration under

the Seeurities Aet of 1933. It is anticipated that such revision will

result in the elimination of a number of the existing forms by combination into more general categories.

U Includes some duplication Inasmuch as some securities are admitted to unllsted trading privileges on

more than one registered exchange.

lll'nbllshed lQ1y 7,1937.

-

'
20 SECURITIES AND EXCHANGE COMMISSION

Statistics of Securities Registered or Exempt from Registration on Exchanges

The Commission is now engaged in the development of a new

program for the collection and analysis of significant data relating

to all phases of exchange trading. It is expected that the data

yielded by this new program will be both more comprehensive and

more significant than the data which have been accumulated to date.

Further reference to this new program will be made below.

Certain interesting data concerning securities registered or exempt

from registration upon exchanges follow;

Sales of securities on registered exchanges for the fiscal year ended

June 30, 1937, amounted to $28,052,500,834, increasing 9.1 per cent

over sales in the fiscal year ended June 30, 1936. Stock sales totalled

$24,581,956,285, a figure 11.8 per cent higher than that of the preceding

year, and bond sales were valued at $3,470,144,794, declining 6.5 per

cent from the comparable figure in the preceding year.

Shares of stock sold totalled 945,164,509, 1.8 per cent less than the

total a year earlier, while the principal amount of bond sales declined

9.9 per cent to $4,307,104,255.

These figures indicate that the average price per share of stock sold

and the average price per hundred dollars of principal amount of

bonds sold both increased.

The two leading New York exchanges accounted for 95.8 %

of sales on all registered exchanges; 95.3 per cent of stock sales and

99.8 per cent of bond sales.

The Commission, in addition to continuing its regular monthly

releases on the value and volume of trading on securities exchanges,

has instituted, in the past year, several series of releases making available to the public for the first time regular data on the trading of

various groups on the two leading New York exchanges.

In accordance with the program embodied in its report to Congress

on the Feasibility and Advisability of the Complete Segregation of the

Functions of Broker and Dealer, the Commission commenced in

October 1936 to issue weekly releases showing daily the purchases

and sales for their own account of several groups of members on the

New York Stock Exchange and the New York Curb Exchange. A

summary of these releases, with corrections as received from the

exchanges, was made available in June 1937 at the public reference

rooms of the Commission's Washington office and principal regional

offices. Through the weekly releases and the annual summary,

there is now available to the public a continuous record of members'

trading on the New York Stock Exchange and the New York Curb

Exchange since March 1936.

In June 1937, the Commission commenced to release to the public

figures on odd-lot trading. There is made available daily at the '

Washington office figures showing for the second day preceding that
THIRD ANNUAL REPORT 21

of the release the number of shares purchased and the number of shares

sold in odd-lots by odd-lot dealers and specialists on the New York

Stock Exchange, together with the number of orders involved in such

trades. Weekly summaries of these figures, as corrected by more

complete reports from the odd-lot dealers and expanded to include the

value of daily purchases and sales in odd-lots, are publicly distributed

in release form.

These two series enable the investing public to follow in some

detail and with reasonable dispatch the extent and the direction of two

important sections of total trading on the two largest stock exchanges;

purchases and sales by members of the exchanges and transactions in

small amounts (i. e., in amounts of less than full lots) which may be

assumed to reflect purchases and sales by smaller traders. During

the six-month period ending June 30,1937, member trading has represented about 21% and odd-lot trading about 12% of total exchange

trading (i. e., total purchases and sales both in round lots and oddlots). The .two new series, therefore, provide information concerning

one third of the total stock exchange trading.

In addition to statistical information on the securities markets

made available through public releases, the Commission has regularly

collected from a number of member houses of the N ew York Stock

Exchange and the New York Curb Exchange data on margin accounts,

commission orders received and executed, orders on specialists' books

and orders executed for account of foreign customers. Most of these

series are still in an experimental stage, but have provided the Commission with current information valuable in its administration of the

Securities Exchange Act. The Commission has been gratified by the

ready cooperation of the member houses in furnishing the basic

material for these statistics.

During the year, the Commission instituted proceedings to determine whether to suspend for a period not exceeding twelve months

or to withdraw the registration of securities of seven companies

listed on national securities exchanges. In general, these proceedings were based upon the failure of the registrants to conform to the

requirements of certain sections of the Act, and the Rules and Regulations thereunder. At the close of the fiscal year, four of these

proceedings had been terminated, two by entry of an order by the

Commission directing the withdrawal of the securities registered on

such national securities exchange, and two by dismissing the proceedings in view of the satisfactory fulfillment of the requirements by the

registrant company, and tbree were pending.

Annual reports on Forms 18-K, 19-K, 2o-K, and 21-K are due to

be filed on <or before September 30, 1937 by 155 foreign issuers having securities registered on a national securities exchange. As the

securities- of such issuers -were exempt from registration until May
22 SECURITIES .AND EXCHANGE COMMISSIO~

15, 1936, this will represent the initial filing of annual reports by foreign issuers. As of June 30, 1937, eight such reports were :filedwith.

the Commission.

The following table indicates the number of applications and reports filed in connection with the listing of securities on exchangesduring the period from July 1, 1936 to June 30, 1937:

New applications on basic forms and 8UpplementalapplicatiODS ._______ 913

New applications on provlslonal Form 7 ._ 40

.Applications for ''wbeD Issued" tradlDg In mtlssued warrants___________________________________ 69

.Applications for "when Issued" tradlDg In unissued securities otber than warrants, 6-

Statementa In respect of exemption of Issued warrants ._ 101

8ection 13 reports -.-- 8, 931

In addition, 3,941 amendments to these applications and reports-

, were received.

The following table indicates the basic forms used by issuers in

registering securities and the number of securities registered and

issuers involved as of June 30, 1936 and as of June 30, 1937:

As of .Tune 30, 1936 As of .Tune 30, 1937

Form

- 8ecurities Issuers 8ecurities Issuers Reglstered Involved RegIstered Involved

7 Provlslonal registration form_. 10 8 18 11

10 General eorporattons., 2, 761 1,739 2,848 1,876

11 UnlDoorporated lssuers 2li 13 Z1

12 Issuers maklDg annnal reports under 8ection 20 of

the Interstate Commerce .Act, 88 emended, or

under 8ection 219 of the Communications Act of 1934 ._. 746 196 712 193

12-A Issuers In receivership or b8Ilkruptcy and makIDg

annnal reports under Bectlon 20 of the Interstate

Commerce Act, 8B emended, or under Beetlon 219

of the Communications .Act of 1934 129 ss 128 2li

13 Insurance companies other than Ute and title Insur. ance companies.. ._. ._. 17 17 16 .16

14 Certl1lcetes of deposit Issued by a oommittee _______ 60 43 ss 39

16 Incorporated Investment oompanies _______________ 117 Jill 61

16 Voting trust oertl1lcates and underlying secnrities __ 41 36 43 36-

17 UnlDcorporated Issuers engaged primarlly In the

business of investing or tradlDg In secnrities ______ 7 6 8 s. 18 Foreign governments and political subdlvlslons thereof 182 86 188 86

19 AmerIcan certiftcates Issued against foreign seeurt- ties and for the underlying securities _____________ 13 11 13 Ii 20 8ecurities other than bonds of foreign private Issuers 6 3 6 3~

21 Bonds of foreign privateJssuers. ___________________ 92 lili 9li lili

22 Securlties of Issuers reorganized in insolvenoY pro- eeedlngs or their successors ______________• ____• __ (a) (a) 70 M

23 Seoarlties of successor Issuers other than those sue- ceeding insolvent Issuers (a) (al 34 26

Total. 4, 196 2,.303 4,368 2,489

a Forms were not promulgated as of .Tune 30, 1936.

• __ •• _•• • • •

•

•

• __• __

•

__- •__• __- - --- •• •

• • __• •

_

•

••

_________• _____• ___•

________________ - ________•• _

________• _____•• ___• _______•

__ __________•• ___• ____•• ___________••• ____

__• ______•• ___

_____ __________• ___ __• ____

~

__________________________ • ___• __•• __•____

___________• _______________________________

_________• ____• ____•••• __

______•• ________••• ___•• ___•• ________
THIRD ANNUAL REPORT 23 

The following table indicates the industries engaged in by issuers 

having securities registered on national securities exchanges as of 

June 30. 1937. 

INumb Industry of IsgUer8 

~~anspa~tstion snd eommunioation (railmade.talephone. eto.) ............... .... ............ 818


mining (iooludlngnan-derroms).................................................... 269 

~ ~wry ~ and i ta, , h ........................................................................... 
 aa

-oartation esulp-t lsutomobiles, parts, accsssoris, etc.) ............................... 184 


Merchanaiahg (chain stom. department storan. etc.).......................................... l€6 


pinanctu and invsament (inuestmaot trusts. Bre losuranca. etc) .............................. 186 


~md 106 


~ ~ 

and related products ................................................................... 
 Utility omrathe (electric and am)............................................................. 1 98
 ..... Mhwllmeous maoufacturlng .................................................................. 86 


Oil sod gas wells............................................................................... 77 


ChemicSls and dUed pmducts 73 


Bev-ss mrewerlsa and distilleris) ........................................................... 06 


Utilibbddln~(electsic and gas)............................................................... 01 


T~lulesand ih& pmducls..................................................................... 511 


Bulldio( and relaled mmpsoiss ..................................................... 55 


Iron aml ptel (exrludlnp mwbiosry....................................................... ....., 5a 


On refining and dirtrtbutlng ................................................................... M) 


Tire,rubber, and leather products ............................................................. 35 


Paper and paper products...................................................................... S2 


aealestate..................................................................................... 28 


Coal mhhg ................................................................................... 20 


Printing, pubUbllsbing, and allied Lndustriss ...................................................... 23 


Tobw produce .............................................................................. zd 


Utllit~operatlog.holding (dechlcand gm)..................................................... n 


Agrioultm .................................................................................... IT 


Misoellwus other hdoWls .................................................................-167 


Total.................................................................................... 2.489 

24 SECURITIES AND EXCHAKGB COMbIISSION 

The following table indicates the total number of securities, classified 

as to stocks and bonds and as to the basis for admission to dealing on 

all exchanges as of June 30, 1936 and June 30, 1937. The number of 

shares and the principal amount of bonds are shown for securities other 

than those admitted to unlisted trading privileges. Duplications 

within identical bases for admission to dealing have been eliminated, 

e. g., where the same security is registered on more than one exchange, 

the security is counted only once. (Securities exempted under Section 3 (a) (12) of the SecuritiesExchange Act of 1934 are not shown). 

1 / June 30, 1938 11 Iune 30, 1937 

Bssis for 

Dealing 

Admission to I 1 No.ofShares 1 Isrues N0.01Shsle~ 

Number of Authorleed Number of Authorired 

sharesL$ted, for Addltian i~~Listed~ for to Addit" Liat 

Registered ................... 
 ...... 
 Temporarily exempted from 

reaist~ation..~~ ............. Listed an exempted sr- ohage6.................... 215 .......... .............. Admitted to unlisted tradim 

privileges 

iieS~*~

on national 

........ ss-. .....................181 .............. 1~ ............. 

Admitted to unlisted trading 

pdvileg~~ I on erempted exobpw.................... 145 I.............. / .............. 8 ;(P .......I .............. 

(-) mdudes 3 issues in the ammt of 3,042,622 pounds sterling listed and 330.W pounds sttnling author. 

ie8dforhaditiontolid. 

(I) Number of shares not rewrted ss of Iune 30, 1838. 


(9ThiSfig~reLIasofDeeembsr15,1935; notabulation -mads 81 ofJune30.1938. 


BONDS (Iooludes oarti8oate for daposlt of bonds) 

~em~orsdi; exempted from 

registration ................ Lieted on exempted er- 0hSDgBs-.................. ddmitted to unlisted trading 

privileges on nationel semriries eachangos..~ ...... 

Admitted to unlisted trading 

~11vile.e~on easmDted sr-

(.I Includes9 bond issuesin themomt of 9,093,4W p0~11dssteeLing1ist~dddd 1bond ime i% the ~mount 

a165,353,WO Frenchlranos listed as of Tuna 30,1938; includes, m of June 30,1037,s bond issuesin the smount 

01 12,4W.040 pounds sterling listed and 1 bond issue in the amount of65.353.000 French franos. 

(b) Amount not reportad sn of Juoe 30, 1938. 


(4 This flgoreis srof Dscember15,1935:no tabulation was made ssofJune 30.1986. 

THIRD ANNUAL REPORT 25 

The following table indicates the number of securities permanently 

registered and securities admitted to unlisted trading privilege8 which 

were admitted to deding on one and more than one exchange as of 

June 30, 1937: 

BTOCXS 

(sea faatnote ro, explanation of mlumn headings) 

Classinoation 

(5) (6) 0 (8)' 

~otel issues admitted te unlisted tmding 

privileges.......... . . 

Total registared stock hes admitted ~. to dellling on more tM? Om . ' 

BIchBngB........................................................... 
. 


admittea to daaiing on mom than aoe mchshsge...........-L...-. 511 


gnduplicatad Mtal of stock issues nglstsredand sdmitted to dated : 


trading privileges 3;588 


undupiicated total of atoek issues registered end admitted to busted . 
 trading pri~ilegea which me admitted to Fng on more thin me 


Total stock Issues sdmitted to unlisted tradinl ~ri$Uege3 wblch pre . , 

mchrmge.................................. ................... Vk-2b.w.01uo 


BONDS 

,. (sea footnote !or explanation dl col-

" ~~t.li~~~esregist~md ...................... 1,ls~ I.% o 18-.. ... Tom issues aamittsd to oolistea trading 

privileges................................. 692 35 ? . ', 

Total registered bond issue admitted to dealing onmm than one 

%change............................................................ P6 

Totail bond isr- sdmltted to unlisted -din$ prjviiegss ~hich #.re 

admitted to dealing on more than one exchange..7.7, ................ 42 

unduplioated total of bond isrues reatered amiad1111Itted to u~listh . : 

trading privileges 2,049 

Unduplicated total of bond issue registersd snd admitted to mlisted 

trsd'lg privileges which are admitted to dealing on more than one 

exchmge........................................................... 'Wr10.W70 of uodupUcszted total. 

i4) ~dmittedto unlisted trading p?iail& m man) than one exhange. , - (5) Registered on one exchange and admitted to unlisted trading privileges on one &change. 

(6) Registered on one exchange and admitted to unlldted trading pri- on m m than me EZ-

(1) R~gisteredon mare tban one eiehsnge and admitted to unlisted tradiog pridw m *awe. 

(E) Registered on mare tbsn om ~lchengeand sdmitted to onlietad tradiw privileges on more than me, 
26 SECURITIES AND EXCHANGB COErID.IISSION 

The following tableindicates by exchanges the number of issuers antl 

securities and the basis of admission to dealing as of June 30, 1937: 

Exempted In,m n&lslrattunar soa~omiseorlrlritrrexthano. 

R,reakrsred;P.18rori.ioo~U~rcyhwmd, X, r*mpormlyeremp~exihon~redlstla,lon: LS alm!tled I,. un. 

)ktd trmlop: yr$rllepar XL. Ivld eb an sre~uptelI~xa~ye: rad Xl'.sd8wttW lo odlsreJ lreecng prlvlREGISTRATION OF BROKERS AND DEAI.ERS l'RAh'S.4CTING BUSINESS 

IA' OVER-THE-COUNTER MARKETS 

Section 15 (d) of the Securities Exchange Act of 1934, as amended 

on May 27, 1936, preserved all registrations of brokers and dealers 

which were in effect on the enactment date without the necessity of 

@rig new applications for registration on the part of those so registered. 

Subsequent registrations were continued in substantially the same 

manner as prior to the amendment. 
--- 

THIRD ANNUAL REPORT 27 

The statistics with reference to the registration of brokers an& 

dealers under Section 15 of the Act are as follows: 

hs of June30, 1938 As 01June SO, 1937 i 
 I 

TOW............................................ / M,II 0071 1 8218 1 m6 


- C~rrmlstlsefrour Ianum 1. 1838. to the dale plveo 

I Cumulatlse from May '2%. 1835. to lla daleplueo. 


018 ~~s!r@tioq~
 mpended plot U,Mny 23. 1938, a sere iuiyendhl ,n ncluarl .Illle rPy.r:rauk, end 

tbPy were pemlltled 10 kllhdr8~tbelrBlstappllcattonrolao ihenilngol "era al,plscstiun(rur, lar fiecll~~! 16 

b. emended. 'The otter4 susparionl arm mveral in Fo~coore5 

4 ~no~de? of denlslooteredon Urnembar 28.1635, was vaehrad sfler the elope nlrha &al ga o 1w.8.

e Ofthese 17, 13 BCEJI~C~O~OLAW to brlbg thn.r~~~lltxti~n< UIIJBI the~meudeddet sud rltry am therelm ~~nmUed by o~~lstionf the amendment. Fourrtelstrstbnn, ooder auswndon on the edc live date cl 

the amendment, *em sutomatlrally sllmLnated by operation of the mendmerit. 

REGISTRATION OF PUBLIC UTILI~YHOLDING COMPANIES 

Registration of a public utility holding company, pursuant to the 

provisions of the Public Utility Holding Company Act of 1935, is 

accomplished by filing with the Commission a notification of registration and, later, a registration statement. 

During the fiscal year, the Cornmiasion adopted a permanent form 

for notification of registration (Form U5A) and a form for the registration statement (Form U5B). In requiring the completion of statements on this latter form (Form U5B), the Commission made effective 

one of the vital provisions of the law. 

Congress, by incorporating in the Public Utility Holding Company 

Act of 1935 the provisions of Sections 4 and 5, realized that the informatory process was fundamental to the positive powers of regulation established in other parts of the Act. Sections 4 and 5 require 

that interstate utility holding company systems disclose complete 

financial and operating information as well as management interests, 

Since many abuses enumerated in Section 1 of the Act have sprung 

from the inaccessibility and unavailability of information about the 

holding company, its interests and activities, the publicity thus 
28 SECURITIES AND EXCHANGE COMMISSION

req uired will prove a great deterrent offuture financial chicanery and

abuse .

.Although the registration provisions were established as the means

whereby other parts of the law were-made effective;theywere designed

to serve a necessary purpose in and by themselves, independent of

other parts of the .Act. They represent an important supplement to

the regulations in the Securities .Act of 1933 and the Securities Exchange Act of 1934 in providing protection, through disclosure, to

investors, consumers, and the general public.

To provide full information regarding interstate holding' company

systems a comprehensive form was required. Perhaps the most essential requirement contained in Form U5B is .that the registrant submit,

as part of the exhibits, consolidating balance sheet, income and surplus statements. The consolidating type of statement reveals the

financial interrelationships within a given system since it requires

that the individual statements of the registrant and each subsidiarywhich is customarily consolidated shall be set forth separately, with

explanations of the intercompany eliminations made by the accountants in compiling the consolidated statement.

In addition to these consolidating statements which in themselves

provide a wealth of important financial data not generally available

in the past, certain pertinent information is required, relating to specific subjects of which the following are representapive: ,(except where

noted, the various required data pertaining to these general subjects

must be furnished for both the registrant and its subsidiary companies)

,(I) general character of business; (2) analysis 'of balance sheet

accounts including funded debt, capital stock and property; (3) revaluations of property; (4) intercompany holdings of securities and

evidences of indebtedness issued by companies Within the system;

(5) investments in outside holding companies and public utility 'com-'

panies; (6) interstate sales of 'electric energy and gas; '(7) important'

leases; (8) important financing during the past five years; '(9) distribution of capital stock of the registrant; (10) officers' and directors'

other business affiliations, including connections with financial institutions; (11) loans to officers and directors; (12) interests of officers and

directors in contracts to which the registrant or subsidiaries are

parties; (13) compensation to officers, 'directors and :highly-paid

employees; (14) important sales, service, construction ailE): other'

contracts; and (15) litigation relating to 'franchises,' orders of a-State

Commission or other govemmentel 'agency and, 'other' 'important

matters. 1 ;,.'! I'

As exhibits, in addition to the consolidating statements 'referred' to'

. above, certain additional material is required. These include, among

other things, maps showing the areas in which electric and gas service

are furnished and maps showing the nature and location of various

, "
. THIRD ANNUAL REPORT 29

types of electric and gas property, such as generating plants, transmission systems, points of interconnection with all other systems, and

aimilar or related material.

The illumination of the facts required by Form U5B should be a

potent influence in eradicating serious abuses which exist in some

systems, and in dispelling suspicions which may unjustly be prevalent

regarding the activities in other systems.

Upon filing with the Commission, the registration statements are

thoroughly examined for the purpose of determining compliance with

the Act and the rules and regulations promulgated thereunder.

When the examination discloses the existence of deficiencies, the registrant is so advised, Deficiencies in the statements may be corrected

by the registrant filing the necessary amendments. Amendments

filed with the Commission are also examined.

Although it is difficult to accurately determine the total number of

holding companies subject to regulation under the Act, or the volume

of assets which they control, it is estimated that at the present time

somewhat less than 45% of the total number of companies subject to

the Act are registered. However, the assets controlled by these

registered companies probably constitute not more than 30% of the

total assets of the companies subject to the Act.

As of June 30, 1936, there were sixty-five holding companies registered under the Act. During the year ended June 30, 1937, there

occurred a net increase of twenty-one companies, bringing the total

number of registered holding companies to eighty-six. Included in

the companies which registered during the last fiscal year were such

large systems as The North American Company, American Water

Works and Electric Company, Inc., and American Light and Traction

Company.

The eighty-six holding companies which were registered at June 30,

1937, comprise the following:

American Light & Traction Company

American Public Service Company

American Utilities Service Corporation

American Water Works and Electric Company, Inc.

Arkansas-Missouri Power Company

Lee Barroll, Charles H. Bliss, Mord M. Bogie, Robert D. Gordon, Thomas AL

Tunney (Voting Trustees of the American Utilities Service Corporation)

Lee Barrell, et al, Trustees of United PubliciUtilities Corporation

British-American Utilities Corporation

Brokaw, Dixon & McKee

Central and South West Utilities Company

Central New Hampshire Power Company

Central States Edison, Inc.

Central States Power & Light Corporation

Central States Utilities Corporation

Citizens Public Service Company

Citizens Utilities Company
30 SECURITIES AND EXCHANGE COMMISSION

Colonial Utilities, Inc.

Colonial Utilities Corporation

Commonwealth Light & Power Company (Trustee of)

Community Power and Light Company

Consumers Natural Gas Company

-Oreseent Public Service Company

Derby Gas and Electric Corporation

East Coast Public Service Company

Foster Petroleum Corporation

Gary Electric and Gas Company

The Gas Company of New Mexico

General Public Utilities, Inc.

Georgia Natural Gas Corporation (Trustees of)

Granite City Generating Company (Voting Trustees)

Great Lakes Utilities Company

<treat Lakes Utilities Company (Voting Trustees for Common Stock)

Great Lakes Utilities Corporation

:Illinois Traction Company

Inland Power & Light Corporation (Trustees of)

International Hydro-Electric System, New England Power Association, and Old

Colony Trust Company (Trustees of)

Interstate Gas and Electric Company

Interstate Light and Power Company

Interstate Power Company

Jowa Public Service Company

Lone Star Gas Corporation

:Middle West Corporation (The)

Midland United Company (Trustees of)

:Midland Utilities Company (Trustees of)

Minneapolis General Electric Company

:MissionOil Company (The)

National Fuel Gas Company ,

National Gas and Electric Corporation (Trustees of)

National Gas and Electric Corporation

National Light, Heat and Power Company

New England Power Association

New England Public Service Company

North American Company (The)

North American Edison Company (The)

North American Gas and Electric Company

North American Light and Power Company

Northern States Power Company

North West Utilities Company

Penn Western Gas and Electric Company

Pennsylvania Gas & Electric Oorporation

Peoples Light and Power Company

Peoples Light and Power Corporation (Trustees of)

:Peoples Light and Power Corporation (Voting Trustees)

:Public Service Corporation of Texas

:Public Utilities Securities Corporation (Trustees for)

:Republic Electric Power Corporation

:Republic Service Corporation

Sandar Corporation

Southeast Power & Light Company
THIRD AN;NUAL REPORT

Southern Natural Gas Company

Southern Union Gas Company

Southwestern Development Company

Southwestern Public Service Company

States Electric & Gas Corporation

Twin State Gas and Electric Company (The)

Union Electric Power Corporation

United Cities Utilities Company

United Public Service Corporation

United Public Utilities Corporation

Utilities Holding Corporation

Utilities Power & Light Corporation

Utilities Stock and Bond Corporation

Washington and Suburban Companies

Washington Gas and Electric Company

West Penn Electric Company (The)

West Penn Railways Company

31

EXEMPTIONS FROM REGISTRATION UNDER THE PUBLIC UTILITY

HOLDING COMPANY ACT OF 1935

Applications for exemptions 'from registration requirements under

the Public Utility Holding Company Act of 1935 are filed with the

Commission pursuant to specific sections of the Act which exempt by

rule or order of the Commission holding companies of certain specified

types and holding companies which meet certain specified requirements.

The requirements as to the various kinds of applications for exemption under Sections 2 and 3 of the Act are extremely flexible. The

Commission has adopted rules specifying the minimum information

which was thought relevant in the ordinary situation, but has suggested that each applicant omit irrelevant data and furnish any additional information which is pertinent to the particular case, reserving

the right on the part of the Commission to call for any other data that

might be necessary.

As of June 30, 1937, 399 applications for exemption of holding companies and for orders declaring companies not to be holding companies

or declaring companies not to be electric or gas utilities had been

received. Twenty-four of these applications were received during the

past year. Of these 399 applications, there were 87 granted exemption,

172 withdrawals, and 140 pending at the close of the fiscal year.

RULES, REGULATIONS, AND FORMS UNDER THE PUBLIC UTILITY

HOLDING COMPANY ACT OF 1935

During the year ended June 30,1937, the Commission adopted nine

new rules, while sixteen rules were amended to a greater or lesser

degree. Inaddition to adopting four new forms, the Commission also

adopted the "Uniform System of Accounts for Public Utility Holding

Companies" .
32 SECURITIES AND EX<mANGE COMMISSION

The new rules adopted during the year include the following:

Rule 3B-2 exempts public utility companies operating

within the United States from duties and obligations as holding

companies under the Act if such companies would be considered

holding companies under the Act solely because of a foreign

public-utility subsidiary company operating in Mexico or

Canada.

Rule 3D-6 exempts from the provisions of Section 6 (a) the

issue of initial shares of a company in process of organization,

if all such shares having a par, stated, or declared value not

exceeding $10,000 are acquired for cash by a single company.

Rule 5A-3 prescribes the use of Form U5A for notification

of registration.

Rule 5B-l prescribes the use of Form U5B for registration

statements. .

Rule 6B-l prescribes the-use of Form U6B-l for applications for exemption from Section 6 (a) of the issue and sale of

securities, the proceeds from which are to be used to finance

the business of the applicant and which have been expressly

authorized by the State commission of the State in which the

applicant is organized and doing business.

Rule 12-0-2 provides that no dividend shall be declared or

paid out of capital or unearned surplus, except upon application to and approval by order of the Commission.

Rule 13-60 requires the filing of annual reports by mutual

and subsidiary service companies on Form U-13-60.

Rule 15-10 prescribes the use of the Uniform System of

Accounts for Public Utility Holding Companies which do not

own and operate public utility or other property.

Rule 170-12 grants to newly registered holding companies and their subsidiary companies exemption until September 1, 1937, from the provisions of Section 17 (c), with reference

to :financial connections of directors and officers, which existed

on August 26, 1936.

Of the many amendments to existing rules adopted during the year,

the most far-reaching and important were to Rule 90-3, dealing with

exemptions from the requirement to obtain approval of the Commission as to certain acquisitions of securities. Certain new exemptions were included, namely, the acquisition of securities which have

been issued in accordance with Rule 3D-6 and those which have been

acquired in the exercise of preemptive rights. In this connection,

Rule 14-1, providing for quarterly reports to the Commission on such

acquisitions, redemptions and retirements of securities, was amended
THIRD ANNUAL REPORT 33

to eliminate the necessity for filing duplicate reports under certain

circumstances.

Other amendments included amendments to Rule 3, regarding

applications for exemption under Sections 2 or 3 of the A:ct; Rule

9A2-2, permitting brokers, dealers, or underwriters to acquire securities of a public-utility company in certain circumstances; Rule 13-3,

exempting newly registered holding companies from the provisions of

Section 13 for a period of thirty days; Rule 170-3, exempting from

the provisions of Section 17 (c) officers or directors of financial institutions who are acting as directors of a registered holding company

or subsidiary on express approval by a Federal Court.

Forms have been promulgated as follows:

(1) Form U5A-Notification of Registration pursuant to

Section 5 (a) of the Public Utility Holding Company Act of

1935.

(2) Form U5B-Registra.tion Statement, pursuant to Section 5 (b) of the Public Utility Holding Company Act of 1935.

(3) Form U6B-I-Application by a subsidiary of a registered

holding company, pursuant to Section 6 (b) of the Public

Utility Holding Company Act of 1935, for exemption of

securities expressly authorized by a State commission.

(4) Form U-13-60-Annual Report of Mutual and Subsidiary Service Companies, pursuant to Section 13 of the

Public Utility Holding Company Act of 1935.

(5) The Uniform System of Accounts for Public Utility

Holding Companies, prescribing a system of accounts, pursuant to Section 15 of the Public Utility Holding Company

Act of 1935.

Each form has presented a separate problem in the light of the

particular provisions of the Act involved and the character of the

information required. The Commission has attempted to make the

forms simple, readily understandable and not unnecessarily burdensome to the industry, yet at the same time, comprehensive enough to

elicit the requisite information.

UNIFORM SYSTEM OF ACCOUNTS FOR PUBLIC UTILITY HOLDING

COMPANIES

Pursuant to Section 15 of the Public Utility Holding Company Act

of 1935, the Commission, on August 8,'1936, adopted the "Uniform

System of Accounts for Public Utility Holding Companies". This

system became effective January 1, 19.37,as to those registered holding companies for which the system was designed.

This system of accounts is applicable to public utility holding

companies which derive practically all their income from dividends
34 SECURITIES Am) EXCHANGE COMMISSION

and interest on investments in other companies. It was not designed

to meet fully the requirements of those holding companies which

derive a portion of their income from public utility or other physical

property of similar character directly owned and operated by them.

It was the aim of the Commission to provide a system of accounts

which would not impose burdensome requirements upon the companies, but sufficiently comprehensive to provide information essential in the administration of the Act. In formulating the system,

certain matters had to be dealt witll'respecting which diverse accounting practices were being followed. It .is not anticipated, however, that the companies will.be faced with any serious problem in

conforming their accounting. practices to the uniform methods

prescribed by the system.

Financial data for public utility holding companies, thus compiled

for the :first time on a uniform basis, will be of material assistance to

investors, as well as to this Commission and to State regulatory commissions in protecting the interests of consumers and investors.

In the preparation of this .system of accounts, the Commission

invited the cooperation of.accounting officers of public utility holding

companies and of the American Institute of Accountants. Numerous

conferences were held with representatives of the foregoing, at which

extended discussions were. had upon various matters involved.

Upon completion of a tentative draft of the system, copies were

distributed to holding companies and others inviting comments,

suggestions and criticism in connection therewith. The replies

received in response to this invitation were given careful consideration,

and as a result, a number of modifications, amendments, and changes

suggested were embodied in the system as finally adopted.

ISSUANCE OF SECURITIES BY REGISTERED HOLDING COMPANIES

One of the important provisions of the Public Utility Holding

Company Act of 1935 relates to control over the issuance of securities.

During the fiscal year just ended, the Commission received 95 applications and declarations under Sections 6 (b) and 7 relating to the issuance of securities by registered holding companies and their subsidiaries. Prior 'to July 1, 1936,24 applications and declarations had

been received, making a total of 119 received since the Act became

effective. Of these, 87 have been approved, 11 withdrawn, and the

balance of 21 were still pending on June 30, 1937.

The eighty-seven applications and declarations which have been

approved by the Commission related to the issuance of over $750,-

000,000 H of securities, while the 11 withdrawals covered securities

aggregating almost $90,000,000. Applications and declarations

pending on June 30, 1937 related to securities amounting to over

I' Of thls amount about $/iOO,ooo,ooo were approved under Sec. 7 and the balance of $260.000.000under

Sec. 6 (b).
--- 

TRlRD AWL REPORT 35 

$225,000,000. Thus the issuance of well over $1,000,000,000 of 

securities has been covered by applications and declarations filed with 

the Commission under this Act. 

A vcry large proportion of the approved security issues were those 

of subsidiary operating companies of registered holding companies 

which were issued in refinancing outstanding securities with securities 

having smaller fixed charges. Representatives of companies appearing in these cases have maintsjned before the Commission that the 

resultant savings in the course of time should materially benefit consumers of these companies. Many of these issues had been authorized 

previously by State commissions. In certain instances, the Commission made suggestions which were adopted by the local commissions, which it is hoped resulted in improved security issues. Jn 

certain other instances where, because of the lack of local commission 

control, the initial responsibility lay with this Commission, it has 

likewise endeavored to improve the character of securities which were 

issued. 

ACQUISITION OF SECURITIES, UTILITY ASSETS AND OTHER INTERESTS BY REGISTERED HOLDING COMPANIES OR THEIR SUBSIDIARIES 

The Cornmiasion received, during the fiscal year ended June 30. 

1937, 56 applications requesting approval of the acquisition of securities and assets under Section 10 of the Public Utility Holding Company Act of 1935. Since the effective date of the Act, 76 such applioations had beenreceived. Of these 76 applications, 53 were approved, g 

were withdrawn or dismissed, and 15 were pending on June 30,1937. 

The followingstatisticsindicatethe number of applications received, 

the number of applications approved, the number of applications 

withdrawn or dismissed, and the number of applications pending 

as of June 30,1937: 

Number Number of Number of Number of 

spphoa- applies-
 aPP1'Cn. BPD1'(s- tlon~with. tmns pend- dravn or ing close of 'ZgZ t ~ dlSmis8ed ~ v ~ fisoal year ~ 

TOJune 30,1BJB....................................... W 16 4 I 


JUIYI,IW to June ao, 1837........................... SB aa 4 16 


The preponderance of these applications related to the acquisition 

of securities, with 62 in this category compared with 14 applications 

for approval of the acquisition of utility assets or interest in a business. 

Acquisition of securities and assets approved under these applications in many instances have constituted important steps in the 

simplification of holding companies in voluntary compliauoe with the 

purposes of Section 11. 
36 SECURITIES.AND EXCHANGE €lOMMISSION

STATEMENTS REQIDRED PURSUANT TO .SECTION 12 (i) OF THE

PUBLIC UTILITY HOLDING COMPANY ACT OF 1935

During the past year, 25 reports on Form U-12 (i)-l were :filed

with the Commission pursuant to Section 12 (i) of the Public Utility

Holding Company Act of 1935. This section of the Act requires any

person employed or retained by any registered holding company, or

by any subsidiary company thereof, who presents, advocates, or

opposes any matter affecting any registered holding company or any

subsidiary company thereof before the Congress, or any member or

committee of Congress, or before the Securities and p;xchange Commission or the Federal Power Commission or any member, officer,

-or employee of either such Commission, to :filea statement with the

Securities and Exchange Commission. The information required in

"this statement covers the subject matter in respect of which. a person

is retained or employed, the nature and character of his retainer or

employment, and the amount of compensation received or to be

received, directly or indirectly, in connection therewith.

CONTROL OF SERVICE COMPANIES

Following the adoption on May 12, 1936 of a "Uniform System of

Accounts For Mutual Service Companies and Subsidiary Service

Companies", the Commission, during the year, adopted Form U-13-60

as the form of annual report to be submitted to the Commission by

such companies.

The principal requirements of the report embrace the following:

a, balance sheet statement as of the close of the year with supporting

schedules; a statement of revenues and expenses classified in accordance with the prescribed accounts, together with detailed' analyses

of the more important classes; and various schedules to show 'the

allocations made of charges for service, including a schedule of the

amount of service charges billed to associated companies or other

customers.

The purpose of this report is to secure information with respect to

the financial condition of service companies and the charges made

by them to associate companies and others in the performance of

service, sales, or construction contracts. ;.s a result of the information obtained, it is expected that the Commission will be in a position

to adequately safeguard the interests of consumers and investors with

respect to the operations of mutual service companies and subsidiary

service companies without placing any undue burden on any such

company with respect to the necessity of disclosing in full its methods

and means of operations. .

Furthermore, under the uniform system of accounts for service

companies, detailed information with reference to the costs of furnishing services are made available for the first time to local regulatory
THIRD-ANNUAL REPORT 37

bodies and should be of value to them in determining the fairness of

service charges paid by operating companies under their jurisdictions,

A report on Form U-13-60 covering the calendar year must be

filed by each mutual service company or subsidiary service company

on or before the first day of April, following the close of the year for

which the report is made. The form of this annual report is based

upon the requirements of the uniform system of accounts for such

service companies. As this system of accounts became effective

August 1, 1936, the first of the annual reports covered the five months

period ended December 31, 1936.

During the past year, 3 applications were filed for approval of

mutual service companies and 13 applications were filed for approval

of subsidiary service companies. .All of the applications in the first.

category have been approved, while in the second group 11 have been

approved, one withdrawn, and one was pending on June 30,1937.

VOLUNTARY COMPLIANCE WITH THE PURPOSES,OF SECTION 11 OF

THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 BY REGISTERED HOLDING COMPANIES AND SUBSIDIARIES

Since the passage of the Public Utility Holding Company Act of

1935, a number of applications have been received and granted by

the Commission, which involved simplification of corporate structures

and indicated the desire of the applicant to comply with the provisions

embodied in Section 11 of the Act.

Transformation or Holding Companies Into Operating Companies by Acquisitioll

of the Utility Assets of Subsidiaries

There have been two outstanding examples of the type of simplification in which registered holding companies acquired the utility

assets of their operating subsidiaries and thereby became entitled to

the exemption provided for under Section 5 (d).

The Neveda-Oalifornia Electric Corporation, a Delaware corporation, 'fermerly ()'W'D.edthree electric utility operating companies,

namely, . ,

The Nevada-California Power Company, a Wyoming corporation

The Southern Sierras Power Company, a. Wyoming corporation

Yuma Utilities Company, an Arizona corporation

All the outstanding securities of these three utility subsidiary

companies were owned by The N evada-Oalifornia Electric Corporation. The properties of such subsidiaries constituted and were

operated as a single interconnected system for the generation, transmission and distribution of electric energy in the States of California,

Nevada and Arizona. .

On .April 16, 1936, the Commission approved the acquisition by

The Nevada-California Electric Corporation of all the assets of the

subsidiary companies above named. Upon the acquisition of such
28 SECURITIES ,AND. EXCHANGE. COMMISSION

assets, The Nevada-California Electric Corporation surrendered all .

their outstanding securities of each of the subsidiary companies for

cancellation and assumed their other obligations and liabilities .

.As a result of the foregoing transection, The Nevada-California

Electric Corporation ceased to be a. holding. company and an order,

to that effect was issued by the Commission pursuant to Section 5 (d)

of the Public Utility Holding Company Act of 1935, on December

10,1936.

A further simplification of the corporate structure of The.NevadaCalifornia Electric Corporation was achieved by its acquisition Of the

properties of two of its non-utility subsidiaries, in exchange for which

it surrendered all the outstanding securities of such subsidiaries.

This transaction was likewise approved by 1;heCommission, pursuant.

to Section 9 (a) of the Act. .' ., ,

On March 13, 1936, the Commission issued an order pursuant .to

Section 9 (a) of the Act, approving the acquisition by the MontanaDakota Utilities Oo., a Delaware corporation, which was both 'a;

registered holding company and an operatiilg C{qmpany,of the utility

assets or any other interest in business of the following of its public

utility subsidiary companies, subject to the funded debt and other

liabilities of such subsidiaries: r

Montana-Dakota Power Company; a Delaware corporation, and

Montana Cities Gas Company, a Delaware corporation.

The Montana-Dakota Utilities Co. supplies natural gas to various'

communities in western North and South Dakota, eestem-and northern Montana, and north-central WyonJing. The properties acquired

from its two subsidiary companies 'are located in and-serve the same

general territory. ., . . . ,

The three corporations named above were merged into. a single eor-'

poration, the surviving corporation ..being the Montene-Dakota

Utilities Co. The outstanding preferred and common stocks of the

subsidiary companies held by the public 'were acquired ..by the.Montana-Dakota Utilities Co. through exchange for its own securities:

The capital stocks of subsidiaries thus acquired, together. with such

capital stocks already held by the Montana-Dakota Utilities Co. were

cancelled. .

:The Montana-Dakota Utilities Co. also disposed of its holdings .of

the entire capital stock of Missoula Gas and-Coke Company, another

of its public utility subsidiaries. . .' .' ,

. .As a result of the foregoing transaction, Montana-Dakota Utilities.

Co. ceased to be a holding company and an order-to thatreffecf;,!

pursuant to Section 5 (d) of the Act, was issued by: the,CommissioD,on

Mareh29,1936. . " !.... ' ,,'.

_.; -
THIRD ANNUAL REPORT 39

Exchange oCControl oCProjlerties Cor the Purpose of Creating Integrated Pnblic

Utility SystelDB

The Commission had occasion to approve two applications which

involved the exchange by two holding company systems of minority

interests in a group of operating companies for control of two utility

companies. The purpose of these transactions was the ultimate

elimination of, a number of subsidiary holding .companies and the

creation of an integrated public utility system.

On March 19, 1937, the Commission, pursuant to Section 9 (a) of

the Act, approved the acquisition -by Massachusetts Utilities Asso-.

ciates of the outstanding minority interests.in 16 of its existing subsidiary companies from New England. Gas and Electric.Association,

in exchange for securities of Plymouth. County Electric Company

(representing 9~.73% of voting control) and 'of Plymouth 'Gas Light

Company (representing 84.04%. o~.the V:2tWgcontrol); '

Massachusetts Utilities 'Associates, a subsidiary company of New

England Power Association, both of which are registered holding

companies, is a Massachusetts voluntary association. Massachusetts

Utilities Associates has four subsidiary holding companies, and controls, directly or indirectly, 29 public utility. companies, all of which

operate in the Commonwealth of Massachusetts.

The electric properties of the subsidiaries of Massachusetts UtilitiesAssociates, in which New England Gas and Electric Association

owned a minority interest, together with other' electric properties

controlled by Massachusetts Utilities Associates and New England

Power Association, form an interconnected system which serves

generally contiguous areas. .Two gas utility companies' which were

included in the above mentioned 16 companies likewise operate in the'

area served by subsidiaries of the' New England Power Association.

The acquisition of the minority interests in these operating companies will facilitate the ultimate elimination of four subsidiary

holding companies of Massachusetts Utilities Associates, and,' therefore, result in the simplification of the corporate structure of the NewEngland Power Association system.

New England Gas and Electric :Association is a -Massachusetts

voluntary association, and an affiliate of a number of public utility.

companies, among which is Associated Gas and Electric Company.

Plymouth County Electric Company and Plymouth Gas Light

Company, the companies acquired by New England Gas and Electric

Association, are Massachusetts corporations and operate in the same

area in the State of Massachusetts. The territory served by Plymouth County Electric Company is Ioeated between areas served by

New Bedford Gas & Edison Light Company and Cape & Vineyard
40' SECURITIES AND EXCHANGE COMMISSION

Electric Company, existing subsidiaries of New England Gas and

Electric Association, which are physically interconnected.

Simplification of Corporate Structure of Holding Company Systems by Merger of

Subsidiaries Operating in the Same Area

There is one outstanding example of the type of transaction by

which the corporate structure of a holding company system was

simplified through a merger of a number of subsidiary companies

into one operating company.

In orders dated May 24, May 27 and June 25,1937, the Commission

approved certain declarations and applications as a result of which

five subsidiary companies of the Union Electric Light and Power Company (Missouri) were reorganized and merged into one company whose

name was changed to Union Electric Company of Illinois. These

five companies, all Illinois corporations, were as follows:

East St. Louis Light & Power Co.-Surviving company

Union Electric Light and Power Company of Dlinois

Alton Light & Power Co.

Alton Gas Company

Power Operating Company

The above companies are public utility companies operating in and

around Alton and East St. Louis, Illinois, Power Operating Company

owned no properties of its own, but leased its power generating facilities

from Union Electric Lig4~.l!:¥d Power Company of Illinois and sold

electric energy at wholesale to Union Electric Light and Power Company (Missouri), to East St. Louis Light and Power Company and to

Illinois-Iowa Power Corporation.

The parent company of the :fivemerged companies was Union Electric Light and Power Company (Missouri), a subsidiary of the North

American Edison Company, which in turn is a subsidiary of the

North American Company, both registered holding companies.

Four of the five merged companies had securities outstanding with

the public. Union Electric Light and Power Company (Missouri)

acquired all the common stock and the :first mortgage bonds of the

new company so that only two small issues of underlying non-callable

bonds remain outstanding in the hands of the public. The :first mortgage- bonds of Union Electric Company of Illinois were pledged under

a new large issue of first mortgage and collateral trust bonds of Union

Electric Light and Power Company (Missouri).

The result of these transactions, therefore, was the reduction of the

number of subsidiaries in the North American Company system by

four and a very substantial simplification in the capital structure of

its Missouri and Illinois subsidiaries.
THIRD Al\"'KUAL REPORT 41

COMMISSION REPORTS ON REORGANIZATION PLANS

Section 11 (g) of the .Act requires the Commission to make reportson plans of reorganization of registered holding companies or their

subsidiaries. .Any person soliciting proxies or other authorizations in

connection with a plan must accompany or precede such solicitation

with a copy of the Commission's report. This section is applicable

not only to court reorganization proceedings, but to readjustment

plans affecting stockholders alone and consummated through their

vote. Two large companies whose securities are widely held, have

carried through stock readjustment plans and have obtained and submitted to their security holders reports of the Commission in connection with such plans.

One of the companies which carried through such a stock readjustment plan is Illinois Power & Light Corporation, all of whose common

stock was held by its parent, North .American Company. The company also had outstanding a large amount of publicly held preferred

stock on which there were substantial aeenmuletions of unpaid

dividends. .A plan was proposed to the preferred stockholders by

the company and it may fairly be assumed that it represented the

wishes of the parent company which was the sole owner of the common

stock. The plan offered to preferred stockholders 60% of the common

stock equity in return for a reduction in the dividend rate on the

preferred stock and a funding of accumulated dividends into dividend

arrears certificates. The Commission's report attempted to make

clear to preferred stockholders the fact that the interest of the management proposing the plan was necessarily adverse to theirs and to set

forth the considerations which would be relevant to appraise the fairness of the proposal made to them by the management. The application was filed with the Commission on March 1, 1937 and the plan was

formally approved by the requisite vote of the company's stockholders on .April 30, 1937.

The other plan presented to the Commission was that of the International Paper & Power Company, which presented questions on which

there was a division of opinion on the part of the Commission, both as.

to its jurisdiction in the matter and as to the merits of the plan.

The division of opinion as to jurisdiction arose out of the circumstance that the company had not registered but was claiming the.

status of temporary exemption pending disposition by the Commission

of an application for exemption under Section 3. It was not considered feasible to dispose of the exemption application immediately.'

The company desired, however, without delay to propose to its stockholders a plan calling for reclassification of its outstanding stock into

21123-37--4
42 SECURITIES AND EXCHANGE COMMISSION

new securities, including preferred stock, convertible into common,

and option warrants to purchase common stock. The company

wished to avoid the risk of being unable to fulfill its commitments

with respect to future issues of common stock in the event of termination of its existing status as to exemption prior to conversion of all

the preferred stock and exercise of all the purchase warrants and

applied for an order which would .have the effect of exempting such

future issues.'

. The application also submitted all information which would have

been required from a registered company and requested a report on

the plan in the manner provided in Section 11 (g).

The Commission rendered an opinion holding that it had jurisdiction and at the same time made. the report on the plan. One Commissioner wrote a separate, concurring opinion agreeing that the

Commission should make a report on the plan but pointing out some

features of the.new securities which, in his opinion, were objectionable.

4nother Commissioner, in a dissenting opinion, denied the jurisdiction

of the Commission to make the report and in certain respects disagreed

with ;the report as made. No order was entered pursuant to the

request 'for exemption until after the Commission was advised of the

action taken by shareholders in voting to assent to the plan. Thereafter the Commission entered an order exempting from the .Act the

shares of common stock to be issued upon conversion of preferred

stock and exercise of warrants. The Commissioner who had previously dissented did not participate in this and the Commissioner

who had previously written the separate concurring opinion dissented

because of the objections stated in such concurring opinion to some

features of the new securities. IS

GENERAL POLICIES WITH RESPECT TO ADMINISTRATION OF PUBLIC

UTILITY HOLDING COMPANY ACT

_In spite of pending litigation which has resulted in the failure of a

substantial proportion of the holding companies to register under the

Act, a sufficient number of companies have registered to provide

exercise by the Commission of practically all important regulatory

functions. Under Section 11 of the Public Utility Holding Company

.Act of 1935, it will be the duty of the Commission as soon as practicable after January 1, 1938, to take steps looking toward the simplification and integration of public utility holding company systems.

The Commission has been preparing itself for the discharge of these

duties, both by extensive research into these problems and by actual

ezperienee in working with companies which' have voluntarily simplified their corporate structures.

IIA oommon stockholder who had appeared before the Commlssion in opposition to the plan applied for

a rehearing on september 9, 1937. This application was denied, under date of October 12th. This stock.

holder has tiled a petition seeking review of the Commission's order by the United States Circuit Court of

Appeals for the FIrst Circnit.
, THIRD A!.~NU.AL REPORT 43

The Commission continues to administer this law to the end that

abuses which brought about its passage will not recur. But in carrying

out this program it endeavors to impose no more than a minimum of

necessary restrictions on the industry. The importance of active

cooperation by utility holding companies in expediting the changes

required under Section 11 and other sections of the law are clearly

understood, . and the Commission's general policy is designed to

develop a spirit of cooperation by encouraging registered holding

companies to initiate constructive policies wherever possible.

COMPLAINTS, INFORMAL AND FORMAL INVESTIGATIONS

The Commission receives thousands of letters annually complaining

of fraudulent or other illegal activities by persons engaged in the sale

of securities. While most of such letters are sent by members of the

general public, many are likewise sent by State Securities Commissions, State and 'Federal officials, and voluntary agencies such as

Better Business Bureaus and Chambers of Commerce.

H the information thus brought to the Commission's notice by

complaint, or information independently obtained by the Commission

from its own surveillance of trading activities and examination of

registration statements, indicated a substantial possibility of a violation of any of the Acts administered by the Commission, it was

handled as a complaint case, and the facts thereof were investigated

informally. During the past year 678 new complaint cases were set up.

H an informal investigation disclosed no violation of the legislation

administered by the Commission, or if sufficient facts did not appear

to warrant a belief that there had been a violation, the case was closed

at that point and no further action was taken by the Commission.

. H, as a result of the informal investigation, sufficient facts were

developed to warrant the institution of civil or criminal proceedings,

appropriate action along those lines was immediately taken. Where

enough facts were not elicited in the course of an informal investigation to. merit immediate court proceedings, but substantial basis

existed for the belief that the legislation administered by the Commission had in some respect been violated, a formal order for investi-.

gation was entered by the Commission pursuant to the powers conferred upon it under Sections 19 and 20 of the Securities Act of 1933

and. Section 21 of the Securities Exchange Act of 1934. These

formal orders empowered designated officers of the Commission to

administer oaths and affirmations, subpena witnesses, take evidence,

and require the production of any books, papers, correspondence,

memoranda, or other records which were relevant or material to the

mquiry. H facts indicating a violation of any of the Acts administered by tb,e Commission were discovered in a formal investigation,

such action as was deemed most fitting to the circumstances was

thereafter undertaken. But if the facts as developed in the formal
- - 

---- 

----- 

44 SECUIIITIES AND EXCHANGE COJlBlISSION 

investigation indicated that no violation had talien place, the case 

was closed. 

During the past yesr formal orders were issued by the Commission 

in 87 cases. At the close of the preceding fiscal year 185 such investigations were pending, resulting in a total of 272 such investigations 

which were pursued by the Commission during the past yosr. Of the 

272 cases in u.hich formal investigations were undertaken, 123 are 

pending and 149 were concluded. 

Report of complaints, informal investigations, and jormhl inveetigations for jiacal 

year 1998 -

Ceses 

Cares CBSesdossd docketed Totalcases IU1 Cms 

pendlna July 1, a35 to be* pending Jub 1.1935 ta June30, countedlor July 1.1938 

1936 

Casea set up as rssult of complaints........ 2,330 1,708 4,038 2,884 1,174 

Informal lnriestlgations .................... F& in7estigations..................... 2.214 

118 

1,478 

ZB 

3.583 

345 

2,704 

158 

BBU 

186 

Report of complaints, i%formal investigations, nrad formal investigaliona jar fiscal 

year 1957 

cseaset up ar result of mmpleints........ 1,174 678 1,852 1,102 7M) 

~~fiiarmd investmtions .................... ss9 691 
 I, 580 9s an

Pomd investigations..................... I85 87 172 140 I23 


- p~ 


s Undsl both Secuities Act of 1933 and Securities Exohange Act of 10.34. For a decision vhich dsalr 

mars particularh with investigations of manipulative prartioes, see infro, p. BQ. 

PUBLIC HEARINGS 

Many phases of the quasi-judicial work of the Co~~lmission necessitate the holding of public hearings. The following statistics indicate 

the number of orders entered for public hearings and the number of 

public hearings held from July 1, 1935 to June 30, 1937. 

I Ordsrs for Publlo Hearings Public Heanngs Held 

8acuntl~sAd of l(U3........................... 66 174 

SBcurltiea Eaohsnge Ad of 1034............... I32 87 44 

Poblle, UUty Holding Commn~ Ad of 1895 .. 187 124 180 

Tots1 .................................. 216 a98 

THmD A..~NUALREPORT ~ 45

The following represent a few of the situations in which public

hearings are held by the Commission:

(a) Under the Securities Act of 1933, hearings are held in connection with the registration of securities in order to determine

whether stop or refusal orders suspending the effectiveness of registration statements should be entered by the Commission.

(b) Under the Securities Exchange Act of 1934, hearings are held

relating to registrations of brokers and dealers, withdrawal and

striking from listing and registration of securities listed or registered

on national securities exchanges; and suspension of members of

exchanges for violations of the Securities Exchange Act of 1934.

(c) Under the Public Utility Holding Company Act of 1935,

hearings are held in connection with the acquisition of securities

and assets, the issuance of securities, exemptions, and other matters.

LITIGATION UNDER THE SECURITIES ACT OF 1933 AND THE SECURITIES EXCHANGE ACT OF 1934

During the fiscal year ended June 30, 1937, 86 civil proceedings

were initiated with respect to the enforcement of the Securities Act

of 1933 and the Securities Exchange Act of 1934, bringing the total

of such suits since the creation of the Commission to 209. The

large majority of these proceedings have been injunctive suits instituted by the Commission to enjoin violations ot Sections 5 and 17

of the Securities Act and Section 9 of the Securities Exchange Act.

The remainder have included suits to enjoin enforcement of the Securities Act and the Securities Exchange Act, suits to enforce subpenas

issued by the Commission, and petitions for review of the Commission's determination that information for which application was made

for confidential treatment, pursuant to Section 24 (b) of the Securities

Exchange Act, be made public. In accordance with the provisions

of Section 20 (b) of the Securities Act and Section 21 (e) of the Securities Exchange Act, the Commission has also referred a number of

cases to the Attorney General for criminal prosecution. The status

of the cases filed or pending during the fiscal year ended June 30,

1937, is given in the tables in Appendix VI, and the more important

of these cases are there discussed in detail.
46 SECURITIES AND EXCHANGE COllMISSION 

Statement Indicating Number ol Litigalion Cases under the Securities Ad and 


Securitzes Exchange Act by Types of Cases 


Total 1 Total 

CB1M 	 c86s 

ittd & Closed 22; F2d 

Types 01 Cases Initiated %%,"f Initiated Closed CI& kending Prior to Prior to Prior to Rior to ss of 

July 1, 	 zy& IU~Y1. July 1, July 1. IuneBO. ended 1635 	 Juns30, 1937 186 June30, 1937 1937 

1937 1937 

Buits by Commlsrion ta enloin 

dalations of Seoaritls Act 

andlor Securities Elohsnge 

Aot.......................... €6 71 

Suits gain st Commission to 

enloLn enforament of SBOUrlties Act and/or Becuritis 

Ezohanxe A d................ 4 3 

Soits in which Commission has 

apl)e,red and petitioned for 

leave ta appear a9 arnica 

curioc or intervener in suits 

involving the Secaritis Aot 

andlor Securities Exchange 

Act.......................... 20 2 

8Ult~tommpsi~p~)~~r~oooand 

tsstimangaf witn- before a trlsl examiner.............. 12 1 

Petitions for rsvlew of Commi%lan orders by Circuit 

Cow of Appeals (or Court 

of Apm& for Didtrlct of 

Columbia) pursoant to Section 9 (8) d SmrItl~~ Aot 


or Section 23 (a) of Seeurltis 


Erchhngs Act ................ 22 12 


Totals................... 124 89 


Injunctions Against Violation of the Securities Act and the Securities Exchange 

Act 

As n result of suits instituted by the Commission, by June 30, 

1937, 269 firms and individuals had been permanently enjoined from 

the acts and practices complained of, 121 of such injunctions having 

been obtained during the past fiscal year.18 

The principal defendants in the injunction suits filed by the Commission during the past year, grouped according to the Federal 

District Courts in which the suits were instituted, are as follows: 

Southern District of Brieona--.. .....Consolidated Gold Mines Com~anv. - .. Ltd., et 81. 

Colorado...........................The Metals Tunnel Company, et al. ... 

Crusader Aircraft Corporation, et sl. 

Anaconda hlinina and Milling . Company, . .

et 81. 

I* Thee figure inalude some firma and bdiridusls ss to aham tbe Inlunctloa was aobsequ~ntlyurntad. 
THIRD ANl\"UAL REPORT 47

Colorado The Union Trust Company, et at

Great Western )I.1ineTrust, et aI.

Tip-Top Gold Mines, Inc., et al,

Viking Gold Mines Corp., et al,

McDowell Mines, Inc.

United Empire Gold Mines Company,

et aI.

District of Columbia; ________________ The Krystal Chemical Company, Ine.,

et al.

Hertz & Company, Inc., et a1.

The Columbia Company, et al,

Automatic Guns, Inc., et al.

National Reference Library, Inc., et al,

Idaho Submarine Gold Mining Company.

Dry Lake Oil Company.

Granite Creek Dredging Company.

Willis E. Smith.

George D. Gottlieb.

Boise Petroleum Corporation, et al,

Edward L. Webster.

Northern District of Illinois R. J. Koeppe & Company (2 suits).

Edman Company, et al,

Maryland Associated Pharmacists of Baltimore,

Inc., et aI.

Massachusetts William Huke.

Ralph A. Gallagher, et al,

Harold Alton Meyer.

W. A. Nash & Co., Inc.

H. Gordon Oburg.

H. Henry Anthony, et al,

Albert Emerton & Co., Inc.

Eastern District of Michigan Harold M. Saddlemire, et al,

Montana LawrenceR. Hannah.

Butte Mines Holding Company.

Elkhorn Mines, Inc.

Basin Goldfields, Ltd., et a1.

Southern District of New York Centennial Consolidated Mines Corporation; et al,

Archie M. Andrews, et al,

Aaron S. Saphier, et at

Connor, Leach & Co., Inc., et al,

Frank V. Brecka, et al,

George Hubert Heyman. Nevada United Goldfields Company, et al,

New Hampshire Francis J. Sullivan, Inc.

Northern District of Ohio The Hickox Finance Corporation, et al,

Southern District of Ohio C.8. Parks.

Northern District of Oklahoma E. R. Perry, et al,

Oregon F. I. Lamb.

Leo A. McGrail & Co., Ine., et aI.

Eastern District of Pennsylvania C. Raymond Wickes, Ine., et al,

Western District of Tennessee Federal Compress and Warehouse Company, et al,

E. .Randall Henderson.
48 SECURITIES A1\"D EXCHANGE COMMISSION

Northern District of Texas J. G. Jarvis, et 801.

A. D. Beck.

Ben Banner.

Utah The Royalty Securities Company, et al,

Western District of Virginia Walter P. Spielberger, et al,

Eastern District of Washington William LaVey, et al.

L. O. Pickett.

Montana Drum Lummon Extension,

Inc.

Western District of Washington Northwest Gas & Oil Properties, Inc.,

et al,

Record Gold Mining Company, et al.

Indian Creek Mining Company, Inc., et

a!.

Peter Ivanoff.

Sunbeam Gold Mines Company (2 suits).

Golden West Consolidated Mines, et al,

C. R. Hesseltine.

Engineers Gold Mining Co., et al,

Gold Helm Mining Company.

Suits to Enforce Subpenas

The principal defendants in suits to enforce subpenas issued by

the Commission :filed or pending during the :fiscal year ended June

30, 1937, grouped according to the district in which they were filed,

are as follows:

District of Columbia The Krystal Chemical Co., Inc., et al,

Massachusetts National Short Term Securities Corporation, et al.

Western District of Oklahoma Verser-Clay Co., et al,

Western District of Pennsylvania A. C. Smith.

Northern District of Tennessee. J. Edward Mills, et 801.

Petitions for Review of Commission's Determinatien on Applications For Confidential Treatment

During the :fiscalyear ended June 30, 1937, 31 petitions were filed

or pending in 7 Circuit Courts of Appeal and in the Court of Appeals

for the District of Columbia for review of determinations made by

the Commission upon application for confidential treatment of material

filed with it, that public disclosure of this material Wasin the public

interest. As of June 30, 1937, the Courts had disposed of none of

these petitions on the merits. Table X of Appendix VI indicates the

name of the company, the date of the filing of the petition, the circuit

within which filed, and the status of the case as ofJune 30, 1937. I

References to The Attorney General For Criminal Prosecution

During the fiscal year, 42 cases were referred to the Attorney General

for criminal prosecution, bringing the total so referred to 112. Most

of these references followed formal investigations conducted by the

Commission. Of the 112 cases referred, indictments containing

counts charging violations of the Securities Act or conspiracy to

violate the Securities Act were returned in 54 cases, 21 of such indict-
THIRD ANNUAL REPORT 49

ments having been returned during the past fiscal year. During the

same period, indictments charging violations of the Securities Exchange Act were returned in 3 cases.

Thirty of the cases in which violations of the Securities Act were

charged have been tried, and 99 individuals have been convicted.

Eighty-seven of these individuals were given jail sentences ranging

from 5 days to 17 years, and were fined from $50 to $15,000; 9 received

suspended sentences; 2 are awaiting sentences; and 1 has been placed

on probation. The cases in which indictments were returned or pending during the fiscal year ended June 30, 1937, are listed and briefly

described in Table VI of Appendix VI, and the more important are

there discussed in some detail.

LITIGATION UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT

OF 1935

Litigation under the Public Utility Holding Company Act has consisted almost wholly of actions to determine the validity of that Act,

Since its enactment, a total of 58 suits challenging the constitutionality

of this Act have been brought. These suits may be classified into

three groups according to the manner in which they have arisen:

(1) suits by holding companies to enjoin enforcement of the Act;

(2) petitions by trustees of holding companies in bankruptcy seeking

determinations that the Act is unconstitutional; and (3) stockholders'

suits seeking similar decisions. Two suits to enjoin the investigation

of investment trusts conducted by the Commission pursuant to Section

30 of that Act were begun during the fiscal year ended June 30, 1937.

These cases are discussed in detail in Part III of Appendix VI.

Suits by Holding Companies to Enjoin Enforcement

Thirty-nine of the 44 suits brought by holding companies to enjoin

enforcement of the Holding Company Act of 1935 were pending during

the fiscal year ended June 30, 1937. This number is exclusive of the

suit brought by the Commission in the District Court of the United

States for the Southern District of New York against the Electric

Bond & Share Company and its principal intermediate holding companies (Securities arid Exchange Oommission v. Electric Bond and Share

Oompany), in which defendants filed a cross bill and counter-claim

seeking an injunction against enforcement and a declaratory judgment

that the Act was unconstitutional. This case is discussed more fully

in Appendix VI, Part III.

The Comission and the Attorney General announced at the time

the latter case was instituted that no penalties would be sought for

failure to comply with the requirements of the Act until its validity

had been confirmed by the Supreme Court. Each of the 44 suits

brought by holding companies involved substantially similar questions

of law and fact; and the maintenance of those actions harassed the
50 SECURITIES AND EXCJl4.NGE COMMISSION

government with a needless multiplicity of suits. .All of these suits

have been handled in accordance with a uniform policy developed by

the Commission in collaboration with the Department of Justice.

No effort was made to defend the suits outside the District of Columbia on their merits. In each such suit, appropriate motions were

made for dismissal for lack of jurisdiction. The suits then remained

pending as to the local government officials. In 26 of the suits, injunctions have been issued against such local government officials;

in the remainder, the courts either refused to make any disposition

until after a decision by the Supreme Court in the Electric Bond and

Share case or the parties have agreed to hold the litigation inabeyance

until such a decision.

In the 7 suits which were instituted in the District Court for the

District of Columbia, the government obtained a stay of proceedings

pending a determination of the Electric Bond and Share case (North

American 00. v. Landis, D. C., decided January 6, 1936). On appeal,

the Supreme Court, in a decision rendered December 7, 1936, remanded the causes for further proceedings on that stay. (Landis v.

North American 00., 299 U. S. 248). Four of these cases are now in

the District Court for the District 9f Columbia awaiting further proceedings on the motion to stay. The Tennessee Electric Power Oompany case, the American Water Works &: Electric 00., Inc., case, and

the North American 00., Inc., case have been dismissed on motions

by the plaintiffs.

Parties plaintiff in the cases in this group filed or pending during

the fiscal year, listed according to the district court in which the

suit was :filed, are as follows:

Colorado Public Service Co. of Colorado, et at

Delaware Delaware Electric Power Co.

Susquehanna Utilities Co.

The Commonwealth & Southern Corp.

Eastern Texas Electric Co.

El Paso Electric Co.

Engineers Public Service

The Toledo Edison Co., et aI.

Stone & Webster, Inc.

Stone & Webster Utilities Corp.

American Gas & Power Co.

Louisville Gas & Electric Co.

Standard Power & Light Corporation

Cities Service Co., et al,

North Continent Utilities Corp.

The United Corporation, et al.

Associated Gas & Electric Co., et al.

H. M. Byllesby & Co.

The Byllesby Corporation

North American Edison Co.

North American Light & Power Co.

Northeastern Water & Electric Corp.
THIRD AJ.~NU.A.LREPORT 51

.Distriet of COlumbia. The North American Company

American Water Works and Electric

Company, Inc.

United Light and Power Co.

United Light and Railway Co.

Continental Gas & Electric Corp.

American Light & Traction Co.

-Maine Sierra Pacific Electric Co.

Maryland United States Electric Power Corp.

Minnesota Northern States Power Co., et al.

Southern District of New York Consolidated Gas Co. of New York

The United Corporation, et al,

Cities Service Co., et al,

Federal Light & Traction Oo., et al,

Northern District of Ohio The Toledo Edison Co., et al,

Eastern District of Pennsylvania , _____ Philadelphia Electric Co.

United Gas Improvement Company

Western District of Virginia East TeIinessee Light & Power Company, et al.

Petitions by Trustees of Holding Companies in Bankruptcy

Two of the six petitions filed in the District Courts by trustees of

holding companies in bankruptcy, seeking determinations that the

Holding Company Act is unconstitutional, were pending during the

fiscal year. In another suit, that brought by the Standard Gas and

Electric 00., government officials were joined as parties. Except for

the Burco case (Burco, Inc. v. Whitworth), discussed in the Second

Annual Report, all of the bankruptcy suits have been either dismissed

or are still pending. The three cases pending during the fiscal year

are as follows:

District Court Parties Plaintiff

Delaware Standard Gas and Electric Company

Southern District of New York North American Gas and Electric Co.

Eastern District of Pennsylvania Lehigh Valley and Transit Company

Stockholders' Suits

There have also been instituted six stockholders' suits to enjoin

compliance by utility holding companies with the Public Utility

Holding Company Act on the ground that the Act is unconstitutional.

In only one case was the Commission made a party. Each of the

suits, insofar as the Commission is informed, is still pending; in certain cases temporary restraining orders have been granted. The

cases are as follows:

Delaware Albert E. Pierce v. Central Public Utility

Corporation, et al,

Massachusetts Charles B. Barnes v, Ford, et al.

Southern District of New York .Theodore Case v. Columbia Gas & Electric Corporation

Albert E. Pierce v. Coughlin, et al,

Public Utility Investment Corporation

v. Utilities Power and Light Corporation
52 SECURITIES AND EXCHANGE COMMISSION

Eastern District of Virginia Public Utility Investment Corporation

v. Utilities Power and Light Corporation, et al,

Validity of Section 30 of Public Utility Holding Company Act of 1935

Fisher v. Landis, et al; Fisher v. The Equity Corporation, et ai-On.

July 27, 1936, the complainant filed two suits, one in his individual

capacity and one as a stockholder of The Equity Corporation, challenging the validity of subpenas issued by the Commission in its

investigation into investment trusts conducted pursuant to Section

30 of the Holding Company Act. In the former suit, Fisher sought

to enjoin the individual Commissioners from compelling his appearance pursuant to subpenas, from issuing any further subpenas, and

from taking any steps to cause him to be prosecuted for refusal to

obey these subpenas. In the companion suit which named as defendants, in addition to the Commissioners, The Equity Corporation

and its officers and directors, the complainant sought to restrain the

Commission from taking any action to compel the giving of evidence

by the latter persons, or the prosecution of such persons for failing

to give evidence, and also sought to enjoin such persons from appearing and testifying at the inquiry. On August 11, 1936, the District

Court for the District of Columbia denied the motions for preliminary

injunctions on the ground of want of equity.

SECURITIES VIOLATIONS FILES

The Securities Violations Files, established on May 1, 1935, and

described in the Commission's previous annual reports, were enlarged

during the fiscal year by the addition of 5,613 items of information

pertaining to existing files and by the addition ~f 3,604 new .files.

As of June 30, 1937, the Commission had assembled data relative to

the records of 25,379 persons against whom State and Federal action

had been taken during the past ten years in connection with the sale

of securities.

FORMAL OPINIONS

The Commission, during the past year, issued 196 formal opnuons

involving matters under the Securities Act of 1933, the Securities

Exchange Act of 1934, and the Public Utility Holding Company Act

of 1935. These opinions were issued in the following cases:

Securities Act of 1933, as Amended

FIXING EFFECTIVE DATE OF AMENDMENTS TO REGISTRATION

STATEMENTS:

In the Matter of Bainbridge Colby, et al (Kreuger & Toll

Company) June 26,1937

PERMANENT SUSPENSION ORDERS: .

In the Matter ofAmerican States Oil Company, Respondent-Offering

Sheet of Producing Landowners' Royalty Interests in

the American States Oil Company-Skelly-Dittmers Farm June 2~ 1937
THIRD ANl'olJAL REPORT 53

PERMANENTSUSPENSIONORDERs-Continued.

In the Matter of-Continued.

A. D. Beck, Respondent--Offering Sheet of Nonproducing Free-working Interests in the Smith-Fleet-BellBeaver Block Farms Apr. 12,1937

Louis Bernstein, Respondent-Offering Sheet of. Producing Landowner's Royalty Interests in the BritishAmerican et al-McNabb Farm May 20,1937

Central Royalties Company, Respondent--Offering Sheet

of Non-producing Landowner's Royalty Interests in

the Central Royalties Company-Central-Sooy Farm June 30,1937

Continental Investment Corporation, Respondent-Offering Sheet of Royalty Interests in the Gulf-Culp Farm; Nov. 17,1936

Continental Investment Corporation, Respondent--Offering Sheet of Landowner's Royalty Interests in the

Magnolia-Metropolitan Life Tracts Dec. 3,1936

Fredrick Falkin & Company, Respondent--Offering Sheet

of Producing Landowner's Royalty Interests in the

Loual-Carter-Craddock Farm May 14,1937

G. E. Fisher, Respondent--Offering Sheet of Non-producing Landowner's Royalty Interests in the AndersonPrichard Oil Corp.-Swisher Lease Apr. 20,1937

L. D. Greenfield Company, Respondent-Offering Sheet

of Overriding Royalty Interests in the Avalon Oil Co.-

Garfield Street Addition Lease Dec. 5,1936

L. D. Greenfield Company, Respondent--Offering Sheet

of Overriding Royalty Interests in the W. C. W. Oil

Co.-Garfield Street Addition Lease Nov. 30, 1936

L. D. Greenfield Company, Respondent-Offering Sheet

of Landowner's Producing Royalty Interests in the

Windsor-Culbertson No.1 Farm Mar. 30, 1937

Park T. Grimes, Respondent--Offering Sheet of Royalty

Interests in the Rosenthal and Beardmore Derby Karst

Farm Nov. 3,1936

Kent K. Kimball, Respondent-Offering Sheet of Landowner's Producing Royalty Interests in the Central

Petroleum Co.-Benso "A" Farm May 25,1937

Dion A. Kitsos, Respondent-Offering Sheet of Working

Interests in the Sealy-Burke #2 Farm Oct. 29,1936

P. R. Knickerbocker, Respondent-Offering Sheet of

Royalty Interests in the Pure Oil Co.-R. L. Wells No.

47 Lease Nov. 12,1936

Guy C. McBride, Respondent--Offering Sheet of Landowner's Producing Royalty Interests in the CarterSmith Lease Apr. 2,1937

Guy C. McBride, Respondent--Offering Sheet of Landowner's Producing Royalty Interests in the Magnolia- Smith Lease Apr. 5,1937

E. M. Thomasson Producing Company, RespondentOffering Sheet of Non-producing Overriding Royalty

Interests in the Thomasson-Durham et al Community F8J7D ~ May 14, 1937
54 SECURITIES AND EXCHANGE ,COMMISSION

6,1937

14, 1936

10, 1936

14, 1936

PERMANENTSU8PEN8IONORDER-Continued.

In the Matter of-Continued.

E. M. Thomasson Producing Company, Respondent--

Offering Sheet of Producing Overriding Royalty Interesta in the Thomasson-Durham et al Community Farm : May 2~ 1937

Stuart L. Vance, Respondent--Offerlng Sheet of Royalty

Interests in the Alma and Skelly Johnson Farm Oct. 20,1936

John Wight, Respondent-Offering Sheet of Overriding

Producing Royalty Interests in the O'Donnell Farm __ Apr. 9, 1937

REFU8AL ORDERS:

In the Matter ofNational Boston Montana Mines Corporation Aug. 6,1936

National Invested Savings Corporation Nov. 5,1936

STOP ORDER8:

In the Matter ofAmerican Iud COmpany Sep. 2~ 1936

American Terminals and Transit COmpany Sep, 29,1936

Avoeslon Extension Syndicate, Ltd_ __________________ Aug. 25, 1936

Bankers Union Life Company Feb. 20,1937

Condor Pictures, Inc May 11,1937

Consolidated Mines Syndicate May 19,1937

Emporia Gold Mines, Inc Apr. 23,1937

Gilpin Eureka Consolidated Mines, Inc Oct. 8,1936

Gold Hill Operating COmpany Sep. 14,1936

Great Dike Gold Mines, Inc Aug. 3,1936

Income Estates of America, Inc :. June 29,1937

The Livingston Mining Company Apr. 3,1937

Major Metals COrporation Feb. 20,1937

Mining and Development COrporation Oct. 20,1936

National Boston Montana Mines Corporation Apr. 28,1937

National Invested Savings Corporation Mar. 24, 1937

Old Monroe Brewing Association July 30,1936

Rickard Ramore Gold Mines, Ltd June 16,1937

Sunset Gold Fields, Inc May 20,1937

Treasure Hill Extension Mines Co., Inc Apr. 2,1937

Yumuri Jute Mills Company Mar. 2,1937

Securities Exchange Act of 1934

Broker and Dealer:

In the Matter ofLouis Grow May lR,1937

Michael James Hughes Nov. 12,1936

H. Owen Jones May 26; 1937

Clyde Beall Mitchell; Nov. 30,1936

Harry H. Natanson Nov. 23,1936

Lewis S. Parsons Apr. 15,1937

B. W. Sargent; May 18,1937

Manipulation:

In the Matter ofW. E. Hutton & Co., et al Feb.

White, Weld and Company July

Charles C. Wright et aL July

Dec.

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Unlisted Trading:

In the Matter ofAmerican District Telegraph COmpany June 30,1937

a U 41

Jan. 5,1937

Dec. 16, 1936

Dec. 16,1986

Apr. 10, 1937

June 25, 1937

June 30, 1937

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Jan. 19, 1937

Jan. 22, 1937

Dec. 10,1936

June 19, 1937.

City and Suburban Homes Company

Edison Electric Illuminating Co. of Boston

Piedmont & Northern Railway Company

Pittsburgh Stock Exchange (Applications for Unlisted

Trading Privileges in 23 Securities} Apr.

Security-First National Bank of Los Angeles Dec.

Withdrawal from Listing and Registration:

In the Matter ofAllen Industries, Inc

Connecticut Railway and Lighting Co

Dolphin Paint & Varnish Co

Teck-Hughes Gold Mines, Ltd

Public Utility Holding Company Act of 1935 17

Acquisition of Securities, Assets, Business or Other Interests:

In the Matter ofAmarillo Gas Company

Arkansas-Missouri 'Power Corporation

Citizens Utilities Company

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14, 1937

16, 1936

June 30, 1937

June 30, 1937

Apr. 2,1937

Mar. 19, 1937

July 1,1936

Oet.: 14,1936

Mar. 19, 1937

M8f. 5, 1~37

June 24, 1937

June 30, 1937

Oet., 9, 1936

Mar. 24, 1937

Apr. 26, 1937

Clam River Electric Company June 30,1937

East St. Louis Light & Power Company May 27, 1937

Morris E. Feiwell, Emanuel M. Goodman and Edward P.

Allen, Voting Trustees of the Capital Stock of Granite

City Generating Company .

Granite City Generating Company

Great Lakes Utilities Company

Voting Trustees for Common Stock of Great Lakes

Utilities Company Apr. 2, 1937

Kentucky Utilities Company June 26, 1937

Laclede Power & Light Company June 30, 1937

Massachusetts Utilities Associates Mar. 19,1937

The Middle West Corporation July 15,1936

Jan. 22, 1937

" Jan. 28,1937

June 15,1937

June 26, 1937

Middle West Utilities Company of Canada Limited June 30, 1937

National Gas & Electric Corporation, The Industrial

Gas Company, Gas Producing Company of Ohio

Nevada-California Electric Corporation .

Nevada-California Power Company

New England Gas and Electric Association

New England Power Association u .

Polk Electric Light Company _.

Public Service Company of-New Hampshire

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Republic Service Corporation ..

11 Ina few Instances, opinions are duplicated under more than one cIaasf1Ication.

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Acquisition of Securities, Assets, Business or Other Interests-Con.

In the Matter of-Continued.

Southern Natural Gas Company May 26, 1937

StJltes Ell:ctric~& Gas Oorporstton June 18,1937

Texas Utilities Company Dec. 28, 1936

Union Electric Company of Missouri., June 25, 1937

Union Electric Light and Power Company May 27, 1937

United Public Service Corporation Dec. 5,1936

Utility Service Company Dec. 30,1936

Virginia East Coast Utilities, Inc Dec. 11,1936

Approval as Mutual Service Company:

In the Matter ofNepsco Appliance Finance Corporation July 30,1936

Penn-Western Service Corporation July 13,1936

Republic Mutual Service Company . Oct. 5,1936

4uthorizing Increase of Percentage of Short-Term Indebtedness

Pursuant to Clause (3) of the First Sentence of Section 6 (b):

In the Matter ofCumberland County Power and Light Company Sept. 25,1936

Public Service Company of New Hampshire Oct. 9,1936

The Twin State Gas & Electric Company Sept. 26,1936

Union Electric Light and Power Company of Illinois May 24,1937

Declaration with Respect to Organization and Conduct of Business

of Subsidiary Service Company:

In the Matter ofAmerican Service Company Mar. 8,1937

John E. 'Barber, Joseph B. Wilson, Edward A. Olsen,

Trustees . July 31,1936

Bureau of Safety July 30,1936

Corporation Services, Inc July 31,1936

Illinois Stock Transfer Company July 31,1936

Middle West Service Company July 31,1936

Midland Stock Transfer Company July 31,1936

Nepsco Services, Inc July 30, 1936

New England Power Service Company July 31,1936

Republic Service Management Company Dec. 31,1936

Utilities Power & Light Operating Corporation Sept. 3,1936

Declaring Applicant not to be a Holding Company:

In the Matter ofIndiana Southwestern Gas & Utilities Corporation Dec. 29, 1936

The Nevada-California Electric Corporation Dec. 10,1936

Southern Unned GasCompany ~1ay 3,1937

Declaring Applicant not to be Subsidiary Companies of a Specified Holding Company:

In the Matter ofBoise Gas Light and Coke Company May 3,1937

Chicago District Electric Generating Oorporation Jan. 13,1937

Dividend Declarations and Payments:

In the Matter ofClam River Electric Company June 30,1937

Illinois Power and Light Corporation May 1,1937

Polk Electric Light Company June 30,1937

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THIRD AN~""UALREPORT 57

10,1936

1, 1936

5, 1937

June 12, 1937

Oct. 23, 1936

June 22, 1937

Aug. 17, 1936

July 8,1936

Oct. 15, 1936

Dec. 23, 1936

Aug. 5,1936

Apr. 9,1937

Feb. 11,1937

Aug. 3,1936

Nov. 6,1936

Oct. 19, 1936

Mar. 1,1937

Oct. 21, 1936

Dec. 15, 1936

Dec. 17, 1936

Aug. 3,1936

Nov. 5,1936

Aug. 6,1936

Sep. 29, 1936

Nov. 7,1936

Nov. 7,1936

Apr. 8,1937

Dec. 29, 1936

Apr. 20, 1937

May 26,1937

Aug. 3,1936

May 18, 1937

Apr. 7,1937

Aug. 3,1936

Exemption from Provisions of the Act:

In the Matter ofAmerican Allied Products Company, American Engineering & Management Corporation, and Associated Public

Service Company Dec.

The Arizona Edison Company, Inc July

Central California Utilities Corporation Jan.

Columbian Carbon Company, and F. F. Curtze, Reid L.

Carr, George L. Bubb, S. Vere Smith and Allan F.

Kitchel as Voting Trustees of the Capital Stock of the

Columbian Carbon Company .

Consolidated Oil Corporation

Copper Range Company

Dental Oil Company

Essex and Hudson Gas Company

Illinois Northern Utilities Company

Insular Light and Power Corporation

International General Electric Company, Inc

International Pulp Company and Oswegatchie Light and

PowerCompany

The Millville Manufacturing Company

Minnesota Tribune Company

Monarch Mills

Monroe Gas Company, Inc

The National Supply Company of Delaware

Newark Consolidated Gas Company

New Brunswick Light, Heat and Power Company

Nerthern Indiana Public Service Company

Northern Paper Mills

Petroleum Corporation of America

Phelps Dodge Corporation

Reno OilCompany

South American Utilities Corporation

Southeastern Indiana Corporation

Tyler Oil Company

Exemption of Security Transactions from Provisions of Section 6

(a) of the Act:

In the Matter ofAbington Electric Company Apr. 26,1937

The Buckeye Light & Power Company, The Bradford &

Gettysburg Electric Light & Power Company, The

Brookville & Lewisburg Lighting Company, The New

Madison Lighting Company, The Eaton Lighting

Company, and the Western Ohio Public Service

Company

Central Maine Power Company

Central Ohio Light & Power Company

Central Vermont Public Service COrporation

Copper District Power Company

Cumberland County Power and Light COmpany

Green Mountain Power Corporation

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58 SECURITIES, ~J) EXCHANGE C01\UIISSIO:N

Exemption of Security Transactions from Provisions of Section 6

(a) of the Act-Continued.

In the Matter of-Continued.

The Laclede Gas Light COmpany Sept. 17, 1936

Lake Superior District Power Company Oct. 16, 1936

Middle West Service Company June 9,1937

Missouri Gas & Electric Service COmpany Jan. 28,1937

The Narragansett Electric Company .Tilly 14,1936

New England Power Company Nov. 7,1936

Northern Berkshire Gas COmpany -' June 24,1937

Northwestern Wisconsin Electric Company June 30,1937

Public Service Company of New Hampshire Aug. 10,1936

Dec: 19,1936

Tidewater Electric Service Company Dec. 11,1936

Union Electric Company of Illinois '_____ .Tune 25, 1937

Washington Gas Light Company June 22,1937

Washington Gas Light Company of Montgomery County, Md 1 Aug, 28, 1936

Wisconsin Power and Light COmpany Apr. 14,1937

Exemption of Acquisition of Securities from Provisions of Section

9 (a) of the Act:

In the Matter ofThe Middle West Corporation June 30,1937

Exemption from Provisions of Section 13 (a) of the Act:

Inthe Matter ofCitizens Utilities COmpany Oct. 6,1936

United Cities Utilities COmpany Sep. 19,1936

Fixing Date for Declaration to Become Effective:

In the Matter ofAmarillo Gas Company and Southwestern Development Co Apr. 10,1937

American Public Service COmpany Feb. 4,1937

American Service Company Mar. 8,1937

Arkansas-Missouri Power COrporation June 25,1937

Central and South West Utilities Company Feb. 4,1937

Central Vermont Public Service COrporation Aug. 7,1936

Citizens Utilities Company June 30,1937

Deerfield River Electric COmpany June 24,,1937

Great Lakes Utilities Company Apr. 2,1937

Voting Trustees for Common Stock of Great Lakes

Utilities Company Apr. 2, 1937

Illinois Power and Light Corporation., ________________ May 1, 1937

Iowa Public Service Company Dec. 29,1936

June 29,1937

The Kansas Electric Power Company _________________ Nov. 27, 1936

Dec. 14, 1936

Middle West Utilities Company of Canada Limited June 30,1937

The Mission Oil Company Dec. 23,1936

Missouri Public Service Corporation Jan. 1~, 1937

Nepsco Appliance Finance COrporation May 15,1937

Nepsco Services, Inc May 15,1937

Nevada-California Electric Corporation Oct. 14,1986

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"THIRD ANNUAL ,REPORT 59

Fixing Date for Declaration to Become Effective-Continued.

In the Matter of-Continued.

New Hampshire Power Company and Public Service

Company of New Hampshire July 21, 1936

North American'Gas and Electric Company Apr. 22,1931

. Republic Service Corporation Nov. 19,1936

Feb. 3,1931

San Antonio Public Service Company May 29,1931

'Sioux City Gas and Electric Company July 14,1936

Southwestern Development .Company , July ~3, 1936

Dec. 17,1936

States Electric &: Gas' COrporation June 18,1931

Texas Utilities Company Dec. 28, 1936

Washington and Suburban Companles; _______________ Dec. 30, 1936-

Permitting Declaration to Become Effective:

In the Matter ofEast St. Louis Light &: Power Company '___ May 24, 1937

May 27,1937

Granite City Generating COmpany June 30,1931

Morris E. Feiwell, Emanuel M. Goodman and Edward

P. Allen, Voting Trustees of the Capital ~tock of

Granite City Generating Company June 30,1931

Union Electric Company of Missouri June 25,1931

Union Electric Light and Power Company of llIinois May 21,1931

Reorganization PlAn-Jurisdiction of the Commission:

In the Matter 01-

International Paper and Power COmpany May 5,1931

ADVISOR¥ AND INTERPRETATIVE ASSISTANCE

Numerous inquiries as to the' application to particular tranS!ictions'

of the provisions of the Acts administered and the rules and regulations promulgated by the Commission are constantly received by the

Commission, in both written and oral form. In order that legitimate

financing might not be impeded, the Commission, during the year,

continued carefully and promptly to consider such inquiries and,

wherever possible, to render advisory assistance.

The extent of this service, however, is determined by the purpose

which' it is designed to serve, i. e., assistance to those who seek to

comply with the law but who have a bona fide doubt as to the proper

interpretation of particular provisions. The Commission declines to

answer hypothetical questions or problems arising otherwise than from

sections of the Acts which it administers. The Commission does not

feel at liberty to render interpretative opinions with respect to possible

civil liabilities since it has no jurisdiction over these matters, .nor are

advisory opinions rendered unless the inquirer states all the relevant

facts of an existing or proposed transaction and, in addition, discloses

the names of the persons or corporations, as well as the amounts

involved.

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60 SECURITIES AND EXCHANGE COMMISSION

New problems of interpretation are continually raised by the

inquiries. In many instances, the solution of the question presented

has necessitated, in addition to analysis of complicated factual situations, a thorough understanding both of the history of the legislative

provisions in question and of the practical results of a particular

interpretation. Furthermore, in order to answer many questions of

this type, the general body of judicial case law must be searched for

relevant analogies. While an advisory opinion upon a particular

factual situation may serve as a basis for a similar opinion upon an

analogous set of facts, the great variety of circumstances under which

financing transactions are undertaken give rise to a constant stream

of novel prohlems of interpretation.

The advisory service afforded by the Commission has been designed

for the benefit of those seeking assistance in their endeavor to comply

with the Acts. But the Commission has likewise benefited. Through

correspondence and conferences incident to the rendering of advisory

legal opinions, the Commission has itself obtained invaluable factual

information which has provided the basis upon which existing rules

and regulations have been improved and which has materially aided

the Commission in the promulgation of new rules and regulations.

REPORTS OF OFFICERS, DIRECTORS, AND PRINCIPAL STOCKHOLDERS

As part of its new comprehensive survey of significant data relating

to trading upon. exchanges, the Commission is making new analyses

of reports of officers, directors, and principal stockholders, filed pursuant to Section 16 (a) of the Securities Exchange Act of 1934.

Where any issuer has any class of equity security listed and registered on a national securities exchange, its officers, directors, and

principal stockholders (i. e., persons who beneficially own, directly

or indirectly, more than 10% of a class of registered equity security)

are required under Section 16 (a) of the Securities Exchange Act to file

initial reports showing their beneficial ownership of equity securities

of such issuer and monthly reports showing all changes intheir holdings

of any equity security of their company. Corresponding reports' are

required under Section 17 (a) of the Public Utility Holding Company

Act to be filed by officers and directors of registered holding companies

concerning their holdings of all securities of the registered holding

'Company and its subsidiaries.

The principal purpose of these reports is to make available information with respect to the amount of equity securities of issuers beneficially owned by their officers, directors, and principal stockholders

and with respect to transactions on the part of such persons closely

identified with the management or control of their enterprises.

The numbers of original and amended reports filed and examined

during the fiscal year ended June 30, 1937 are compared below with

corresponding figures for the two preceding fiscal years:
THIRD AN1'I'UALREPORT 61

Reports tiled and examined Fiscal year Fiseel year Fiscal year 1935 1936 1937

Original reports-Becnrities Exchange Act ____________________ 10,114 37,509 25,022

Amended reports-Securities Exchange Act ___________________ 2,624 5,7M 5,101 Original reports-Holding Company Act ______________________ ------------.- 464 416 Amended reports-Holding Company Act ____________________ ---.---------- 45 44

A separate file is established for each person reporting on a given

issuer or a given holding company system. At the close of the fiscal

"year"2n;017' suclr ftles had -been-established for '23'13:10different persons, representing largely the leaders of American business and

industry, who had filed with the Commission a grand total of 86,993

reports, or an average of nearly 4 reports each. On the other hand,

there are only about a half dozen cases of persons who have failed to

file reports apparently required of them under Section 16 (a) of the

Securities Exchange Act or to furnish a satisfactory statement orexplanation regarding their apparent non-compliance with the statutory requirement. Appropriate action is being taken in these cases;

The Commission compiles and publishes semi-monthly an Official,

Summary of Security Transactions and Holdings of Directors, Officers;

and Principal Stockholders as reported to it under Section 16 (a) of

the Securities Exchange Act of 1934 and Section 17 (a) of the Public

Utility Holding Company Act of 1935. Copies of these summaries

are available at each regional office of the Commission and each na-

:tiollw.securities exchange, us well as at the offite of the Commission

in Washington, D. C. In addition; the actual reports filed are themselves available for public inspection at the office of the Commission

in Washington, D. C. and the particular exchange with which copies

relating to the issuer concerned are required to be filed.

SOLICITATION OF PROXIES, CONSENTS, AND AUTHORIZATIONS

The administration of the rules and regulations governing the

solicitation of proxies, consents, or authorizations, adopted pursuant

to Section 14 of the Securities Exchange Act of 1934, has involved,

among other things, the examination of soliciting material sent to

the security holders of more than 1,500 listed companies. This

examination is for the purpose of determining whether the companies

have complied with the rules and regulations of the Commission.

The examination of proxy, consent, or authorization soliciting material

has disclosed the need for a general revision of these rules and regulations, to the end that the 'purpose thereof may' be mere completely

and effectively accomplished. Such a revision has been undertaken

and is in the final stage of preparation.

During the past fiscal year, 1,896 proxies and approximately 230

amendments thereto were filed with the Commission.
62 SECURITIES AND EXOHANGE OOMMISSION

In one case, the Commission, upon the examination of soliciting

material, raised a question as to whether statements contained in

such material might not be misleading, and suggested to the company

that it reciroularize its stockholders with supplemental information

to correct any false impressions which might have been formed by

them. When the company declined to do so,' the Commission,

acting pursuant to Section 21 (a) of the Securities Exchange Act of

1934, decided that it was in the public interest and in the interest of

all the stockholders of the company to make public information available to the Commission bearing upon the adequacy of, certain statements contained in the soliciting material. In the release. which t)i.e

Commission made public, the Commission set forth various particulars

in which it appeared to the Commission that tl1e..soliciting ,material

might be misleIlding., " . " .", "11,.'

In another case in which the Commission .desired soliciting I¥ftteJ;ial .

to be supplemented in order to eliminate false impressions, and.In

which the corporation concerned agreed .to do so, the OO~!UQll

issued a public release ,explaining the Particulars in which it felt th~t

further disclosure was essential to, the protection, of stockholders

and in the public interest generally.

CONFIDENTIAL TREATMENT OF APPLICATIONS, REPORTS 'OR DOCU.

"MENTS ' . ",'

. Rules of the Commission provide that persons wishing to object to

the public disclosure of any applicationy report; or document, filed, by

them with the Commission under the Securities Exchange Act may

file the confidential portion of such material with the Chairman of the

Commission, together with an application stating the. grounds upon

which the objection to public disclosure is based. .

During the year, 234 applications for confidential treatment of

material, involving a' total rof 308 separate items of information

primarily in connection with annual reports filed with the Commission

pursuant to Section 13 of the Securities Exchange Act of 1934 were

filed. Material filed by 202 issuers, involving 288 items,' was made

public during the year, the Commission having determined that disclosure of such information is iIi the public interest; and material 'filed

by 49 issuers, in respect of 62 items, was granted confidential treatment. During the year 48 private hearings on the applications for

confidential treatment were held.- :'

One application for confidential treatment with respect to ownership reports of equity securities required by Section 16 (a) of the

Securities Exchange Act of 1934 to be filed by directors, officers, and

certain securities holders, was filed with the Commission during the

year. This report, together with 3"such reports covered by appliestions pending at' the beginning of the Year, were made available to

the public. .~ . . .

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THIRD ANNUAL REPORT 63 

Sixty-eight applications for confidential treatment of material contracts or portions thereof contained in registration statements filed 

under the Securities Act of 1933 were submitted during the year pursuant to Rule 580 under said Act. Of these 65 requests, 65 were 

granted in their entirety, 1 was granted in part, 1 was denied and 1 

was withdrawn. 

One application for confidential treatment of material filed under 

the Public Utility Hording Company Act of 1935 was received during 

the fiscal year and is still pending. 

At the beginning of the year, petitions had been filed in the several 

Circuit Courts of Appeal by 31 issuers seeking to review findings of 

the Commission that disclosure of information filed by such issuers in 

pursuance of Rule UB2 is in the public interest. During the year, 

10 of these petitions were dismissed by the petitioners, and the 

material in question, involving 17 items of information, was made 

public. No new petitions for judicial review of the Commission's 

determinations in these matters were filed during the fiscal year. 

ADMISSIONS TO PRACTICE AS ATTORNEY OR AGENT BEFORE THE 

COMMISSION 

In order to gain admission to practice before the Commission as 

Attorney or Agent, the Rules of Practice require the submission to 

the Commission of an application disclosing certain specified information regarding the qualifications of the ipplicant. During the year, 

733 applications for admission to practice as Attorney and 143 applications for admission to practice as Agent were received. The 

register, which the Commission established November 1, 1935, containing the names and addresses of all persons admitted to practice 

before the Commission, was enlmged during the fiscal yea by 

the addition of 873 names. The following statistics indicate the 

number of applications received since the register was established 

(November 1, 1935), the number of persons admitted to practice, and 

the number of applications pending as of June 30, 1937: 

xomber 01 appllmtlons Number oi persons adrem1VBd mltted to practice Number or 

- appllmtlons 

Nov. to 1. 19.35 July 

to 

1, 1836 NOT

to 

1, 1835 July to 

1. 1838 Ezl;h

Juns 30, 1936 June30. IW rune 30, 1936 June 30,1937 

Attomays......................... 876 733 840 731 58 


&gents ........................... 618 14.3 617 142 la 


Totd........................ 1,404 876 873 50
 I 

Total admitted to praotioe, 2.230 

The Rules of Practice, as amended November 4, 1936 and January 

19, 1937, appear in Appendix I. 
64 SECURITIES AND EXCHANGE COMMISSION

REPORT ON THE STUDY AND INVESTIGATION .OF PROTECX1.VE AND

REORGANIZATION COMMITTEES

The Commission continued work on the report to the Congress

based on its study and investigation of the work, activities, personnel

and functions of protective committees. This study, investigation,

and report were authorized and directed by Section 211 of the Securities Exchange Act of 1934.

During the preceding year, three parts of the report had been completed and submitted to the Congress. These were Part III, pertaining to the Committees for the Holders of Real Estate Bonds;

Part IV, pertaining to tile Committees for the Holders of M4lli~ipal

and (.luasi-Municipal Obligations; and Part VI, pertaining to Trustees

Under Indentures. .

During the current year, three additional parts of the report have

been completed. These are the following:

Part I, entitled Strategy and Techniques of Protective and

Reorganization Committees, which was transmitted to the

Congress on May 10, 1937.

Part II, entitled Committees and Conflicts of Interest,

which was transmitted to the Congress on June 21, 1937.

Part V, entitled Protective Committees and Agencies for

Holders of Defaulted Foreign Governmental Bonds, which

was transmitted to the Congress on May 14, 1937.

The two remaining parts of the report are in process of completion.

The basic recommendations contained in the Commission's reports

were embodied in three bills introduced at the last session of Congress:

The Barkley Bill (S. 2344); the Lea Bill (H. R. 6968); and Chapter X

of the Chandler Bill (H. R. 6439; H. R. 8046). The last, Chapter X

of which contains a complete revision of the corporate reorganization

provisions of the existing law, revises the National Bankruptcy Act.

It was passed by the House on August 10, 1937, and is now pending

before the Senate, where it has been referred to the Committee on

the Judiciary. The Barkley Bill, still pending before the Senate

Committee on Banking and Currency, deals with the corporate

trustee and the trust indenture. The Lea Bill, still pending before

the House Committee on Interstate and Foreign Commerce, deals

with the solicitation of deposits, proxies or assents in reorganization

situations. Administrative powers created by the three bills would

be vested in the Securities and Exchange Commission.

Representatives of the Commission aided in drafting these bills

and appeared before the Congressional committees at hearings on

the bills and testified in support of them.
THIRD ANNUAL REPORT 65

STUDY OF INVESTMENT TRUSTS AND INVESTMENT COMPANIES

In the Commission's study of investment trusts and investment

companies, undertaken pursuant to the Congressional mandate of

Seetion 30 of the Public Utilities Act of 1935, the major portion of

the work was completed during the fiscal year.

In addition to four questionnaires distributed at the inception of

the study, the Commission, with cooperation of the representatives

of the industry, prepared a questionnaire for common or commingled

trust funds and another for investment counsel and investment

advisory services. Both questionnaires were of the summary type

and required only basic information.

As of June 30, 1937, the Commission had received questionnaire

replies from 495 management investment companies; from 178 fixed

investment trusts; from 37 investment special plans; from 5 companies offering guaranteed face amount certificates; from 16 common

trust funds; and from 400 investment counsel organizations.

The great amount of material received by the Commission in

response to its questionnaires, the unexpected ramifications of the

activities of investment companies and investment trusts discovered

in the course of the study, and the necessity of including a considerable

number of additional investment organizations in the study, has

delayed the Commission in submitting its final report and its recommendations to the Congress. On January 8, 1937, the Commission

submitted to the Congress a progress report indicating the Commission's method of procedure and detailing the progress of the study

and its status.

Detailed studies have been made of the larger investment trusts

and investment companies and of a number of smaller companies

regarded as representative examples. These have. been based in

most instances upon the information furnished by the companies in

reply to the questionnaire and in some instances through a field study

of the books and records of the companies. During the fiscal year,

public examinations were held on approximately 125 investment

companies and investment trusts at which about 20,000 pages of

testimony were taken and 2,100 exhibits introduced into evidence.

All public examinations were preceded by preliminary conferences

with respresentatives of the companies

At the close of the fiscal year, the Commission had received information from practically all companies believed to be within the purview

of the study and had almost completed its field studies. Considerable

progress had been made on the statistical and analytical study of

the material collected, and on the preparation of the final report.
66 SECURITIES A..i.~DEXCHANGE .CDMMISSION

Bond, Goodwin & Tucker, Inc

Bullock Fund, Ltd

Canadian Investment Fund, Ltd

Carriers and General Corporation

Central Illinois Securities Corp

Central States Electric Corp

A -list of-public hearings held in connection with this study during

the fiscal year ended June 30, 1937, follows:

Investment Trusts and Investment Companies of the Manageme~ Type

Name of Trust or Company Date of Public Examination

Adams Express Company December 1,1936

Allied General COrp November 5, 6, 1936

All American General Corp_______________ May 28,'June 28, 29, 30, 1937

American, British & Continental Corp October 28, 29, 1936,'June 28, 29,

30,1937

American Capital Corporation December 2, 3, 1936

American Cities Power & Light Corp February-25, 26, March 1, 2,3, 4,

5,8,9, 1937

American Company June 2,3,4,8,9,10,11,1'937

American-European Securities September 30,1936

American International Corporation November 30,1936

American Investors, Inc June 28, 29, 30, 1937

American Superpower Corp ~_--_ January 6, 1937

Atlantic & Pacific International Corp December 17, 18, 19, 21, 22, 23, ., 1936 .

Atlantic Securities Corp June as, 29; 30, 1937

Atlas Corporation June 28,'29, 30, '1937

Atlas.Utilities & Investors Co., Ltd June 28, 29,.30, 1937

Aviation Securities Corp June 28, 29, 30, 1937

Blue Ridge Corp . June 2,3,4,- 8,9,10,11,28,29,30;

1937 ' , ' --

June 2, 3; 4; 8, 9, 10, 11,'1937-

October 14, 15, H!, 1936

October.14, 15, 16, 1986

October 14, 15, 16, 1936. '

September 14, 15, 1936, ,

February 25, 26, March' 1, 2, 3~4,

5,8, 9, 1937' -'

Chain & General Equities, Inc :August 14, 1936 '

Chain Store Stocks, Inc ' :._ June 28,29,30, 1937

Chicago C~rporation--------------------- January 14, 15, 1937

Consolidated Equities, Inc "'__ September 22, 1936

Consolidated Funds Corporation (Del.) December 17, 18, 19, 21, 22, 23,

1936

Dividend Shares, Inc October 14, 15, 16, 1936

Eastern Shares Corporation August 3, 1936

Federated Capital Corp June 28, 29, 30,1937

Financial Corporation (Formerly known as Ungerleider Corp.) May 4, June 28,29,30,1937

Financial & Industrial Securities Corp June 2,3,4,8,9,10,11,1937

Fourth National Investors October 26, 28, 1936

General American Investors Company, Inc; November 12,1936

General American Securities Corporation December 17, 18, 19, 21, 22, 23,

1936

General Capital Corporation ' October 8,1936

General Equities, Inc December 17, 18, 19, 21, 22, 23,

1936

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.THIRD ANNUAL REPORT 67

Investm~nt Trusts and Investment Companies of the Management Type-Contd.

Name of Trust or Company Date of Public Examination

General Investment Corp May 7, 8, 1937

Granger Trading Corporation September 16, 1936

Group Securities (Distributors Group) January 22,1937

Home & Foreign Securities April 29,1937

Illuminating & Power Securities Corp January 5,1937

.Ineorporated Investors __: September 22, 1936

Insuranshares Certificate Corp November 5, 6, 1936

Insuransharee Management Corp November 5, 6, 1936

International Superpower Corp October 14, 15, 16, 1936

Interstate Equities Corp July 27, 28, 29, 30, 31, 1936

Investors Company of America December 2,3, 1936

Investment Trust Fund A__. February 1, 1937

Investment Trust Fund B February 1, 1937

Investors Fund C, Inc February 1,1937

Iroquois Shares Corp March 30, June 28.29, 30, 1937

Italian Superpower Corp December 15,1936

Joint Investors, Inc July 31,1936

Lehman Corp November 9,10,1936

Liberty Share Corp December 29, 30, 1-936

M & T Securities Corp January 18, 1937

Maryland Fund, Inc. (Ross Beason Group)__ January 27, 28, 29, 1937

Massachusetts Investors Trust September 21, 1936

Mayflower Associates; Inc October 13,1936

National Bond & Share Corp September 16,1936

National Investors October 26, 27,1936

National Liberty Insurance COmpanies June 2,3,4,8,9,10,11,1937

National Securities Investment Co April 2, June 28,29,30,1937

Nation-Wide Securities Company October 14,15,16,1936

Oil & Industries, Inc April 1, 1937

Old Colony Investment Trust November 19, 1936

Old Colony Trust Associates November 19, 1936

Pacific American Co., Ltd June 2,3,4,8,9,10,11,1937

Pacific Eastern Corp (Formerly known as June 2, 3, 4, 5, 8, 9, 10, 11, 28, 29,

Goldman Sachs Trading Corp.) 30, 1937

Pacific Investors, Inc December 2,3, 1936

Pacific Southern Investors, Inc : December 2, 3, 1936

Petroleum Corporation of America September 28,29, 1936

Phoenix Securities Corp November 18, 1936

Prudential Investors, Inc November 13, 1936

Public Utilities COrp January 5,1937

Reliance International Corp August 5,6,7,1936

Reliance Management COrp August 5, 6, 7, 1936

Second National Investors October 26, 27, 1936

Securities Allied Corp. (formerly known as May 13, June 28, 29, 30, 1937

Chatham Phen~ Corp.) .

Securities Research Corporation August 12, 1936

Shawmut Association ' ., October 7, 1936

Shawmut Bank Investment 'I'rust , October 7, 1936

Shenandoah Corporation June 2,3,4, 8J 9,10,11,28,29,30,

1937
68 SECURITIES AND EXCHANGE COMMISSION

Inves/ment Trusts and Investment Oompanies of the Management Type-Contd.

Name of Trust or Oompany

Special Equities, Inc

Spencer Trask Fund, Inc

State Street Investment Corp

Sterling Securities Corp

The Equity Corporation

Third National Investors

Union Investors, Inc

United Equities, Inc

U. S. Electric Light & Power Shares, Inc.

of Md.

U. S. & Foreign Securities Corp

U. S. & International Securities Corp

U. S. Shares Corporation (N. Y.)

Vick Financial Corporation

Yosemite Holding Corporation

Date of Public Examination

December 17, 18, 19, 21, 22, 23,

1936

September 30, 1936

September 23, 1936

April 16, June 28, 29, 30, 1937

December 17, 18, 19, 21, 22, 23,

1936

October 26, 27, 1936

August 12, 1936

December 17, 18, 19, 21, 22, 23,

1936

Oct. 14, 15, 16, 1936

February 12, 1937

February 12, 1937

December 17, 18, 19, 21, 22, 23,

1936

October 9, 1936

August 12, 13, 1936

Fixed Investment Trusts

Ross Beason Group January 22,28,29,1937

(Basic Industry Shares

Corporate Trust Shares .

Corporate Trust Shares, Accumulative

Corporate Trust Shares, Series AA

Corporate Trust Shares Accumulative

Modified

Corporate Trust Shares, Series AA

modified

Fixed Trust Shares

Fixed Trust Shares, Series B

Fixed Trust Oil Shares

Five-Year Trust Shares)

Distributors Group January 22,1937

(Accumulative Trust Shares

Foreign Bond Associates

North American Bond Trust

North American Trust Shares, 1953,

1955, 1956, and 1958)

Diversified Trustee Shares Series A, B, C and

D December 14, 1936

Nation- Wide Securities Company Trust Certificates Series A & B- October 14,15,16,1936

United States Electric Light & Power Shares,

Inc. Trust Certifieates Series A & B October 14, 15, 16, 1936

Special Investment Plans

Bank & Insurance Shares (Transcontinent

Shares) March 19,20, 1937

Financial Independence Founders, Inc November 20,1936

Independence Fund of North America, Inc; November 27, 1936

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THIRD ANNUAL REPORT 69

MARGIN REGULATIONS

Under Section 7 of the Securities Exchange Act of 1934, jurisdiction to regulate the extension and maintenance of credit on national

securities exchanges is vested in the Board of Governors of the Federal Reserve System. The Commission has endeavored to assist the

Board by making suggestions from time to time for methods to increase the effectiveness of Regulations T and U, which have been

promulgated by the Board pursuant to Section 7.

The Commission has taken steps to eliminate violations of Regulation T in respect of the time when margin was required to be deposited

by customers with members of exchanges. As a result of conferences

held between representatives of exchanges, the Commission, and the

Board, substantially all national securities exchanges adopted rules

prohibiting members from permitting customers to make a practice

of avoiding the requirement for depositing margin by liquidating the

unmargined commitment within three days.

Although Regulations T and U are promulgated by the Board of

Governors of th~ Federal Reserve System in the exercise of the

Board's exclusive jurisdiction, responsibility for the enforcement of

Regulation T devolves entirely upon the Commission. The task is

one of great magnitude, for which the Commission unfortunately only

has a limited staff available. Itinvolves the systematic inspection of

accounts of firms which carry' margin accounts for customers; the

analysis of reports resulting from such inspections; the institution of

proceedings to enforce the rule and the 'statute whenever violations

are found. The Commission keeps the Board of Governors of the

Federal Reserve System currently informed concerning the results.

During the fiscal year, 107 margin inspections were made, in which

62,876 accounts were examined. As a result, a number of cases

involving members of exchanges have been referred to such exchanges

for disciplinary action. As yet, no cases have been discovered which

required the institution of legal proceedings by the Commission itself

DETECTION OF MANIPULATIVE AND DECEPX1VE PRACTICES

Our national securities exchanges have not as yet demonstrated the

capacity themselves to police their markets effectively against manipulative and deceptive practices. In consequence, the burden of

detecting and instituting proceedings against such practices has rested

almost entirely upon the Commission.

During the year, machinery was set up for a systematic coverage of

trading in as large a number of securities as was considered practical

in an effort to solve the problem of detection of manipulation. A

total of 2,778 exchange issues were under regular observation at the

close of the fiscal year and price and volume records of approximately

225 securities traded in the over-the-counter markets were made.

•
70 SECURITIES AND EXCHANGE 'COMMISSION

To facilitate the detection of manipulation, all securities, wherever

traded in, were classified according to the broad categories of industry.

The reports of changes in the beneficial ownership of equity securities

by those persons called upon to report under Section 16 (a) of the Act

were reviewed. The stock ticker tape quotations of the New York

Stock Exchange and the New York Curb Exchange were under continued surveillance, and lists of daily security transactions were

regularly examined. Transactions on all exchanges were constantly

scrutinized.

On July 1, 1936, 54 preliminary and 30 formal investigations were

in process. During the year, 420 reports dealing with the probability

of manipulation on exchange markets, and 72 preliminary investigations were made. As a result of these preliminary investigations, 18

new formal investigations were authorized, 60 were closed or completed, and 48 were in process as of June 30,1937. In addition to the

18 new formal investigations begun as the result of preliminary investigations, there were 12 authorized without preliminary investigations.

Thus, with the 30 formal investigations carried over from the previous

fiscal year, there were 60 formal investigations in process during the

year. Of these 60 formal investigations, 31 were closed during the

year, and 29 were still pending at the end of the year.

When a formal investigation develops evidence which makes it

appear to the Commission that any person is violating or about to

violate any provision of the Act, appropriate legal proceedings are

instituted. Such proceedings may take the form of a suit for injunction; they may take the form of a reference to the Department of

Justice for criminal proceedings; and they may take the form of a proceeding by the Commission under Section 19 (a) (3) of the Securities

Exchange Act of 1934 to suspend or expel the offender (if the offender

is a member of a national securities exchange) from the exchange ofwhich he is a member. A brief description of injunctive proceedings

brought during the fiscal year against violations of the Securities

Exchange Act of 1934, and of criminal proceedings instituted against

violations of that statute upon reference by the Commission to the

Department of Justice, may be found in Appendix VI, Part II. A

summary of proceedings instituted under Section 19 (a) (3) follows.

{Although some of the events in these summaries preceded the fiscal

year and some did not take place until after the fiscal year, it has been

thought desirable to include them all, in the interest of giving a

reasonably complete picture of the proceedings.)
. THIRD ANNUAL REPORT' 71

Securities Exchange Act of 1934-0ases 'in which Section 19 (a) (3)

proceedings were instituted

M. J. Meehan-(Bellanca Aircraft Corporation)

Commission directed public hearing under Section 19 (a) (3).

Order for hearing dated October 25, 1935. Order expelling

respondent from membership on national securities exchanges

entered August 19, 1937.

Charles C. Wright, et al-{KiIpler Airplane & Motor Corp.)

Commission directed public hearing under Section 19 (a) (3).

Orders dated February 27, and April 9, 1936 for hearing. Oral

argument on Report of Trial Examiner set down for November

11, 1937.

White, Weld and Co.-(A. O. Smith Corporation)

Commission directed public hearing under Section 19 (a) (3).

Order for hearing dated April 22, 1936. Oral argument on

Trial Examiner's Report April 23, 1937. Commission has

matter under advisement.

Thomas F. Gagen, et aI-(East Boston Company)

Commission directed public hearing under Section 19 (a) (3).

Order for hearing dated May 4, 1936. Order expelling respon-

.dent, from membership on Boston Stock Exchange entered,

. 'with consent of respondent on October 6, 1937.

W. E. Hutton, et aI-(Atias Tack Corporation)

Commission directed public hearing under Section 19 (a) (3).

Order for hearing dated November 13, 1937. Hearings concluded and matter before Trial Examiner for Report ofFindings.

Harry A..Dart, et al-(Lakey Foundry and Machine Co.)

Commission directed public hearing under Section 19 (a) (3).

Order for hearing dated April 20, 1937. Respondents expelled

from membership by Detroit Stock Exchange March 1, 1937;

resigned from membership on ,Chicago Stock Exchange effec-

,. tive May 10, 1937. Because of above, Commission ordered

proceedings discontinued and hearing scheduled for May 13,

. 1937 cancelled. _

Abbott, Proctor & Paine, et al-(Root Petroleum Company)

. Commission directed public hearing under Section 19 (a) (3).

Order for hearing dated June 7, 1937. Commission ordered

, discontinuance ~f proceedings by order dated June 17, 1937,

owing to resignations from memberships on national securities

exchanges by certain individuals named as respondents in

order for hearing.

As a result of surveillance of over-the-counter trading, the Commission authorized 15 preliminary investigations. Of these, 10 were

closed and 5 were in process as of June 30, 1937.

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72 SECURITIES AND EXCHANGE COMMISSION

SPECIAL STUDIES AND RESEARCHES

Study of Exchange Rules Governing Miscellaneous Exchange Practices

As we have already indicated, the Commission has undertaken a

comprehensive new program for the collection and analysis of data

relating to all aspects of exchange trading. This program will cover

the study of such subjects as: statistics on members' trading; status

of margin accounts; orders on specialists' books; short sales statistics;

printing on tape of all sales; round-lot orders entered and opened in

commission houses; analysis of executed round-lot and odd-lot

orders; analysis of executions of all orders of 1,000 shares or more;

analysis of tenders and deliveries of certificates; transactions in

foreign accounts; statistics of cash and margin accounts and firms'

financial positions; analysis of the activity of brokers and dealers;

analysis of broker-dealer income and expenses; volume of put and call

sales; and data concerning the government and operation of the

exchange, In devising this program, the Commission was guided by

both its practical experience and its previous research.

During the past year, the Commission has undertaken a number

of studies relating to problems arising in connection with the rules of

national securities exchanges. These studies have been conducted • with a view to obtaining a measure of uniformity in some of the

essential rules of registered exchanges and with-a view to improving

the standards of practice and organization prevailing thereon. The

studies undertaken are as follows:

1. A study of the nues of all registered exchanges dealing with

those matters specified in Section 19 (b) of the Securities Exchange

Act of 1934, concerning which the Commission is authorized to

request any registered exchange to alter its rules. These matters

include: (a) safeguards in respect of the financial responsibility of

members and adequate provision against the evasion of financial

responsibility through the use of corporate forms or special partnerships; (b) the limitation or prohibition of the registration or trading

in any security within a specified period after the issuance or primary

distribution thereof; (c) the listing or striking from listing of any

security; (d) hours of trading; (e) the manner, method, and place of

soliciting business; (f) fictitious or numbered accounts; (g) the time

and method of making settlements, payments, and deliveries and of

closing accounts; (h) the reporting of transactions on the exchange

and upon tickers maintained by or with the consent of the exchange,

including the method of reporting short sales, stopped sales, sales of

securities of issuers in default, bankruptcy, or receivership, and

sales involving other special circumstances; (i) the fixing of reasonable

rates of commission, interest, listing, and other charges; (j) minimum

units of trading; (k) odd-lot purchases and sales; (1) minimum deposits on margin accounts; and (m) similar matters.
THIRD ANNUAL REPORT 73

2. Studies of specific practices have been combined with a general

survey of the scope and effectiveness of all the important rules of four

national securities exchanges.

3. A study of the rules and practices of national securities exchanges

relating to specifications for admission of securities to listing and setting forth the conditions under which securities may be removed from

the list. Conferences with exchange officials have been held in regard

to, matters relating to exchange policy on the listing and delisting of

securities.

4. A study of the methods of providing adequate reporting of transactions effected on exchanges in securities of issuers in bankruptcy,

reorganization or receivership, dissolution or liquidation, and securities in respect of which there has been a default in interest or principal

or both; and in securities which have been called for retirement or

redemption, or which have matured but have been extended, or which

have not been fully paid for, or upon which assessments have been

levied.

The Commission also continued its studies and researches preparatory to the drafting of rules and regulations on (1) puts, calls, straddles

and other options; (2) borrowings and solvency of brokers and dealers,

and the hypothecation of customers' securities; (3) pegging, fixing and

stabilizing operations; and (4) short selling and stop-loss orders. '

A study of the status of margin accounts was also made by the staff.

Study of Over-the-Counter Practices and Problems

The studies inaugurated by the Commission in 1934 of appropriate

measures for the control of over-the-counter markets were continued

during the year. Following the adoption of the original plan for

registration of brokers and dealers on January 1, 1936, which plan

became specifically part of the Act by the amendment of May 27,

1936, attention was directed to the need for comprehensive research

into various significant problems in the investment banking and overthe-counter fields. Securities traded .in on the over-the-counter

markets were enumerated and classified. A special study was made I

with respect to the dissemination of ~tations for securities traded in

over-the-counter markets. The legal aspects of various problems of

regulation for these markets were studied exhaustively and the possible economic effects of all such proposals were given due consideration. Conferences were held with representative members of the industry upon their problems. Representatives of the Commission co- \

operated with representatives of the over-the-counter business in the

formation of the Investment Bankers Conference, Incorporated, and \

has maintained close contact with the officials of that organization I

since its inception in a joint endeavor to improve the standards of

practice prevailing.in the business. The Commission has also wel-

! ;

21123-37--6
14 SECURITIES AND EXCHANGE COMMISSION

corned the assistance, of other organizations, such as the New England

Dealers' Association, the New York Security Dealers' Association,

and the Investment Bankers' Association. ' .'

Formulation of Rules to Define Manipulative; Deceptive and Other Fraudulent

Devices in the Over-the-Counter Markets

During the fiscal year, the Commission conducted studies and researches in connection with and drafted rules to define manipulative,

deceptive and other fraudulent devices in the over-the-counter markets.

These rules were drafted pursuant to Section 15 (c) of the Securities

Exchange Act of 1934, as amended. In accordance with the custom of

the Commission, drafts of the rules were forwarded to an extensive

and representative list of members of the securities business for

criticism during the latter part ot the fiscal year."

Study of "When Issued" Trading Rules

A complete revision of the rules and regulations governing the registration on national securities exchanges of unissued securities and the

exemption of issued warrants from the provisions of Section 12 of the

Securities Exchange Act of 1934 has been undertaken with a view to

, simplifying the regulations and the procedure thereunder.' A draft

of the revised rules has been sent by the Commission to all national

securities exchanges tor comment.

Further Study of the Segregation of the Functions of Broker and Dealer

Consideration is being given to methods of effectuating the suggestion contained in the Segregation Report that firms carrying margin

accounts for customers, and general partners of such firms, should be

prohibited from trading on margin for their own account. ,.

The Segregation Report expressly left open for further study certain

important questions concerning 'the status and functions of the specialist: This further study will, of course, be carried forward, as part of

the comprehensive program to which reference has been made: '

SUMMARY OF ALL RULES AFFECTING EXCHANGE TRADING PRO.

MULGATED BY THE COMMISSION OR ADOPTED BY .EXCllAN,GES

. AT REQUEST OF COMMISSION.

In view of the pendency of the Oommission's new comprehensive

survey of trading upon exchanges; it-seems desirable to sum up at this

point all rules affecting exchange trading which have either been promulgated by the Commission or adopted by exchanges at the request

of the Commission sinoe the effective date of the Securities Exchange

Act of 1934. There follows a brief description of such rules, together

with explanatory comment .

.. These regulations were adopted by the Commission after the close of the 1lscaI year and become effective

October I, 1937.
{rHffiD ANNUAL REPORT 75

A. Reoules~e~ulating Trading Practices. Upon Exchanges Promul~Jf1' I.... mnusSlon. ..

fu ihe ~t~ct sense, only two rules which actually r~g~~'~~

1?ractw~8..upon exchanges have been p,romulgated by the Cf?~<Pi.

In addition to these two rules, a considerable body of reguliitiohs has,

of course, been promulgated by the Commission under the 'EX&f8:'~:

Act. These other regulations, however, do not govern traffing practices as such, but relate to such subjects as: registration by exchanges:

registration of securities upon exchanges; annual and other reports;

admission of securities to unlisted. trading; admission of securities to

when-issued trading; the solicitation of proxies. in respect of securities

registered upon national. securities exchanges; the registration of

over-the-counter brokers and dealers; regulation of over-the-counter

tradirig; complete, limited, or temporary exemption from various

provisions of the statute; and rules defining certain formal requirements, such as the format of registration statements, the mechanics

of filing, etc. The two rules which regulate trading are:

(1) Rule ND1, which brings arbitrage transactions by

officers and directors of issuers of listed equity securities under

restrictions equivalent to those prescribed by Sections 16 (a)

and 16 (b) of the Exchange Act for ordinary transactions.' .

(2) Rule GB2, which supplements Section 9 (a) (2) of the

Act and outlaws an. unmistakably manipulative practice."

B. Trading Rules .Adopted by Exchanges at the Request of the Commission.

These rules consist of the following:

(1) The sixteen trading rules recommended by the Commission in

,!pril1935 for. adoption by national securities exchanges.

(2) The .interpretation .of the tenth of the foregoing sixteen rules,

applicable to trading by specialists, made by the Director of the

. Trading and Exchange Division.

(3) The margin rules adopted by exchanges .which desired to permit

"when issued" dealing thereon, covering the amount of margin

required on all commitments in securities or rights admitted to "when

issued" dealing upon such exchanges.

(4) The rules embodying the requirement that commitments of

members, their firms and their partners made during any single day

shall be fully margined at all times.

(1) The Sixteen Trading Bules«. .

The sixteen rules for the regulation of trading on exchanges recommended by the Commission on April 16, 1935 for adoption by national

securities. exchanges are intended to provide additional safeguards

against certain activities on exchanges which lend themselves to

manipulative tendencies; .

It .Rule 'GB2 dld Dot become effective until after the IIsca1 year, ODOctober 1, 1937.

"
76 SECURITIES AND EXCHANGE COMMISSION

It should be noted, that although all of these rules relate to trading

activities, three of the rules, in whole or in part, are applicable only to

members while on the floor, i. e., the second, fourth and seventh rules.

~It ;mould also be noted that bonds, arbitrage and odd-lot transactions are exempted from the operation of some of the rules.

As is noted in the discussion, some of these rules approximate

existing regulations of the exchange before April 1935 or codified

existing practices.

The First Rule in general terms prohibits members, then- firms and

partners, from effecting transactions of purchase and sale for their

own account, which transactions are excessive in view of the market for

such security or in view of the financial resources of the member, firm,

or partner.

The Second Rule reads as follows: Trading for Joint Account.

(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 for

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.

This rule is intended to curtail the ability of members, while on the

floor, to engage in manipulative practices by means of financial

resources made available through joint accounts. The Senate investigation disclosed that members joined in such accounts to a very ,

large extent, and that many manipulative operations were based on a

combination of a member's manipulative skill and trading ability with

the' financial backing of outsiders .jointly interested. in the account.

For the odd-lot dealer and specialist, other rules specifically govern

the conditions, and this rule is therefore not applicable to them.

The Third Rule merely provides for the reporting of joint accounts

to the exchange. It is supervisory in intent, and approximates an

exchange regulation in force before the issuance of these rules.

The Fourth Rule deals with the fiduciary obligation which a broker

owes to his customer. A member handling a customer's discretionary

account is forbidden, while on the floor, to execute purchases or sales

for such account which are excessive in size or frequency in view of

the financial resources in the account. The purpose is twofold:

(1) it is designed to eliminate trading for discretionary accounts which

is primarily motivated by the broker's desire to increase his com-
. THIRD ANNUAL REPORT 77

missions; (2) to eliminate any opportunity for a member on the floor

to effect transactions by means of discretionary accounts for the purpose of stimulating activity or raising or depressing the price.

The Fifth R'IJ1e,relating also to fiduciary obligations, is declaratory

.of prior New York Stock E:xichmIg6.practice. It prohibits a broker,

while holding a customer's unexecuted market or limited price order,

from competing with the customer by trading for his own account in

the same security on the same side.

The Sixth R'IJ1eis intended as a deterrent to a familiar device for

manipulation. Members, firms and partners are prohibited from

making purchases at successively higher prices or sales at successively

lower prices for the purpose of creating a misleading appearance of

activity, or making a price which does not reflect the true state of the

market in any security.

The Seventh Rule is aimed at another device which might facilitate

manipulation. Itwas disclosed by the Senate investigation that members-of e~~es,had pal'tiGipatee.,in.opoon&.to a large extent in.connection with manipulative operations. This rule provides that a member, while on the floor, may not initiate the purchase or sale for his

own account or for that of his firm or a partner, of any security classified for trading as a stock by the exchange, in which he or the firm

or partner holds or has granted any put, call, straddle or option.

The Eighth R'IJ1eprovides for the keeping of records of orders. This

rule embodies what was considered by most firms as good practice.

Itis intended to aid the exchange in supervising activities.

The Ninth R'IJ1erequires the registration of specialists. Itis supervisory in intent.

The Tenth R'IJ1erequires specialists to restrict their dealings for their

own account in securities in which they specialize.to those reasonably

necessary to maintain a fair and orderly market.f" Under date of

March 30, 1937, an interpretation of this specialist rule was issued,

which is summarized and discussed below.

The Eleventh R'IJ1epermits the specialist to carry a joint account

in any security-classified by the exchange as a stock only with a partner

of such specialist, a member of the exchange, or a firm of which a

member is a partner.

This rule is intended to prevent joint accounts between specialists

and members of the public, in which the participation of the specialist

might serve as a means to manipulative operations conducted from the

floor of the exchange.

The. Twelfth. .Rule .provides merely for the. keeping of records by

specialists. It was always considered good practice by exchange

officials.

10 Section 11 (b) ofthe statute provides that IIthe Commission pennlta the llPIlCialist to act as both broker

and dealer hls dealings shall be lunlted to those reasonably necessary to maintain a falr and orderly market.
78 SECURITIES'.AND EXCHANGE:OOMMISSION

The Thirteenth Rule provides for the registration, of odd-lot dealers.

. The. Fourteentl: Rule covers the. conditions' under which odd ..lot

dealers may carry joint accounts. in .the same way as the. Eleventh

Rule .does for specialists. '

The Fifteenth. Rule prohibits the holding or granting of an option

by an odd-lot dealer or specialist in any, security classified for trading

as a stock by the exchange in which such. specialist or odd-lot dealer

is registered. Its purpose follows that of the Seventh Rule, which

governs all members.

The Sizteenth Rule forbids a member from. effecting a short sale-of

a security at a price below the last sale price of such security on the

exchange. This rule was a settled practioe of the New York Stock

Exchange before the issuance.of these trading rules.

(2) The Interpretation of the Tenth of the Sizteen Bulee: . . ,

The Tenth Rule, as noted, deals with appropriate restrictions of

the activities of the specielist.vin general. terms, . Under ..date ~of

March 30, 1937, an interpretation of this rule was issued' by fhe

Director of the Trading and Exchange Division. ' .

This interpretation stated that the phrasing of the rule prohibits

all transactions .for .the account .of a specialist in the security in

which he is registered, excepting, only such transactions as are prop ..

erly a part of a course of dealings reasonably- necessary to permit

the specialist to maintain a fair and orderly market, or to act as an

odd-lot dealer. Therefore, each transaction by a specialist for his

own account must meet the test of reasonable necessity.. A. comprehensive. affirmative statement of the criteria: of reasonable necessity

was considered inadvisable, but certain negative tests were-set out-in

this interpretation. ' . " . -:

For example, certain types of transactions effected by a. specialist

in taking or increasing a position were specifically described as tending to have a detrimental effect upon the market, and as being therefore commonly unjustifiable. In this category were plaoedc .

(1) a purchase above the last sale price; '.

(2) the purchase of all. or substantially all the stock-offered on the

book at the last sale price; and . .

(3) the supplying of all or substantially all the stock bid for on the

book at the last sale price.

(3) "When Issued" Margin Rule8: . . ,'.' ,. ,

These rules cover the requirements -for commitments in. securities

or rights admitted to "when issued" dealings upon -the .exehanges,

In general, these-requirements are designed 'to be -equivalent Ito'.those

imposed in Regulation T in respect of transactions in -issued

securities. >', .

(4) "Daylight Trading" lJtJarginRules: '." .

These rules put into effect the recommendetion made-in ,the-Commission's report to Congress that trading by members of exchanges,

- i ~

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~
_,I ,'_.!J:HIRD ANNUAL 'REPORT. , 79

1: I

exchange firms, and their partners be fully-margined at all times.

They were intended as a means for eliminating the "shoestring

trader" and discouraging excessive trading, and to establish a parity

between member traders and traders who were part of the public.

In essence, these rules apply the standards of Regulation T to

transactions by members of the exchange during the course of a

single day.

REGIONAL OFFICES

The Dommission has established nine regional offices. The ad:'

dresses Of these offices and the States comprising the territory they

serve are indicated below: .' ' , ,

New York Regional Office, 120 Broad- New York, New Jersey, and Pennsylway, New York, N. y. vania.

Boston Regional Office,82 Devonshire Massachusetta, Connecticut, Rhode IsStreet, Boston, Mass. land, Vermont, New Hampshire, and

Maine.

AtI9.'ntaRegional Office,'Pab:nerBuild- Tennessee, North Carolina, South

Ing, Atlanta; Ga. .., Carolina, Georgia, Alabama, Mis,sissippi, Florida,' and that portion of

Louisiana east of the Atchafalaya

River.

Chicago. Regional Office, -105 West Minnesota, Wisconsin, Michigan, Iowa,

AdaYnsStreet, Ohlcago, TIl. Illinois, Indiana, Ohio, Missouri,

Kentucky, and Kansas City, Kans.

I} J' I

F9rt WP~ Reglonal O!ijce,,New Federal Building, Fort Worth, Tex.

Oklahoma, Arkansas, Texas, Kans~

(with exception of Kansas City),

and that portion of Louisiana west

of the Atchafalaya River.

Denver Regional Office,

Building, Denver, GOlD.;

Patterson Wyoming, Colorado, New Mexico, Nebraska, North Dakota, South Dakota, and Utah.

San Fran:cis~o "Regional Office, 625 Califo~ia, Nevada, Arizona, and

Market Street, San' Francisco, Calif.. Hawaii.

SeattlE;Regional Office"1407 Exchange Washington, Oregon, Idaho, Montana,

B!Pl~in~, 821_ Second Avenue, and Alaska.

Sea~t~e,.Wash.

Washington Field Office,'1778 Penn- Virginia, West Virginia, Maryland.

sylvania '.A:venue,'NW., Washington, Delaware,'and District of Columbia:

D.C:

The regional offices are charged with the responsibility of conducting trading, accounting and legal investigations with a view to the

efficient enforcement of the Acts administered by the Commission,

'

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80 SECURITIES AND EXCHANGE COMMISSION

and the rules and regulations thereunder. Each office serves the

general and investing public within the zone over which it has jurisdiction, such as the holding of conferences and the carrying on of

general correspondence relative. to matters of enforcement or interpretation.

Personnel assigned to the regional offices not only conduct the

afore-mentioned investigations but likewise assist in the conduct.

of formal and informal hearings, in the preparation and presentation in

court of injunction proceedings and in the preparation of reports on

criminal violations, which serve as bases for references to the Attorney

'General for criminal prosecution. It is customary to cooperate with

the United States Attorneys in the presentment and trial of criminal

cases, after they have been duly authorized.

PUBLIC REFERENCE ROOMS

In the Public Reference Room of the Commission at Washington,

D.O., all public registel'6&.inf-ormatien, includiag.registranion statements, applications, reports, declarations, and other documents filed

with the Oommission, is available to the public during business hours.

The facilities available in the Public Reference Room were utilized

during the past year by.more than 14,200 members of the public who

visited the offices of the Commission seeking information. In addition to these visitors, thousands of letters and telephone calls were

received requesting information concerning public registered information. Facilities are also available for the sale of copies of any material filed with the Oommission and available for public inspection.

More than 4,300 orders for photocopies of material, involving 346,342

pages, were filled.

In addition to the Public Reference Room in Washington, D.O.,

the Oommission also maintains Public Reference Rooms -irr the

regional offices located in New York. City and in Chicago. In the

Public Reference Room in the New York Regional Office, there are

available to the public such copies of applications for permanent

registration of securities on the Ohicago Curb Exchange, the Chicago

Stock Exchange, and the Chicago Board of Trade as have received

final examination in the Commission, together with current and annual

reports supplementing these applications and amendments thereto.

In the Public Reference Room in the Chicago Regional Office,

there are available to the public such copies of applications for registration of securities on the New York Stock Exchange and the New Yor~

Curb Ex<change as' hase received finaLex~Jl,in. the,Con:unissiOll,

together with current and annual reports supplementing these applications and amendments thereto.

Photocopies of registered public information may be procured from

the offices of the Commission in Washington, D. C. only.
THIRD ANl\lJAL REPORT 81

Duplicate copies of applications for registration of broker or dealer

filed with the Commission are available for public inspection in each

regional office having jurisdiction over the zone in which the broker

or dealer has his principal office. Supplemental statements to these

applications will also be available in these regional offices.

PUBLICATIONS

Registration Record, Securities Act of 1933

During the year, the Commission developed and put into operation

a new daily report, known as the "Registration Record, Securities

.Act of ,193B" ,o,.eontftining.information .concerning .registration' events

occurring each day in connection with the registration of securities

under the Securities Act of 1933. At the time public distribution of

this daily report was begun (May 10, 1937), the periodic releases

covering registrations, hearings, orders, e.te., under the Securities

Act were discontinued.

The Registration Record, which is in tabular form, was designed: (1)

To eliminate delay in reporting to investors and interested members

of the public the fact that registration statements have been filed (on

the great majority of issues, this information had been released only

on a weekly basis); (2)to combine in a single daily release, the registration.information which had been made public through many ..different

releases; and (3) to augment the information made available, by reporting daily the filing of each amendment, the date and manner in which

each statement becomes effective, the data as to post-effective amendments, and all 'Other 'material. relating to each security issue with

respect to which there is a Securities Act registration statement.

At the time of the inauguration of this Registration Record, a

handbook was issued as a guide to its use. This handbook gives

brief descriptions of the various types of actions in registration procedure, and contains a summary of each of the major registration

forms.

Releases

The Commission issues currently releases concerning its activities.

Releases are issued announcing rules, regulations, orders, opinions,

findings, filings of registration statements and applications, effectiveness of registration statements, public hearings, and reports and statements filed by security issuers, officers, directors, and principal stockholders. These releases are classified according to subject and are

made available to the public through issuance to the press and through

.the.medium of a m.ailing~listm.ain.tained,for the. convenience of. those

members of the public who desire to receive them currently. Members of the public may have their names placed upon the mailing list

to receive any or all classes of releases.
82 SECURITIES' AND EXCHANGE 'COMMISSION

During the year ended June 30,- 1937; the Commission published

625 releases-under the Securities .Act of. 1933,.526 releases under the

Securities Exchange Act of 1934,. 459 releases under the Public

Utility Holding Company .Act of 1935, and 32 general releases. Of

the total of 1,642 releases thus issued, 685 releases were orders of the

Commission; 614 announced .tP.e.filing of registration statements,

applications, and other public documents filed with the Commission;

110 releases announced rules, regulations and-interpretations by the

Commission; 79 releases eontained statistical-data; and 154 miscellaneous releases covering such matters as civil and. criminal actions

taken by the Commission in the Courts, announcements Of hearings

held in connection with the Commission's Investment Trust Study,

tabulations of effective registrations, 'personnel changes and appointments, etc .

. For the convenience of the' general public, the Commission -has

published compilations of releases issued by it under the Securities

Act of 1933, .the Securities Exchange ,Act of 1934".and .the Public

Utility Holding Company Act of 1935. ,These compilations cover

releases issued from the date of the 'Passage of each of the Acts to

and including December 31,'1936.

Accounting Opinions

For the purpose of contributing to the development' of uniform

standards and practice in major accounting questions, the Cbtritilission instituted during the year a program for the publication from

time to time of opinions on accounting principles. Many accounting

problems have arisen during the course of the Commission's administration of the SecUrities Act of 1933, the Securities Exchange' Act

of 1934, and the PUblic Utility Holding Company Act of 1935 which

have general application and in these instances the Commission, in

following this program, intends to publish opinions as the necessity

therefor arises in specific cases. Itis believed that by this procedure

the quality of the financial statements filed with the Commission

will be improved materially and there will be a more general acceptance of good accounting practice in -the handling of problems heretofore subject to wide variations in treatment.

Other Publications

. Other publications issued by the Commission during' the 'year

included the following: 21

Report to the Congress on the Study and Investigation ~f the

Work, Activities, Personnel 'and Functions' of Protective and

Reorganization Committees: . . Part 1-8trategy and Techniques of Protective and Reozganization Committees.

For Jist of publications as of November I, 1937,see Appendix IV.

~~

"
r 'THIRD -ANl.\"UAL 'REPORT 83

27,571

104,638

56, 108

168,454

2,235

66,487

Part II-Committees and Conflicts of Interest.

Part V-Protective Committees and Agencies for- Holders

of Defaulted Foreign Governmental Bonds.

Preliminary Summary of the Progress of the Study of Invest-

,: ment Trusts and Investment Companies Made by the Securities

and Exchange Commission.

" Opinions of the Commission, Volume I, Number 2.

, ' Opinions of the Commission, Volume I, Number 3.

Twenty-four semi-monthly issues of the Official Summary of

Stock Transactions and Holdings of Officers, Directors" and

. ~, Principal Stockholders. '

Uniform System of Accounts for Public Utility Holding

Companies under the Public Utility Holding Company, Act of

1935.

List of Securities Traded on' Exchanges under the Securities

Exchange Act of 1934, together Wth supplements thereto, as of

May 31, 1.937. ' PERSONNEL

The Commission and personnel, at...tl;te close of the fiscal year,

consisted, of .1,140 persons. This total comprised 5 Commissioners

and ).,135 employees, 738 of whom were men and 397 were women

Statistics

Oommissioners., _________ _ __ 5

Departmental: PerD1ll.nent 892

Temporary_________________________________________ 38'

Regional offices: , . , . PerD1ll.nent 202

Temporary_________________________________________ 3

SUbject to retirement act 639

-.

FISCAL AFFAIRS

Appropriations for fiscal year 1937

Salaries and expenses , '_' $4, 200, 000

Printing and binding___ __ _________________________ 45, 000 .

Total appropriated $4,245,000

Obligations for fiscal year 1937

Salaries

Departmental $2,479,054

~eld______________________________________________ 599,211

Expenses Mileage and witness fees

Supplies and material

Communication service

Trav~expense

Transportation of things

Reporting hearings

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_

_

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_
84 SECURITIES AND EXGIiANGE COMMISSION

Obligatiens for.flseal y.ear 1937-Continued

Expenses-Continued

Light and power (Field)

Rents

R.epairs and alterations

Special and miscellaneous expenses

Purchase of equipment

$3,404

68,917

6,810

1,686

85,992

Total obligations for salaries and expenses_ ________________ $3, 670, 567

Obligations for printing and binding; _____________________ 44, 971

Grand total obligations

lJnObligated balance 3,71Q,5:iS

529,462

Appropriations $4,245,000

This means the Commission did not spend this sum out of the totel appropriation made for It.

RECEIPTS FOR THE FISCAL YEAR 1937

During the fiscal year the Commission received $1,103,780.13 in revenue."

The source and disposition of the amounts collected are as follows:

IDSpecial Transferred In Special Deposit Ac- to General Deposit count at Net Amount

Character of Receipts Fund of the Account at Sub-Total beginning of Collected

Treasury end of F. Y. (Less During During Fiscal Refunds Fisoel Year

Fiscal Year Year account ex. cesslve fees)

Sale of Photo Duplications ______ $37,364.57 $1,537.10 . $38, 901. 67 $9,288.78 $29,612.89

ljegistration 'Of$i:01'ities ________ 641,493:21 157,466.66 798,"959: 87 21/1,93«:70 :"'5l!S, 02ll.17

Registration of Exchanges _______ 555,183.04 31.66 555,214. 70 9,422.62 545,792.08

Miscellaneous Revenue __________ 354.54 .45 354. 99 ~------------- 354.99

Grand totaL _____________$1, 234, 395. 36 $159,035.87 $1,393,431. 23 $289, 651. 10 $1, 103, 780. 13

This sum is not available for expenditure by the Commission but is deposited mto the U. S. Treasury as

miscellaneous receipts. The Oommtssion Is at liberty to expend only sucb funds as the Congress appropriates for Its use.

Comparison of receipts for the fiscal year 1937 with those for the fiscal years 1935 and

1936 and the total receipts of the Commission since its creation

Character of Receipts 1935 1936 1937 Total

Registration of seeunues ___________________$160,299.25 $496, 850. 89 $[>28,020 17 $1,185, 170.31

Registration of Exchanges _________________ 61.659 86 382,460 11 545,792.08 989,912. 05

Sale of Photo Duplications _________________ 5,738.75 20.892.61 29,612.89 56,244.25

Miscellaneons Revenue_. __________________ .95 196 53 354. 99 562.47

Grand totaL _________________________ 1 $227, 698. B1 $9OO,~.14 $1, 103, 780. 13 $2, 231,879. 08

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APPENDIXES

85

,

APPENDIX I

RULES OF PRACTICE I

RULE I

BUSINESS HOURS~REGiONAL 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. m. to 1 p. m, Regional

offices are maintained at New York, Boston, Atlanta, Chicago, Fort

Worth, Denver, San Francisco, and Seattle.

RULE IT

APPEARANCE AND PRACTICE BEFORE THE COMMISSION 2

(a) An individual may appear in his own behalf, a member of a

partnership may represent the partnership, a bona-fide officer of a

corporation, trusu or association may represent the corporation, trust,

or'association; and ail offieer or employee of a State commission or of

a department or political subdivision of a State may represent the

State commission or the department or political subdivision of the

State, in any proceeding.

(b) A person may be represented in any proceeding by an attorney

at law duly admitted to practice before the Commission.

(cy"A person shall not be represented at any hearing before the

Commission or a trial examiner except as stated in paragraphs (a)

and '(b) 'of this rule.

(d) 'In all matters other than hearings before the Commission or a

trial examiner, a person may be represented by an agent who is duly

admitted to practice before the Commission.

(e) All persons appearing before or transacting business with the

Commission in a representative capacity may be required to file

powers of attorney with the Commission showing their authority to

act in such capacity.

(j) ,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. .

IAs ~ded JanUary 19, 1937. .

jApPe8iance'and praet1ce before the Commission under the Public Utility Holding Company Act or 1935

Is sabJect alsOto the requirements ofsec. 12 (I) of that Act.

87

"
88 SECURITIES AND EXCHANGE COMMISSION

(g) Subject to the provisions of paragraphs (e) and (j) of this

rule, the following classes of persons whom the Commission finds, on

consideration of their applications, to be of good moral character

and to possess the requisite qualifications to represent others, may be

admitted to practice before the Commission:

(1) Attorneys at law who are admitted to practice before any

court of the United States, or the highest court of any State or

Territory.

(2) Any person, not an attorney, to be designated as agent,

who is a citizen of the United States and who shall, in the opinion

of the Commission, possess the necessary education, training, experience, and technical qualifications which would enable him

properly to represent others before the Commission.

(h) An application for admission to practice shall be addressed

to the Securities and Exchange Commission, Washington, 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 case of an agent, the application shall state briefly

his education, training, experience, and technical qualifications.

(i) In the discretion of the Commission or trial examiner, an attorney at law may be permitted to appear for the purpose of any proceeding, though not theretofore admitted to practice before the Commission in the way prescribed.

0) All persons appearing in any proceeding shall conform to the

standards of conduct generally required of practitioners at law.

(k) The Commission may deny admission to, suspend, or disbar any

person who is found by the Commission not to possess the requisite

qualifications to represent others, or to be lacking in character, integrity, or proper professional conduct. A person who has been admitted to practice may be suspended or disbarred only after he has

been afforded an opportunity to be heard, but contemptuous conduct

at any hearing before the Commission or a trial examiner shall be

ground for exclusion from said hearing and for summary suspension

without a hearing for the duration of the proceeding.

RULE III

NOTICE OF HEARINGS IN CERTAIN PROCEEDINGS

(a) Whenever a hearing is ordered by the Commission in any

proceeding under Section 8 of the Securities Act of 1933, as amended,

notice of such hearing shall be given by the Secretary or other duly

designated officer of the Commission to the person designated in the

registration statement as being authorized to receive service and notice

of orders and notices issued by the Commission relating to such regis-
THlliD ANNUAL REPORT 89

tration statement. Such notice shall 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 statement of a material fact or to omit a statement of 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 or by confirmed telegraphic notice a reasonable time in advance of 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.

(b) Whenever a hearing is ordered by the Commission in any other

proceeding, notice of such hearing shall be given by the Secretary or

other duly designated officer of the Commission to the registrant,

applicant, or other person or persons entitled to receive the same.

Such notice shall state the time and place of hearing and shall include

a short and simple statement of the matters to be considered and

determined. Such notice shall be given by personal service, registered

mail, or confirmed telegraphic notice, a reasonable time in advance of

the hearing.

(c) Notice of any hearing before a trial examiner which may be

called on the question of postponement of the effective date of registration of a broker or dealer under Section 15 (b) of the Securities

Exchange Act of 1934, as amended, pending final determination

whether such registration shall be denied, shall state that no trial

examiner's report will be made on the question of postponement of

registration, and that such question of postponement will be considered and determined by the Commission on the transcript of the

testimony, and that prior to determination of such question of postponement the broker or dealer will be entitled to be heard before the

Commission on the transcript.

RULE IV

HEARINGS-EVIDENCE

(a) Hearings shall be held as ordered by the Commission.

(b) All hearings, except hearings, if ordered, on objections to public

disclosure of information pursuant to the provisions of Clause 30 of

Schedule A of the Securities Act of 1933, as amended, or Section 24

(b) of the Securities Exchange Act of 1934, as amended, or Section 22

(b) of the Public Utility Holding Company Act of 1935, shall be publie, !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. .

21123-37-7
90 SECURITIES AND EXCHANGE COMMISSION

(c) Hearings shall be stenographically reported and a transcript

thereof shall be made which shall be a part of the record of the proceeding. 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.

(d) Objections to evidence before the Commission or trial examiner

shall be in short form, stating the grounds of objections relied upon,

and the transcript shall not include argument or debate thereon

except as ordered by the Commission or the trial examiner. Rulings

by the Commission or trial examiner on such objections shall be a 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.

(j) Subpenas requiring the attendance of witnesses from any place

in the United States at any designated place of hearing may be issued

by any member of the Commission or any officer designated by it

for that purpose in connection with any hearing ordered by the

Commission, upon written application therefor.

(g) Subpenas for the production of documentary evidence will issue

only upon application in writing which must specify, as nearly as

may be, the documents desired and the facts to be proved by them:

Provided, however, That nothing herein shall be deemed to require

the issuance of any subpena compelling the production of immaterial

documentary evidence.

(h) Witnesses summoned before the Commission shall be paid the

same fees and mileage that are paid to witnesses in the courts of the

United States, and witnesses whose depositions are taken and the

persons taking the same shall severally be entitled to the same fees

as are paid for like services in the courts of the United States. Witness

fees and mileage shall be paid by the party at whose instance the

witnesses appear.

RULE V

MOTIONS

(a) Motions before the 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 in any proceeding before a trial examiner shall be reserved

and shall be ruled upon by the Commission.
THIRD ANNUAL REPORT

RULE VI

EXTENSIONS OF TIME-CONTINUANCES AND ADJOURNMENTS

91

Except as otherwise expressly provided by law, the Commission for

cause shown may extend any time limits prescribed by these rules 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 the time when, the

place where, and the designated officer before whom the witness is to

testify. Such order shall be served upon all parties by the Secretary,

or other duly designated officer of the Commission, a reasonable time

in advance of 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 them. 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) Depositions not received in evidence at a hearing before the

Commission or a trial examiner shall not constitute a part of the record

in any proceeding, unless the parties shall so agree, or the Commission

shall so order.
92 SECURITIES AND EXCHANGE COMMISSION

(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 or other duly designated officer of the Commission. Within 5 days any other party may file with the Secretary,

his objections, if any, to such interrogatories, and may file such crossinterrogatories 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 crossinterrogatories 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 crossinterrogatories, 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

an'd cross-interrogatories to the witness in their order and reduce the

testimony to writing in the witness' own words.

RULE VIn

TRIAL EXAMINER'S REPORT

(a) Following any hearing before a trial examiner on the question

of postponement of the effective date of registration of a broker or

dealer under Section 15 (b) of the Securities Exchange Act of 1934,

as amended, pending final determination whether such registration

shall be denied, the transcript of the testimony shall forthwith be

filed with the Secretary of the Commission.

(b) Following any hearing before a trial examiner relating to any

matter other than the question of postponement of the effective date

of registration of a broker or dealer under Section 15 (b) of the

Securities Exchange Act of 1934, as amended, pending final determination whether such registration shall be denied, the trial examiner 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.

(c) Such report shall be advisory only, and the findings of fact

therein' contained shall not be binding upon the Commission. The

initial page of the report shall contain a statement to such effect. In

any proceeding in which, under the provisions of Rule XII (b) of

the Rules of Practice of the Commission, the report is first to be made

available to the public on the opening 'date of public hearing on the
THIRD ANNUAL REPORT

merits before the Commission, the initial page of the report shall also

contain a statement to the effect that the report is confidential, shall

not be made public, and is for the use only of the Commission, the

respondent or respondents, and counsel; but copies of the report issued

on or after such opening date may omit such statement.

(d) A copy of such report shall be forthwith served on each party

by the Secretary or other duly designated officer of the Commission.

(e) 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.

(f) The provisions of this rule and of Rules IX, X, and XI shall

not be applicable to hearings pursuant to Clause 30 of Schedule A

of the Securities Act of 1933, as amended, or hearings pursuant to

Section 24 (b) of the Securities Exchange Act of 1934, as amended,

or hearings pursuant to Section 22 (b) of the Public Utility Holding

Company Act of 1935.

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 on

each party by the Secretary or other duly designated officer of the

Commission. Exceptions shall be argued only at the final hearing

on the merits before the Commission.

RULE X

BRIEFS

(a) Any party to a proceeding may file a brief in support of his

contentions within 15 days from the date of service on such party

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

of the testimony 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 opposing parties. Any scandalous or impertinent matter contained in any

brief may be stricken on order of the Commission.

(c) ,An briefs containing more than 10 pages shall include an

index and table of cases. The date of each brief must appear on its

front cover or title page. If briefs are typewritten or mimeographed,
SECURITIES-'AND EXCHANGE OOMMISSION

lO 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 or other duly

designated officer 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

HEARINGS ON REVIEW BEFORE THE COMMISSION

(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 oral 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 report, exceptions thereto, and the respective

briefs submitted.

(c) 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. Exceptions

not briefed may be treated as waived.

(d) If any party shall apply to the Commission for leave to adduce

additional evidence, and shall show to the satisfaction of the Commission that such additional evidence is material and that there were

reasonable 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-DOCKET--COMPUTATION OF TIME

(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 that all papers containing data as to,which confidential treatment is sought pursuant to Rules 580, UB2, or 22B-I of the

Rules and Regulations of the Commission, together with applications

making objection to the disclosure thereof, shall be filed with the

Chairman. .Any such papers may be sent by mail or express to the

officer with whom they are directed to be filed, but must be received

by such officer at the office of the Commission in Washington, D. C.,
THIRD ANNUAL REPORT 95

within the time limit, if any, for such' filing, except that in any case

where the hearing has been held in a district within which a regional

office has been established, papers filed under Rules VIII (e), IX, X,

and XI (a) may be filed with the Regional Administrator for the

District, within the times prescribed. The Regional Administrator

shall immediately transmit such papers to the Secretary or Chairman

of the Commission, as the case may be, in accordance with the provisions of this rule.

(b) All papers containing data as to which confidential treatment

is sought pursuant to Rules 580, UB2, or 22B-l of the Rules and

Regulations of the Commission, together with applications making

objection to the disclosure thereof, shall be made available to the

public only in accordance with the applicable provisions of Rules

580 (h), UB2 (i), or 22B-l (b). All reports, exceptions, briefs, and

other papers filed in connection with any hearing pursuant to Section

15 (b) or Section 19 (a) (3) of the Securities Exchange Act of 1934,

as amended, shall first be made available to the public on the opening

date of public hearing on the merits before the Commission.

(c) The Secretary shall maintain a docket of all proceedings, and

each proceeding shall be assigned a number.

(d) When the time prescribed by these rules or by the Commission

for 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.

(e) Unless otherwise specifically provided in these rules, an original and eight 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 or other duly designated officer of the Commission

as follows: .

(1) Service, except on counsel for the Oommission, shall be

made by personal service on the party or his attorney of record

or by registered mail addressed to the party or his attorney of

record.

(2) Service on counsel for the Oommission shall be made by

delivery to the head of the division to which such counsel is

assigned.
96 SECURITIES AND EXCHANGE COMMISSION

RULE XIV

FORMAL REQUIREMENTS AS TO PAPERS FILED IN PROCEEDINGS

(a) All papers filed under these rules shall be typewritten, mimeographed, or printed, shall be plainly legible, shall be on one grade

of good unglazed white paper approximately 8 inches wide and 10*

inches long, with .Ieft-hand margin 1% 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 doubleleaded 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.

(c) 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.

RULE XV

SIGNATURE OF COMMISSION ORDERS

All orders of the Commission shall be signed by the Secretary or

such other person as may be authorized by the Commission.

RULE XVI

NONAPPLICABILITY OF RULES TO INVESTIGATIONS

These rules shall not be applicable to investigations conducted

by the Commission pursuant to Sections 8 (e), 19 (b), and 20 (a)

of the Securities Act of 1933, as amended; Sections 21 (a) and 21 (b)

of the Securities Exchange Act of 1934, as' amended; or Sections

11 (a), 13 (g), 18 (a), 18 (b), 18 (c), and 30 of the Public Utility

Holding Company .Act of 1935..
APPENDIX II

GUIDE TO FORMS 1

GUIDE TO FORMS ADOPTED UNDER THE SECURITmS ACT OF 1933

FOR REGISTRATION STATEMENTS

FORM A-I-GENERAL FORM

(a) GeneralRule.-This form is to be used for registration under

the Securities Act of 1933, as amended, of all securities for the registration of which no other form is specifically prescribed.

(b) Special Rule.-Notwithstanding the rules for the use of Form

A-2 for corporations, Form A-I may be used by any incorporated

investment trust for registration under the Securities Act of 1933, as

amended, of an additional block of securities of a class, part of which

has previously been registered on Form A-I.

FORM A-o-I FOR SECURITIES OF CORPORATIONS ORGANIZED WITHIN

2 YEARS TO ENGAGE IN THE EXPLOITATION OF MINERAL DEPOSITS

(OTHER THAN OIL OR GAS)

This form is to be used for registration under the Securities Act of

1933, as amended, of securities of any corporation organized within

2 years prior to the date of filing the registration statement to engage

primarily in the exploitation of mineral deposits (other than oil or

gas) if such securities are to be sold to the public for cash or purchasers' obligations to pay cash.

This form shall not be used, however, by any corporation which

(a) has any subsidiary, or (b) was organized to take over and continue

the business of another person or persons, unless such other persons'

were organized within such 2 years.

FORM A-2-FOR CORPORATIONS

This form is to be used for registration statements, except such

statements as to which a special form is specifically prescribed, under

the Securities Act of 1933, as amended, by any corporation which

files profit and loss statements for 3 years and which meets either

IThls guide is designed to aid In the selection of appropriate forms and Is revised from time to time as

clrcnmstances require. Copies of the forms herein referred to will be furnished without charge upon

request .. ,

97
98 SECURITIES AND EXCHANGE COMMISSION

one of the following conditions: (a) Such corporation has made

annually available to its security holders, for at least 10years, 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 corporation had a

net income for any 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, electricity, or gas, and prohibited from paying

any dividends to its stockholders except upon its dissolution or

liquidation, provided that:

1. 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 securities 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 the proceeds of the

securities registered; and

4. Within the period of 10 years preceding the date of the filing

of the registration statement, the corporation shall not have failed to

levy and collect assessments in amounts sufficient to meet all current

charges.

SPECIAL RULES AS TO THE USE OF FORM A-2 FOR CORPORATIONS

1. Notwithstanding that Form E-l is specifically prescribed for

use in cases involving an exchange of securities by the issuer thereof

for others of its securities or a modification of the terms of securities

by agreement between the issuer and its security holders, a registrant

otherwise entitled to use Form A-2 may, at its option, use Form A-2

~ any such case if the registrant is not in reorganization pursuant
THmD ANNUAL REPORT 99

to Section 77B 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 Instruetion 7 in Form E-l, and the table setting forth the calculation shall

be prepared as prescribed in such form.

2. Form A-2 may be used by a registrant if all the following conditions exist:

(a) The registrant was organized as the successor to a single predecessor, or to a group of predecessors one of which, at the time of

succession, directly or indirectly owned substantially all of the outstanding stock of all the other predecessors;

(b r The registrant acquired all of the assets and assumed all of

the liabilities of such predecessor or predecessors, and the capital

structure of the registrant immediately following the succession was

substantially the same as the capital structure of the single predecessor, or as the consolidated capital structure of the group of predecessors, except for such changes as may have resulted from the

substitution of issuers incident to the succession or from changes in

capital stock liability per share; and

(c) The single predecessor, or the parent company in a group of

predecessors, could have used Form A-2 if the succession had not

taken place.

In determining whether such single predecessor or such parent

company in a group of predecessors could have used Form A-2, the

record of the registrant in regard to income or annual reporting to

security holders shall be considered a continuation of the record of

such single predecessor or such parent company. In the case of a

group of predecessor companies, the income of the parent company

of the group shall be determined on the basis of consolidated reports

for such parent company and its subsidiaries, the subsidiaries to be

included in the consolidated reports whether or not they were combined with the parent company to form the registrant.

3. Notwithstanding 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

acquired from promoters under the circumstances stated in such last

sentence consisted principally of one or more going businesses, or of

securities representing directly or indirectly more than 50 percent of

the voting power controlling such businesses.

4. Notwithstanding the rules as to the use of Form E-l, 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 those

for which a special form (other than Form E-l) is specifically prescribed, by corporations which file profit and lOBSstatements of their

own or of their predecessors for 3 years and which, or the predecessors

-
100 SECURITIES AND ,EXCHANGE COMMISSION

of which, have in the past 15 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 "reorganization", as defined in Rule 5 (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 the registrant,

or the exchange of securities of the registrant for outstanding securities

of a subsidiary."

5. Any corporation which was formed by the consolidation of two

or more corporations may use Form A-2, if each of the constituent

corporations which collectively brought in a majority of the assets,

as shown by the books of the constituent corporations prior to the

consolidation, could have used Form A-2 if the consolidation had

not taken place. In determining whether any such constituent corporation could have used Form A-2, the record of the registrant in

regard to income or annual reporting to security holders shall be

considered a continuation of such constituent corporation's record.

In this rule, all the corporations consolidated to form the registrant

are called the "constituent corporations."

6. Form A-2 may be used by a registrant if all the following conditions exist:

(a) The registrant was a wholly owned subsidiary of a corporation

which, either alone or with one or more of its other wholly owned

subsidiaries, was merged into the registrant;

(b) The registrant acquired all the assets and assumed all the liabilities of the corporations merged into it; and

(c) The parent corporation could have used Form A-2 had the

merger not taken place. In determining whether such parent corporation could have used Form A-2, the record of the registrant

subsequent to the merger, in regard to income or annual reporting

to security holders, shall be considered a continuation of the record

of such parent corporation.

FORM A-R FOR CORPORATE BONDS SECURED BY MORTGAGE INSURED BY

FEDERAL HOUSING ADMINISTRATION

This form is to be used for registration under the Securities Act

of 1933, as amended, of corporate bonds constituting part of an

issue secured by mortgage insured by Federal Housing Administration under the authority of Section 207 of the National Housing Act.

FORM e-l FOR SECURITIES OF UNINCORPORATED INVESTMENT TRUSTS

This form is to 'be used for registration under the Securities Act

of 1933, as amended, of securities of unincorporated investment

trusts of the fixed or restricted management type, having a depositor _' I' J:

, Rule 5 (1) deflmng the term "reorganization" isset forth below under the caption "Form E-l for Securl.

ties in Reorganisation ..

____ ' _
. THIRJ) ANmJAL REPORT- 101

or sponsor but not having a board of directors or persons performing

similar functions.

FORM C-2 FOR CERTAIN TYPES OF CERTIFICATES OF INTEREST IN

SECURITIES

This form is to be used for registration under the Securities .Act of

1933, as amended, of certificates of interest in securities of a single

class of a single issuer, if the following conditions exist:

(a) The major part of the certificates are to be sold to the public

forcasb;

(b) Under the terms of the deposit agreement the depositor (as

defined below) has no rights or duties as depositor, subsequent to the

deposit of the securities with the depositary;

(c) Under the terms of the deposit agreement the power to vote orgive a consent with respect to the deposited securities may be exercised only by, or pursuant to the instructions of, the holders of the

certificates of interest, except a power, if any, to vote to effect a

split-up of deposited stock in such manner as to cause no change in

the aggregate capital stock liability of the issuer of the deposited

securities; and

(d) The securities deposited by the depositor are registered under

the Securities .Actof 1933in connection with the sale of the certificates

of interest.

FORM e-3 FOR AMERICAN CERTIFICATES AGAINST FOREIGN ISSUES AND

FOR THE UNDERLYING SECURITIES

This form shall be used for registration under the Securities .Act

of 1933, as amended, 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 or to be deposited with an American

depositary (whether physically held by such depositary in .America or

abroad) and of the foreign securities so deposited.

FORM D-l FOR CERTIFICATES OF DEPOSIT

In registering certificates of deposit issued in anticipation of or

in connection with a plan of reorganization or readjustment, Form

D-1 shall be used. If a plan of reorganization or readjustment is

proposed at the time the call for deposits is to be made, Parts I and II

of Form D-1 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 I may

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 become

effective on such date as the Commission may determine, having due

regard to the public interest and the protection of investors.
102 SECURITIES AND EXCHANGE COMMISSION

In the event that a registrant is exempted from the necessity for

filing Part I, he may nevertheless file Part II.

Before the issuance of the securities provided in the plan of readjustment or reorganization, Form E-I is to be filed by the issuer of

such securities, unless exempted from the necessity of such filing by

the Act. .

FORM D-IA FOR CERTIFICATES OF DEPOSIT ISSUED BY ISSUER OF SECURITIES CALLED FOR 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 connection with a plan

of reorganization or readjustment which involves the issue of new

securities to the holders of certificates of deposit.

FORM E-l FOR SECURITIES IN REORGANIZATION

This form is to be used to register securities (including contracts

of guaranty but excepting voting trust certificates, certificates of

deposit, and certificates of interest or shares in unincorporated in,

vestment trusts of the fixed or restricted management type not having

a board of directors or a board of persons performing similar functions, but having a depositor or sponsor) sold or modified in the

course of reorganization."

The "Rules and Instructions Accompanying Form E-I" contain

the following definition of the term "reorganization":

"5. As used in these rules and the accompanying instructions:

(1) The term "reorganization" includes any transaction involving:

(a) A readjustment by modification of the terms of securities by agreement;

or

(b) A readjustment by the exchange of securities by the issuer thereof for

others of its securities; or

(c) The exchange of securities by the issuer thereof for securities of another

issuer; or

(d) The acquisition of assets of a person, directly or indirectly, partly or wholly,

in consideration of securities distributed or to be distributed as part of the same

transaction directly or indirectly to holders of securities issued by such person

or secured by assets of such person; or

(6) A merger or consolidation."

In the case of any guarantee of, or assumption of liability on,

securities heretofore registered on Form D-2, registration of such

guarantee or assumption of liability may, at the option of the issuer,

be effected on Form D-2 or Form E-l.

IAttention Is called to the rules as to the nse ot Form A-2 which permIt the use of that'form in certain

Instances for securities in reorganfsetfon,
THIRD ANNUAL REPORT 103

FORM F-l FOR VOTING TRUST CERTIFICATES

This form is to be used to register voting trust certificates issued

in the course of a reorganization or otherwise.

FORM G-l FOR FRACTIONAL UNDIVIDED OIL AND GAS ROYALTY

INTERESTS

Form G-1 is to be used to register fractional undivided producing

oil and gas royalty interests.

As used in the foregoing paragraph, 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

production of oil or gas had not permanently ceased, to the knowledge of the issuer, on the date on which the statement became effective.

FORM G-2 FOR FRACTIONAL UNDIVIDED NONPRODUCING OIL AND GAS

ROYALTY INTERESTS

Form G-2 is to be used to register fractional undivided nonproducing oil and gas royalty interests.

As used in the foregoing paragraph, the term "nonproducing

royalty interests" means any royalty interest not included in the

definition of "producing royalty interest" above.'

INFORMATION AND DOCUMENTS REQUIRED FOR EXEMPTION OF

CERTAIN SECURITIES UNDER SECTION 3 (b) OF THE 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 available

without charge upon request.

FORM I-G FOR REPORT OF SALE OF OIL OR GAS RIGHT

This form is to be used for reports of sales of oil or gas rights,

required by Rule 320.

FORM 2-G FOR REPORT OF SALE OF OIL OR GAS RIGHT

This form is to be used for reports of sales of oil or gas rights,

required by Rule 322.

Form A-I should be used for overriding royalties and working Interests, as distinct from landowner's

royalties for which Forms G-I and 0-2 are appropriate. In the case of overriding royalties or workmg Interests, however, the Informatlonspecl1led by Form G-I or 0-2 should be added to the statement on Form A-I

by way of supplemental material.

•
104 SEOURITIES AND EXOHANGE OOMMISSION

FOR ANNUAL REPORTS OF REGISTRANTS UNDER THE SECURITIES ACT

OF 19335

FORM I-MD GENERAL FORM

This form is to be used for the annual reports, pursuant to Section

15 (d) of the Securities Exchange Act of 1934, as amended, of all

issuers except those for which another form is specifically prescribed.

FORM 2-MD FOR SECURITIES OF FIXED INVESTMENT TRUSTS

This form is to be used for annual reports, pursuant to Section

15 (d) of the Securities Exchange Act of 1934, as amended, relating

to securities of unincorporated investment trusts of the fixed or

restricted management type, having a depositor or sponsor but not

having a board of directors or persons performing similar functions.

FORM 3-MD FOR VOTING TRUST CERTIFICATES

This form is to be used for annual reports, pursuant to Section

15 (d) of the Securities Exchange Act of 1934, as amended, relating

to voting trust certificates.

FORM 4-MD FOR CERTIFICATES OF DEPOSIT

This form is to be used for annual reports, pursuant to Section

15 (d) of the Securities Exchange Act of 1934, as amended, relating

to certificates of deposit issued by a Committee.

6 The tiling of annual reports on these formsis required by Rule MDI, pursuant to Section III(d) ofthe

SecurIties E:lchsnge Act oll934, as amended.
THIRD ANNUAL REPORT 105

GUIDE TO FORMS ADOPTED UNDER THE SECURITIES EXCHANGE

ACT OF 1934

FOR APPLICATIONS FOR REGISTRATION OF SECURITIES ON NATIONAL

SECURITIES EXCHANGES

Form 7. For provisional applications.-Where the form for permanent registration of any 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 7 pursuant to Rule JB2. (Rule JB2 sets forth the requirements of an

application filed on Form 7.)

Form 8. For amendments to applicationsfor registration or amendments to annual reports.-This form shall be used for amendments

to applications for registration of securities pursuant to Section 12

(b) and (c) of the Securities Exchange Act of 1934 or amendments

to annual reports pursuant to Section 13 of that Act.

Form 8-A. For additional securities.-This form shall be used

for applications for registration of securities on an exchange on which

other securities of the registrant, whether of the same or a different

class, are registered pursuant to Section 12 (b) and (c) of the Act, if

Form 10, 11, 13, 15, 17, 22, or 23 would be the form appropriate for

registration in case the registrant did not have securities so previously

registered: Prooided, That if Form 22 or 23 would be appropriate for

original registration, this form shall be used only if securities of the

registrant issued pursuant to the plan of reorganization or succession

by reason of which Form 22 or 23 would be appropriate for original

registration have been registered on such exchange pursuant to an

application on such form.

Form 8-B. For securities issued in certain cases upon the registrant's succession to an issuer or issuers oj previously registered

securities.-This form shall be used by an issuer, not having securities previously registered, for applications filed on and after March

12, 1936, for the registration of securities, if the conditions set forth

in the following paragraphs (a), (b), (c), and (d) exist:

(a) (1) The registrant, having no assets at the time other

than nominal assets, succeeded to a single predecessor which had

securities registered pursuant to Section 12 (b) and (c) of the

Act on the exchange or exchanges on which registration is applied for on this form; or

(2) The registrant was organized as the successor to, or,

having no assets at the time other than nominal assets, succeeded

to, a group of predecessors consisting of a parent which had securities so registered and one or more wholly owned subsidiaries of

such parent j or

21123-37-8
106 SECURITIES A~"'DEXCHANGE COMMISSION

(3) The registrant was a wholly owned subsidiary of a corporation having securities so registered, which corporation, either

alone or with one or more of its other wholly owned subsidiaries,

was merged into the registrant.

(b) Substantially all of the securities to be registered on this

form were or are to be issued in exchange for or otherwise in

respect of previously registered securities of one or more of the

predecessors, or are securities which, having been .previously

registered, have become or are to become securities of the

registrant by operation of law or otherwise upon the succession.

(c) The registrant acquired all the assets and assumed all the

liabilities of its predecessor or predecessors.

(d) Except for such changes as may have resulted (1) from

the substitution of issuers incident to the succession, or (2) from

changes in capital stock liability per share, or (3) from the issuance of securities in satisfaction of dividends or interest in

arrears on securities of predecessors, the capital structure of the

registrant immediately following the succession was substantially

the same as the capital structure of the single predecessor or the

combined capital structure of the predecessors, or in a case falling within paragraph (a) (3) above, the combined capital structure of all the constituent corporations.

The term "wholly owned subsidiary" as used in this rule refers to

a subsidiary substantially all the outstanding stock of which is held,

directly or indirectly, by a single parent.

Form 8-0. For registration on an additional exchange.-This form

may be used for applications for registration of securities on an

exchange upon which no securities of the registrant are listed and

registered, if-

(a) Securities of the registrant are registered pursuant to

Section 12 (b), (c) and (d) on another exchange, and

(b) An application on a form other than Form 7, 8-A, 8-B, or

8-C filed by the registrant (or by the predecessor of the registrant

if the registrant had securities registered pursuant to an application on Form 8-B) became effective on such other exchange not

more than three years before the filing of this application.

Form 10. For 'corporations.-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
THIRD ANNUAL REPORT 107

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: Provided, however,

That this form shall not be used for applications for the permanent

registration of securities of any corporation for which, at the time

the application is filed, Form 22 or 23 is prescribed. And provided

further, That this form shall not be used for applications for the

permanent registration of securities of any corporation, if, at the

time the application is filed, such corporation is in bankruptcy or

receivership or in the process of reorganization pursuant to Section

77 or 77B of the Bankruptcy Act, and (a) a trustee or receiver

appointed in such proceedings has title to or possession of a substantial portion of the assets of such corporation, or (b) such corporation is in possession of a substantial portion of its assets pursuant

to an order entered under Subdivision (c), Clause (2) of said Section 77

or Subdivision (c), Clause (1) of said Section 77B. 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 10until 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, 1935, 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: Provided, however, That this form shall not

be used for applications for the permanent registration of securities

of any issuer for whieh.: at the time the application is filed, Form

22 or 23 is prescribed. And provided further, That this form shall

not be used for applications for the permanent registration of securities of any issuer, if, at the time the application is filed, such issuer

is in bankruptcy or receivership or in the process of reorganization

pursuant to Section 77 or 77B of the Bankruptcy Act, and (a) a
108 SECURITIES AND EXCHANGE COMMISSION

trustee or receiver appointed in such proceedings has title to or possession of a substantial portion of the assets of such issuer, or (b)

such corporation is in possession of a substantial portion of its assets

pursuant to an order entered under Subdivision (c), Clause (2) of

said Section 77 or Subdivision (c), Clause (1) of said Section 77B.

Form 12. For companies making annual reports under Section 20

of the Interstate (Iommeree Act, as amended, or under Section 219 of

the Oommunications Act of 1934.-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.

Form 12-A. For companies in receivership or bankruptcy and

making annual reports under Section 20 of the Interstate Oommerce

Act, as amended, or under Section 219 of the Oommunications Act

of 1934.-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 Section 77 or 77B of the Bankruptcy Act).

Form 13. For insurance companies other than life and tiae insurance companies.-This form shall be used for applications filed on

or after May 7, 1935, for permanent registration of securities of corporations engaged, directly or through subsidiaries, primarily in

the insurance business, except corporations engaged primarily in

the life or 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.

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 corporations may file a.

copy of its last annual statement filed with its State regulatory

authority,
THIRD A~'1\"'UALREPORT 109

Form 14. For eertificaie« oj deposit issued by a Oommittee.-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 companies.-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 ofreorganization pursuant to Section 77B of the' Bankruptcy

Act or securities of such corporations in bankruptcy or receivership.

Form 16. For voting trust certificatee and underlying seeurtiiesr-«

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 primarily in the

business of investing or trading in securities.-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 7713of the Bankruptcy Act or

securities of such issuers in bankruptcy or receivership.

Form 18. For joreign governments and political subdivisions

thereoj.-This form shall be used for applications filed on or after

July 1, 1935, for the permanent registration of securities of any

foreign government or political subdivisions thereof: 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.

Form 19. For American certifieaiee' against joreign issues and [or

the underlying securities.-This form shall be used for applieations

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 20. 'For securities other than bonds oj joreign private iseuers.-This form shall be used for applications filed on or after July
110 SECURITIES AND EXCHANGE (,'OMMISSION

15,1935, for the permanent registration of securities other than bonds

or other evidences of indebtedness (a) issued by a national of a foreign

country other than a North American country or Cuba, of (b) issued

by any corporation or unincorporated association, foreign or domestic,

which is directly or indirectly owned or controlled by any foreign

government.

Form 21. For bonds oj jore~gn 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 (a) issued by

a national of a foreign country other than a North American country

or Cuba; (b) issued by a national of a North American country or

Cuba which are guaranteed by any foreign government; (c) issued by

any corporation or unincorporated association, foreign or domestic,

which is directly or indirectly owned or controlled by any foreign

government; or (d) 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 22. For issuers reorganized in insolvency proceedings or which

have succeeded to a person in insolvency proceedings.-This form shall

be used for applications for registration of securities of any issuer

which, pursuant to a plan-

(a) Has been or is being reorganized in insolvency proceedings;

or

(b) Has acquired or is to acquire, directly or indirectly, substantially all of its business and assets (other than cash) from a

person in insolvency proceedings or from such person and one or

more of its subsidiaries, and is continuing or 18 to continue the

business so acquired; or

(c) Being a subsidiary of a person in insolvency proceedings,

has acquired or is to acquire directly or indirectly substantially

all of its assets (other than cash and other than assets owned by

it prior to such acquisition) from such person or from such person

and one or more of its subsidiaries; , .

if the securities are, or are to be, outstanding or issued pursuant to

the plan, or were or are to be issued after the consummation of the

plan; provided that this form shall not be used by issuers for which

Form 8-A, 12, or 12-A is prescribed, or for applications filed with the

exchange after the expiration of a full fiscal year of the issuer commencing on or after the date on which the transfer or opening of

accounts was made.

Form 23. For successor issuers.-This form shall be used for applications for registration of securities of any issuer which has acquired,

or is presently to acquire, directly or indirectly (through the acquisi-
THIRD ANNUAL REPORT 111

tion of securities or otherwise) the major portion of its business and

assets (other than cash) by acquiring all or a part of the business and

assets of one or more other persons, and is continuing or is to continue, the business so acquired: Provided, however, That this form

shall not be used by issuers for which either Form 8-A, 8-B, 12,

12-A, 20, 21, or 22 is prescribed, or for applications filed with the

exchange after the expiration of a full fiscal year of the issuer commencing on or after the date of succession.

Form 24. For bank holding companies.-This form shall be used for

applications for the registration of securities of any person which is

engaged, either directly or through subsidiaries, primarily in the

business of owning securities of banks, for the purpose or with the

effect of exercising control.

Form l-J. For registration of unissued warrants or certificates for

"when issued" dealing.-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 and Rules JD4 and JD5

of the rules and regulations of the Commission thereunder, for "when

issued" dealing on a national securities exchange.

Form 2-J. For registration of unissued securities, other than unissued

warrants or certificates, for "when issued" dealing.-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 and Rules JD7 and JD8 of the

rules and regulations of the Commission thereunder, for "when issued"

dealing on a national securities exchange.

Form 3-J. For reporting deficiencies and changes in information contained in applications on Form l-J or Form 2-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 I-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.

Form 4-J. For statements in respect of exemption of issued warrants

or certificates.-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 and Rule AN15 of the

rules and regulations of the Commission thereunder.

Form 5-J. For reporting deficiencies and changes in information contained in statements on Form 4-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
112 SECURITIES AND EXCHANGE COMMISSION

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.

FOR REPORTS TO BE FILED BY OFFICERS, DIRECTORS, AND SECURITY

HOLDERS

Form 4-. For reporting changes in ownership oj 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 heen 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 listed 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 ownership oj equity securities.-In the case

of an equity security (other than an exempted security) which is

listed subsequent to February 15, 1935, 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 10th day of

the following calendar month. If such person files a statement on

Form 4 for the same calendar month in respect of the same securities,

he need not file an additional statement pursuant to this paragraph.

Form 6. For reports by persons who have Just become officers or

directors or security holders oj more than 10 percent oj any class oj

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 "ofthe

issuer of such security, shall file with each exchange on which any
THIRD ANNUAL REPORT 113

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 10th

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 10th 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 on Form 4 with respect to the

same securities.

FOR REGISTRATION OF BROKERS AND DEALERS TRANSACTING BUSINESS

ON OVER-THE-COUNTER MARKETS

Form 3-M. For applications for registration of brokers and dealers

except applications for which Form 4-M is authorized.-This form is to

be used for applications filed on or after July 1, 1936, for the registration of brokers and dealers pursuant to Section 15 (b) of the

Securities Exchange Act of 1934, as amended, except applications for

which Form 4-'-Mis authorized to lie used.

Form 4-M. For applications jor registration oj partnerships formed

upon death, withdrawal, or admission of one or more partners in partnerships registered as brokers or dealers.-This form is to be used (a)

for applications filed by a registered partnership on or after July 1,

1936, pursuant to Section 15 (b) of the Securities Exchange Act of

1934, as amended, for the registration of a partnership to be formed

as the successor to the applicant by the withdrawal or admission of

one or more partners in the applicant; and (b) for applications filed

on or after October 10, 1936, pursuant to said Section 15 (b) and Rule

MB4, for the registration of a partnership formed as the successor to

a registered partnership which has been dissolved by the death,

withdrawal, or admission of one or more partners: Provided, That the

application is filed within 30 days after such dissolution.

Form 5-M. For adoption oj applications filed by predeces80rs.- This

form is to be used by a broker or dealer in adopting as its own an

application for registration on Form 3-M or Form 4-M filed on its

behalf by a predecessor.

Form 6-M. For supplemental statements to applications [or regis-

. tration oj brokers and dealers.-This form is to be used for correcting

inaccuracies and reporting changes in the information contained or

incorporated inany application filed on Form I-M, Form 3-M, or Form

4-M, or in any adoption filed on Form 5-M or in any supplemental

statement filed on Form 2-M or Form 6-M.
SECURITIES A1\"TIEXCHANGE OOMMISSION

FOR ANNUAL AND OTHER REPORTS OF ISSUERS HAVING SECURITIES

REGISTERED ON NATIONAL SECURITIES EXCHANGES

Form 8-K. For current reports.-This form is to be used for the

current reports required by Rule KA7.1

Form 10-K. For corporations.-This form is to be used for the

annual reports of all corporations except those for which another

form is specifically prescribed.

Form 11-K. For unincorporated issuers.-This form is to be used

for the annual reports of all unincorporated issuers except those for

which another form is specifically prescribed.

Form 12-K. For companies making annual reports under Section 20

oj the Interstate Oommerce Act, as amended, or under Section 219 oj the

Oommunications Act oj 1934-.-This form is to be used for the annual

IRuk KAT. Current report,. (a) A current report on the appropriate form shall be 1I1edby the Issuer

of a security registered on a national securities exchange (hereinafter called "tbe registrant") in case any of

the events enumerated below occurred or shall occur at any time after the close ofthe first 1lsca1year or other

one-year period for which an annual report is required to be 1I1edby the registrant, or If the registrant had

no security registered on a national securities exchange on December 31. 1935,at any time after the registration of any of its securities first became or shall become effective:

(1) A material amendment of any exhibit previously 1Iled by the registrant pursuant to Section 12

or 13 of the Act;

(2) The execution of any voting trust agreement, contra:ct, or indenture of a charaoter requited to

be 1I1edas an exhibit in the form of annnal report appropriate for the registrant;

(3) A substantial reststement of the capital shares account of the registrant;

(4) The issuance of any new class of securities, or an aggregate increase or decrease of more than five

percent in the amount of any class ofsecurities ofthe registrant outstanding, as last previously reported,

unless resulting from an ordinary sinkinl! fund operation; provided that (i) no report need be made

with respect to notes. drafts, bills of excbange, or banker's acceptances having a maturity at the time of

issuance of not exceeding one year, and (ll) for the purposes of this paragraph (4), securities held by the

registrant shall not be deemed "outstanding";

(5) The granting or extension of any option to purchase equity securities of the registrant from the

registrant, provided that a current report need be made only when one or more options call1ng for an

aggregate principal amount of $50,000or more of a single issue of convertible evidences of indebtedness,

or an aggregate of 1,000or more shares or other units of any other single class of eqnity securities, have

been granted or extended and have not been previously reported;

(6) The exercise, in whole or in part, of any option to purchase equity securities ofthe registrant from

the registrant, provided tbat a current report need be made only when a person orpersonsbaveacqulred

an aggregate principal amount of $50,000or more of a single Issue of convertible evidences of indebtedness, or an aggregate of 1,000or more shares or other units of any other single class of eqUIty securities.

through one or more exercises which have not been previously reported;

(7) A person becoming, or ceasing to be, a parent or subsidiary of the registrant. provided that no

report need be made as to any subsidiary the name of which wonld not be required to be furnished in

the form of annual report appropriate for the registrant;

(8) A substantial revaluation of the assets of the registrant;

(9) A substantial withdrawal or substitution with respect to property securing any issue ofregistared

securitle.q;

provided, however, that no report need be 1I1edas to any event concerning which information substantially

similar to that required by Form 8-K shall bave been previously reported by the registrant.

(b) The current report shall be 1I1ednot more than 10 days after the close of the calendar month during

wbich occurred the event obligating the registrant to 1I1ethe current report. or If the event occurred pnor

to December 1. 1936.not later than January 10, 1937.

(c) As used in this rule, the term "prerioualv repar!cd" means previously reported in an application for

~tration or a report filed pursuant to Section 12or 13ofthe Act; the term "option" does not include options

evidenced by an issue ofsecurities, such as an Issue of warrants or rights; the term "umt" means that unit

or a class of securities representing the amaI1est interest in the registrant or in property of the registrant,

or having the smallest par or face value or denomination which is separately transferable by a bolder thereof.

Unless the context otherwise requires, all other terms used in this rule have the same mesnings as in the

Act, in the form appropriate for an annual report ofthe registrant, and in the instruction book accompanying

such form.

(d) The foregoinl! provisions of this rule shall not be applicable to issuers ofsecurities which are registered

pursuant to an application on Form 18, 19. 20, or 21.

•
.i a~' THffiD ANNUAL REPORT 115

reports of companies making annual reports Under Section 20 of the

Interstate Commerce Act, as amended, and of carriers making annual

reports under Section 219 of the Communications Act of 1934, except

such companies in receivership or in bankruptcy, including proceedings

for reorganization pursuant to Section 77 or 77B of the Bankruptcy

Act, at the close of the fiscal year for which the report is made.

Form 12A-K. For companies in receivershipor bankruptcy at close

oj fiscal year and making annual reports under Section 20 oj the

Interstate OommerceAct, as amended, or under Section 219 oj the

OommunicationsAct oj 1934.-This form is to be used for the annual

reports of companies making annual reports under Section 20 of the

Interstate Commerce Act, as amended, and of carriers making annual

reports under Section 219 of the Communications Act of 1934, if such

companies were in receivership or in bankruptcy, including proceedings for reorganization pursuant to Section 77 or 77B of the Bankruptcy Act, at the close of the fiscal year for which the report is made.

Form 13-K. For insurance companies other than life and title

insurance companies.-This form is to be used for the annual reports

of corporations engaged, directly or through subsidiaries, primarily

in the insurance business, except corporations engaged primarily in

the life or title insurance business, This form is not to be used by

corporations engaged primarily in the business of guaranteeing

mortgages or mortgage-participation certificates.

Form 14-K. For certificatesoj deposit issued by a Oommittee.-This

form is to be used for the annual report of issuers of certificates of

deposit issued by a Committee.

Form 15-K. For incorporated investment companies.-This form

is to be used for the annual reports of corporations 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.

Form 16-K. For voting trust certificatesand underlying securities.-

This form is to be used for annual reports relating to securities evidencing a participation in a voting trust agreement or a similar agreement

for the holding of securities for voting purposes and to securities

held subject to such agreements.

Form 17-K. For unincorporated issuers engaged primarily in the

business of investing or trading in securities.-This form is to be

used for the annual reports of unincorporated issuers 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.

Form 18-K. For Joreign governments and political subdivisions

thereoJ.-This forin is to be used for the annual reports of foreign
116 SECURITIES AND EXOHANGE COMMISSION

governments or political subdivisions thereof, except any public corporation or other autonomous entity in the nature of a political

subdivision, other than a State, province, county, or municipality or

similar body politic which, at its option, has registered its securities

on Form 21 in lieu of Form 18. .

Form 19-K. For issuers oj American certificate« against joreign

issues and the underlying securities.-This form is to be used for

the annual reports of issuers 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 20-K. For joreign private issuers registering securities other

than bonds.-This form is to be used for the annual reports of the

following issuers with respect to securities other than bonds or other

evidences of indebtedness: (a) Nationals of a foreign country other

than a North American country or Cuba, and (b) corporations or

unincorporated associations, foreign or domestic, which are directly

or indirectly owned or controlled by any foreign government.

Form 21-K. For joreign private is,suers registering bonds.-This

form is to be used for the annual reports of the following issuers

with respect to bonds or other evidences of indebtedness: (a) Nationals of a foreign country other than a North American country or

Cuba, (b) nationals of a North American country or Cuba if such

bonds' or other evidences of indebtedness are guaranteed by any

foreign government, (c) corporations or' unincorporated associations,

foreign or domestic, which are directly or indirectly owned or controlled by any foreign government; and (d) public corporations or

other autonomous entities in the nature of political subdivisions which,

at their option, have registered securities on Form 21inlieu of Form 18.

FOR REGISTRATION OR EXEMPTION OF A NATIONAL SECURITIES

EXCHANGE

Form 1. Application jor registration or exemption from registration

as a National Securities Exchange.-This form shall be filed in connection with the applications of securities exchanges for registration or

exemption from registration.

Form 9. Amendatory and/or supplementary statement to registration

statement filed by an exchange.-This form shall be used for filing

amendatory and/or supplementary statements to registration statements of national securities exchanges.

Form 9-A. Amendatory and/or supplementary statement to application

for exemption jrom registration filed by an exchange.-This form shall

be used for filing amendatory and/or supplementary statements to

applications for exemption from registration as national securities

exchanges.
THIRD ANNUAL REPORT 117

GUIDE TO FORMS ADOPTED UNDER THE PUBLIC UTILITY HOLDING

COMPANY ACT OF 1935

Form U-2. Declaration and periodic report.-This form is to be

used by a subsidiary of a registered holding company primarily engaged in business as a broker or dealer, which claims exemption under

Rule 3D-4 and also for the quarterly reports to be filed by such a company.

Form U-3A3-1. Quarterly statement filed by banks claiming exemption.-This form is prescribed for quarterly reports to be filed by banks

claiming exemption from any provisions of the Act by virtue of Ru1e

3A3-1.

Form U5A. Notification oj registration.-This form is to be used fo'!'

notification of registration pursuant to Section 5 (a) of the Act.

Form U5B. Registration statement.-This form is to be used for

registration statements to be filed by registered holding companies

pursuant to Section 5 (b).

Form U6B-1. Application pursuant to Section 6 (b).-This form is

to be used for applications by subsidiary companies of registered

holding companies, pursuant to Section 6 (b) of the Act, for exemption

from the provisions of Section 6 (a) with respect to the issue or sale of

securities solely for the purpose of financing the business of the

applicant and expressly authorized by the State commission of the

State in which the applicant is organized and doing business.

Form U-7. Declaration pursuant to Section 7 -This form is to be

used for declarations filed pursuant to Section 7 of the Act, by a

registered holding company or subsidiary company thereof, either in

respect of the issue or sale of securities issued by it, or in respect of

the exercise by the declarant of any privilege or right to alter the

priorities, preferences, voting power, or other rights of the holders of

any outstanding securities issued by it.

Form U-1D-1. Application pursuant to Section 10 (a) (1).-This

form is to be used for applications for the approval of the acquisition

of any securities by a registered holding company, or any subsidiary

company thereof, or the acquisition of securities of a public-utility

company by a person who is an affiliate (as defined in Clause (A) of

Section 2 (a) (11) of the Act) of such company and of any other public

utility or holding company, or will become such an affiliate by virtue

of such acquisition.

Form U-10-2. Application pursuant to Section 10 (a) (2) or 10 (a)

(3).-This form is to be used for applications for the approval of the

acquisition of any utility assets or other interest in any business by

a registered holding company, or any subsidiary company thereof.

Form U-12 (i)-1. Statement required pursuant to Section 12 (i).-

This form is to be used for statements to be filed with the Commission,
118 SECURITIES AND EXCHANGE COMMISSION

pursuant to Section 12 (i), by any person employed or retained by any

registered holding company or by any subsidiary company thereof,

who presents, advocates, or opposes any matter affecting any such

eornpany before the Congress or any Member or committee thereof,

or before the Securities and Exchange Commission or the Federal

Power Commission or any member, officer, or employee of either

such Commission.

Form U-13-l. Application jor approval oj mutual service company

or declaration with respect to organization and conduct oj business oj

subsidiary service company.-This form is to be used, pursuant to

Rule 13-22, for an application for approval of a mutual service

company or for a declaration with respect to the organization and

conduct of business of a subsidiary service company.

Form U-13-60. Annual report oj mutual and subsidiary service companies.-This form is to be used for the filing of annual reports by

each mutual service company and each subsidiary service company

pursuant to Rule 13-60.

Form U-17-l. Reports of oumership by officers and directors.-This

form is to be used for statements of ownership required by Section

17 (a) of the Act to be filed by persons who are officers or directors

of a registered holding company at the time when it is registered. A

statement must be filed by every officer and director of a holding

company following its registration and following his appointment or

election after registration, even if he owns no securities of the company or its subsidiaries.

Form U-17-2. Reports oj changes oj oumership by officers and directors.-This form is to be used by officers and directors of registered

holding companies in reporting changes in their beneficial ownership

of securities of such holding companies or any of their subsidiaries,

as required by Section 17 (a) of the Act.

Form U-17-3. Statement to be signed by officer or director pursuant

to Rule 170-ll.-This form is to be used for statements. to be signed

by officers or directors with respect to whom exemption is claimed

pursuant to Rule 17 G-11 from the provisions of Section 17 (c) of

the Act.

120 SECURITIES A1I."'DEXCHANGE COMMISSION

SECURITIES ACT REGISTRATION .STATEMENTS AS TO WHICH

STOP ORDERS, CONSENT REFUSAL ORDERS, AND WITHDRAWAL

ORDERS WERE ISSUED JULY 1, 1936 TO JUNE 30,1937-Continued

t Type of

Issuer Form Amount order or Date

action

Commonwealth Water Co., Summit, N. L _________ A-2 $5,710,000 W Apr. Zl,1937

{ W Aug 8,1936

Compo Shoe Machinery Corporation, V.T., New F-l '149,977 Ref. Sept. 19, 1936 York,N. Y. ElI. Oct. 9,1936 Comstock Dexter Mines, Inc., Prescott, ArIZ _______ A-I 125,000 W Aug. 18,1936 Condor Pictures, Inc., New York, N. Y ____________ A-I 4,170,092 SO May 11,1937

Consolidated Edison Co. of New York, Inc., New A-2 9,706,127 W June 29,1937

York,N. Y. Consolidated Mines Syndicate, Boise, Idaho _______ A-I 000,000 SO May 19,1937

Consumers Credit Corporation, New York, N. Y __ A-I 135,000 W Dec 19,1936

Contalner Corporation of America, Chicago, 111..___. { R':r.

Sept. 12, 1936 A-2 13,929,200 May 7,1937

ElI. May Zl,1937 Oonverse Rubber Co , Malden, Mass ______________ A-2 825,000 W May 14,1937 Crouch Bolas Aircraft Corporation, Providence, A-I 1,250,000 W Apr. 1,1937 It. I. Dawes Gold Mines, Inc, Lovelock, Nev ___________ A-I 79,582 W May 8,1937

Dayton Porcupine Mines, Ltd, Toronto, Ontario __ A-Q-l 350,000 W June 29, 1937 Detroit CIty Gas Co., Detroit, Mich. ______________ A-2 37,800,000 W Mar. 18,1937 Detrola Radio & Television Corporation, Detroit, A-I 2,218,750 W May 18,1937

Mich.

Dietograph Products Co., Inc., New York, N Y ___ A-I 200,000 W Dec. 5,1936 Driver Harris Co., Harrison, N. J __________________ D-IA 1,889,457 W July 20, 1936 .do, . ________________.. . •. A-2 2,096,351 W Do. Durango Placer Gold Mming Co., Milwaukee, Wis. A-I 347,000 W Feb. 10, 1937 Durbar Gold Mines, Lt.d., Toronto, Ontario A-I 1,000,000 W Feb. 4,1937

gllSt Side Associates, Ine., New York, N. Y ________ A-I 54,000 W Nov. 11,1936

{Oct. 8, 1936 I~merald Park Mining & Development Co., Buffalo, A-I 250,000 'IV as of Wyo. Sept. 12, 1936 Emporia Gold Mines, Inc, Wilmington, DeL ______ A-I 250,000 SO Apr. 23,1937 John L. Etheridge, Riverside, Cali!.. __. _____. ______ 0-1 2,000,000 SO Jan. 6,1937 Frederick & Nelson, Ine., Seattle, Wash ____________ A-I 4, 7.10,000 W June 29,1937

Gage County Electric Co .• Beatrrce, Nebr. , , _______ E-l 370,100 W Jan. 6,1937 Gardner Aircraft, Ine., Mtlwaukee, Wis ________. ___ A-I 260,000 W Apr. 28,1937

Gateway Patrtcia Gold Mmes, Ltd., Toronto, On- A-I 286,000 W Feb. 10,1937

turlo, Canada. General American Oil Co. of Texas, Shreveport, La, A-I .1,013,750 CRO Mar. 5,1937 General Equities, Ine., Minneapohs, MInn A-I 165,000 W Nov. 11,1936

Gilprn Eureka Consolidated Mines, Inc., Kansas A-I 65,000 SO Oct. 8,1936

City, Mo. OIobe Silver Mines, Inc., Wallace, Idaho ___________ A-I 537,354 W Sept. 22, 1936 OIobe Steel Tubes Co , MIlwaukee, WIS ____________ A-2 1,000,000 W May Zl,1937 Gold Hill Operating Oo., Tacoma. Wash __________. A-I 165,000 SO Sept. 14, 1936 Gold Recovery Mming & Millmg Corporation, A-O-l 210,000 W Apr. 8,1937

Nederland, Colo.

{~. Sept. 25, 1934

Great Dike Gold Mines, Ine., ~an Francisco, osnr. A-I 400,000 Oct. 6,1934 Jan. 25,1937

Great Dike Gold Mines, Ine., San Francisco, Calif', A-I 250,000 { SO Aug. 3,1936

ElI. Jan. 25,1937

{ R':f.

Oct. 23,1936

Great Northern Gold Mines, Ine., Nevada City, A-I 650,000 Oct. 30,1936

Calif. CRO Nov. 18, 1936

ElI. Mar. 8,1937 Greenwich Gas System, Ine., Greenwich, CODD____ A-I 1,595,000 W Feb. 11, 1937 Hackensack Water Ce., Weehawken, N. L A-2 16, 173, 000 W June 19,1937

Hedley ChIef Mines, Ltd., Vancouver, British A-I 30,000 W July 3,1936 Columbia. Walter E. Heller & Co, Chicago, Ill ___. ____________ A-2 3,025,000 W Oct. 13,1936 11. R. Holtzman Corporatron, Detroit, Mich _______ A-I 250,000 W Mar. 9,1937 lIotel Plaza, Ine., Corpus Ohrtsti, Tex _____________ A-I 349,400 W July 7,1936

llouston Cotton Exchange Building Co., Inc., A-2 760,000 {C~O Dec. 5,1936

Houston, Tex. Jan. 14,1937 Hnmboldt Mines, Ino., Mayer, Ariz ._._. A-I 250,000 W Mar. 27,1937 Income Estates of America, Ine., Philadelphia, Pa __ 0-1 5,000,000 SO June 29,1937

Indiana Asphalt Paving Co., Ine., Indianapolis, Ind. A-2 132,750 {CRO July 11, 1936

ElI. Nov. 11,1936 Insurance Investors Co., Seattle, Wash _____________ A-I 1,800,000 W July 8,1936 Insurance Investors Fund, Inc., Seattle, Wash ______ A-I 1,800,000 W May 18.1937 Investors Fund of America, Inc., New York, N. Y_ A-I 20,028, 241 CRO Feb. 12, 1937 Iowa Public Service Oo., Sioux CIty, Iowa _________ A-2 16,833,100 W Apr. 6,1937 Jade Petroleum Oorporatron, Dover, DeL __________ A-I 7,875,000 W May 25,1937 Kaw Crow Patricia Gold Mines, Ltd., Toronto, A-I 375,001 W Feb. 10, 1937 Ontario, Canada.

Docke

no.

2-2575

2-2957

2-2268

2-2535

2-1919

2-2267

2-2637

2-2562

2-1618

2-2289

2-2089

2-2621

2-2802

2-2807

2-2939

2-2768

2-2494

2-2109

2-1099

2-1812

2-2198

2-27h3

2-3121

2-JZl

2-2699

2-2163

2-2872

2-2798

2-541

2-3213

2-2835

2-2766

2-2647

2-2207

2-2208

2-1082

2-2281

2-2467

2-2418

2-1045

2-843

2-3169

2-253.1

2-3078

2-Zl69

2-2512

2-2088

2-501

2-2404

2-2667

2-2248

2-2975

2-3025

See footnotes at end of table.

___ _________ • ___ ____ ______

_____• __

_____• ___

____• ____

_____ __• ___
THIRD ANNUAL REPORT 121

SECURITIES ACT REGISTRATION STATEMENTS AS TO WHICH

STOP ORDERS, CONSENT REFUSAL ORDERS, AND WITHDRAWAL

ORDERS WERE ISSUED JULY 1, 1936 TO JUNE 30, 1937-Continued

Docket Issuer

Type of

Form .Amount order or Date no. action

2-2747 Kentucky Mansion Distillery, Louisville, Ky ______ A-I $250,000 W May 5, 1937 2-3152 KeyrocGold Mining Co., Ltd., Toronto, Ontario __ A-Q-1 1,250,000 W May 2R, 1937 2-2277 Gilbert Klinck Brewery Corporation, Buffalo, N. Y_ A-I 945,000 W July 27,1936

Lac Teck Gold Mines, Ltd., Toronto, Ontario ______ {R~r.

Mar. 1,1937 2-2794 A-I 900,000 Mar. 18, 1937 ElI'. May 7,1937 2-2141 Lisarbo Andreas, S. A., Rio de Janeiro, BraziL _____ A-I 1,500,000 W Dec 4,1936 2-2142 Lisarbo Andreas, S. A., VT, New York, N. Y F-1 1,500,000 W Do.

2-1711 Livingston Mining Oo., Boulder, Colo _____________ A-I 474,906 SO Apr. 3,1937

'2-2WO MacIou Corporation, Long Beach, Cali!. ___________ A-I 100,000 W Nov. 11,1936 2-3139 Magnetic Control Oorporataon, Manassas, Va A-I 232, 500 W May 26,1937 2-2557 Major Metals Corporation, New York, N. Y _______ A-I 5,000,000 SO Feb. 20, 1937 2-1374 Manley Quebec Gold Mines, Ltd., Toronto, Ontario. A-I 175,000 W July 17,1936 I~f.

Dec. 11, 1936

2-1955 Mansul Chemical Co., Jacksonville, Fla A-I Dec. 23, 1936 200,000 Etf. tpr. 2,1937 as of I~f.

Mar. 28, 1937 July 29, 1936

2-1809 Marine Airlines, Inc., New York, N. Y ____________ A-I Aug. 25, 1936 1,123,250 Etf. {sept. 21, 1936 as of

Medical Arts Building Corporation, Baltimore, W Sept 14, 1936 2-2613 A-2 575,000 Nov. 30, 1936 Md. l~f. Aug. 27, 1936

2-2384 Mergraf 011 Products Corporation, Detroit, Mlch __ A-I Sept. 9, 1936 1,875,000 ElI'. {NOV. 10,1936 as of

Messenger Corporation, Auburn, Ind _______________ Oct. 16, 1936 2-3124 A-2 340,000 CRO May :J6, 1937 2-2847 Metropolitan Personal Loan Corporation, New A-I 2,313,324 SO Mar. 25, 1937 York,N. Y. IR':r.

Mar. 31, 1937

2-2584 Michigan Bumper Corporation, Grand Rapids, A-I Apr. 14, 1937

Mich. 353,625 Etf. rune 22,1937 as of

Milmac Mines, Ltd., Sault Ste. Marie, Ontario ____ W May 4,1937

2-2014 A-I 300,000 .Aug. 21,1936

2-2280 MIning and Development Corporation, New York, A-I 4,062,500 SO Oct. 20, 1936 N.Y.

2-2719 Mount Baker Chromium Corporation, Seattle, .A-I 125,000 W Ian. 5,19.~7

Wash.

{ W Dec. 4,1936

2-2553 Mountain State Water Oo., Philadelphia, Pa _____._ A-2 246,250 Ref. Dec. 12, 1936 Etf. Ian. 1,1937

2-2866 Munleipal Tax Certificates, Inc., Cleveland, Ohio __ A-I 1,950,000 W Mar. 27, 1937

2-1277 Murwood Gold MInes, Ltd., Toronto, Ontario _____ A-I 175,000 W 1uly 17, 1936

{ W Feb. lI,1937

2-2765 National .Aircraft Co., Los Angeles, Calif ___________ .A-I 500,000 Ref. Mar. 20,1937 ElI'. Apr. 9,1937

2-3008 National Bellas Hess, Inc., Kansas City, Mo _______ A-2 1,660,100 W 1une 17, 1937 2-2842 Natlonal Bond & InvestInent Co., Chicago, TIL ____ A-2 15,300,000 W Apr. 3,1937

2-108 National Boston Montana Mines Corporation, A-I 650,000 SO Apr. 28, 1937

Helena, Mont.

"2-2752 National Funding Corporation, Los .Angeles, Calif_ A-2 1,526,135 {CRO Ian. 27, 1937

ElI'. Apr. 2,1937

2-1428 National Invested Savings Corporation, Washing- .A-I 259,468 SO Mar. 24, 1937 ton, D. C.

"2-2068 National Petroleum Company, TItusville, Pa ______ A-I 414,000 W Aug. 26, 1936

{ SO lune 15, 1937

"2-2121 National Petroleum Corporation, Dallas, Tex ______ A-I 2,889,260 Re- July 2,1937 ElI'.

2-1952 National Surety Oorporation, Albany, N. Y ________ A-I 10,000,000 W Dec 5,1936

2-3082 Naybob Gold Mines, Ltd , Toronto, Ontario _______ A-I 1,100,000 SO June 24, 1937

2-2408 965 Fifth Avenue Corporation. New York, N. Y ___ A-I 1,320,000 W Oct. 2,1936

2-2848 Nortb American Dtsttllsrs, Inc. New Orleans, La __ A-I 1,900,000 W Feb. 23, 1937

2-2318 North Banaor Slate Co, Bangor, Pa _______________ A-2 125,000 W Sept. 10, 1936

2-2393 Oakhurst Garden Apartments Corporation, Lyn- A-I 330,000 W Oct. 19, 1936 brook, N. Y.

2-2755 Oakmere Cemetery Association, Inc., Stapleton, E-l 362,000 W Jan. 19,1937

N.Y. 2-293 Old Monroe Brewing Association. St LOUIS, Mo ___ A-I 250,000 SO July 30, 1936

2-1873 Oil Payment Purchase Corporation, Jersey City, A-I 200,000 W Dec. 22, 1936

N.J.

"2-2617 Oliver Farm Equipment Co., Chicago, TIL. _______ A-I 3,333,225 W Dec. 30. 1938

'See footnotes at end of table.

21123-37--9

___• __

___• __

_____• ______
122 SECURITIES AND EXCHANGE OOMMISSION

SECURITIES ACT REGISTRATION STATEMENTS 'AS TO wHICH

STOP ORDEREl,CONSENT REFUSAL ORDERS, AND WITHDRAWAL

ORDERS WERE ISSUED JULY 1, 1936 TO JUNE 30, 1937-<:lontinued

ocket Type of

Issuer Form Amount order or Date no, action

2-2695 Pacillc Distillers, Inc" Culver City, Calif- _________ A-I $191.956 W Apr. 7,1937 2-2764 Panhandle Eastern PIpe Line Co" Kansas City, A-I 4,100,000 W May 14, 1937 Mo.

{ ~f.

Aug. 21, 1936 2-2380 Peerless Oorporatdon, Cleveland, Ohio ______________ A-2 663,025 Aug. 27, 1936 Elf. Sept. 16. 1936 2-30'70 Pennsylvania Glass Sand Corporation, Lewistown, A-2 3,471.910 W May 1,1937 Pa.

2-2595 Petrie Stores Corporation, New York, N. Y ________ A-2 1,600,000 W' .no. 2-2417 Politics. Inc., Washington, D. C ___________________ A-I 35.~,750 W lan. 19, 1937 2-898 Poundmaker Gold Mines, Ltd., Ottawa, Ontano ___ A-I 500,000 W luly 14, 1936

2-2797 Pre Cambrian Investments, Lt1., Toronto, Ontario A-I 800,000 {CRO Feb. 15.11137

Err. luly 6.1937 2-2718 Puritan Mills, Ine., Ohrcago, DI ____________________ A-I 5.5,000 W Jan. 12, 1937

Ray Alrronditioning Corporation, New York, N. Y {~r. Apr. 3,1937 2-2642 A-I 281.250 Apr. 15 1937

Elf. May 27.19TI 2-2272 Rej!R1 Textile Oo., Ine., Barnesville. Oa ____________ A-I 250.000 W Sept. 9,1936 2-2991 Reynolds Spring Co .1ackson, Mich _______________ A-2 1,537,000 W Apr. 9.1937 2-2592 RIckard Ra,more Oold MInes, Ltd., Toronto. On- A-I 1,699,991 SO June 16,1937 tario.

2-1940 Rochester Distilling Co., Ine., Rochester, N. Y _____ A-I 1,237,373 W Sept 4,1936

2-2877 Rodama Oold Mines, Ltd., Vancouver, British A-I 405,000 {CRO Mar. 6,1937

Columbia. 'w Apr. 15.1937

2-2423 Rotating Valve Oorporatron, New York, N. Y _. __. A-I 600,000 r

RO ~t. 21,1936 ElI. ay 15,1937

2-2787 Rotating Valve Corporation, VT, New York, N. Y_ F-1 1,049,943 CRO Feb. 1,1937

W Apr. 8,1937 2-2263 Royal Petroleum Co., Yakima, Wash ______________ A-I 60.000 W July 9,1936 2-2341 St.lohn Oold and Copper Co., Phoenix, Ariz ______ A-I 100,000 W Aug. 12, 1936

2-2919 San Jose Water Works, San lose, Cali!. ____________ A-2 1,022,000 r

RO ~r. 3,1937 Elf. ay 15,1937

2-3119 Sands O. Penn, Inc., Orand Valley, Pa ____________ A-I 796,000 ~r. May 19,1937

June 25, 1937 2-2409 Scottish Dye Works, Ltd., Vancouver, Bntlsh A-I 472,500 ORO Sept. 16, 1936 Columbia. 2-2061 Seeber Brewing Co., Eli1.abeth, N. J _______________ A-I 490,000 W Oct. 21, 1936 2-2158 Silver Strike MiDlng Co., Murray, Idaho. __________ A-I 170,000 W Feb. 3,1937

2-2381 Silver Syndicate, Inc., Wallace, Idaho ______________ A-I 250, 000 {~. Feb. 15, 1937

June 1,1937 2-2712 Small Industry Management Corporanon, Buffalo, A-I 1,230,000 W Feb. 11, 1937 N.Y.

2-2609 Somoa Products Co., Ine., Chicago, DL ____________ A-I 250,000 {~f.

Dec. 11,1936

Mar. 17,1937 2-1407 Soreno Hotel Co., Gage P. Committee, St. Peters- n-i 248,500 SO Apr. 24, 1937 burs, Fla.

2-2561 South Umpqua Mining Co., Portland, Oreg ________ A-I 225,000 {~f.

Dec. 30, 1936

1une 21, 1937 2-2440 Standard LIle Insurance Co., Indiana, Indianapolis, A-I 1,500,000 CRO Sept. 16, 1936 Ind.

Stauley Gold Mines, Ltd., Montreal, Quebec {~f. luly 1,1936 2-2253 A-I 400,000 Sept. 26, 1936

CRO Oct. 15,1936

Sterling Aluminum Products, Ine., St. Louis, Mo __ { ~f.

Nov. 13,1936 2-2516 A-2 3,948,600 Nov. 25,1936

Elf. Dec. 15, 1936 2-2594 Store Kraft Manufacturing Co., Beatrice. Nebr ____ A-2 165,000 W Dec. 5,1936 2-210 Strange Printing Co , Inc., Wilmington, DeL ______ A-I 50,000 W Mar. 18,1937 2-2793 Stratoplane Corporation, New York, N. Y _________ A-I 50,000 W Feh. 8, 1937

2-1576 Summit Gold Mining Corporation, Vancouver, A-I 445,500 {~f.

Dec. 30, 1936

British Columhla. Jan, 21, 1937

2-148 Sunset Gold FIelds, Inc, Silver City, N Mex ______ A-I 100.000 SO May 20, 1937 2-2708 Sunset Mines, Ine., Forbestown, Callf ______________ A-I 100.000 W Feb. 25, 1937 2-3084 The Time Cap Corporation, Brooklyn, N. Y _______ A-I 100,002 W May 8,1937 2-2530 Tips Glass Co., Three Rivers, Tex _________________ A-I 652,810 W lan. 7,1937

2-3051 Transcontinental Petroleum Corporation, Dallas, A-I 4, 550, 001 f W May 1, 1937

Tex. l Ref. lune 29, 1937

2-1357 Treasure Hili Extension Mines Co., Inc., Ely, Nev __ A-I 750,000 SO Apr. 2,1937 2-1780 Trl States Natural Gas Corporation, South River, A-I 240,000 W Dec. 18, 1936 N.J.

2-2379 Tulsa Oil Development Co.NTulsa, Okla ____________ A-I 500,000 W Mar. 15, 1937 2-2777 Underwriters Group, Ine., ew York, N. Y ________ 0-1 1,000,000 CRO Feb. 10,1937 2-3135 Union Electric Co. of illinois, Monsanto, DL _______-' A-2 23, 100,000 I W May 19,1937 2-1748 United Oold Fields of Nova Scotia, Ltd., Liverpool, A-I 387,500 W Nov. 2,1936 Nova Scotia.

D

Bee footnotes at end of table'

___ • __
THIRD ANNUALREPORT 123

SECURITIES ACT REGISTRATION STATEMENTS AS TO WHICH

STOP ORDERS, CONSENT REFUSAL ORDERS, AND WITHDRAWAL

ORDERS WERE ISSUED JULY 1, 1936 TO JUNE 30, 1937-Continued

Docket Type of

Issuer Form Amount order or Date no. action

2-2812 United Goldfields Oo., Reno, Nev __________________A-I $23,784 W Fe1;l. 11.1937

2-3137 United Investors Realty Oorpomtlon, New York, A-I 600.000 W June l,l937

N.Y. 2-1988 United States Casualty Co., New York, N. Y _____._ A-2 4,250,000 W Jan. 6, 1937,

2-2426 Washington Gas Light Co., Washington, D. C____._ A-2 11,050.000 W Ffb. 25, 11/37

2-2549 Washington National Cemetery Corporation, A-I 225,000 W Nov. 19, 19311

Washington, D. C. 2-2760 West~m Petroleum Oo., Ine., A~tec. N. Mex ______._ A-I 155,500 W Mar. 6, 1937

2-2709 Westgate Greenland 011Oo., San Antonio, Tex____._ A-2 228,742 W Jan. 8.1937

2-3018 Wilson & Bennett Manufacturing Co., Ohieago, 111._ A-2 1,957,500 W May 5.1937

2-2913 Windsor Land Oo., Inc, Jersey City, N.J ___________ A-I 571,400 W June 12, 1937

2-2770 Winoga Patricia Gold Mines. Ltd., Toronto, On. A-I 1,056,000 W Feb. 10.1937

tario. 2-816 Woods Brothers Corporation, B. P. Committee, n-i 316.423 W Oet. 12,1~

New York. N. Y. 2-2470 YumuriJute Mills oe., Ohicago~I1L--.-.---------- A-I 1.000,000 SO Mar. 2, 1937

1This list includes 198registration statements, which are classified as follows:

Withdrawals: Withdmwn and not reIDed_. • • • .___ '125

CRO followed by withdrawaL_. .___ 3

Withdmwn. reflled, withdmwn .___ 1

Withdrawn. refiled, efiectlve. Wlthdmwn___________________________________________1.

Total additions to withdmwais • • .____ 100

WIthdrawn, refiled and- Pending amendment 8

Consent refueal order .__________________________________________1

CRO and later e1fective .______________________________________________1

Efiective ._____ ________ __ 14

Total ._ 24

Grand total of withdmwals during year_______________________________________________________ .IM

Consent refueal orders: Orders issued and still In force •• • • • • 8

Issued re re1lled statement ._____________ 1

Statements subsequently WlthdmwD. • • .__ 3

Statements subsequently e1fective . .________ 6

Issued re refiled statement which subsequently became elfectlve .______________________ )

Total issued during year • • • .19'

StopOrders orders'issued and still m force .___ 27

Statements subsequently efiectlve or re-e1fectlve .________ 3

Total issued during year • • • • .______________________ 30>

5 statements are Included in both withdrawal and consent refusal order data.

W Withdmwn.

CRO=Consent refusal order.

SO...Stop order.

Ref. Re1lIed.

Elf.=Registr8t1on statement fully elfective (stop or refusal order having been lifted. or statemenr having been refiled). Rs-Elf ....Re-elfectivs.

•______ •

• • • ____ __

•

•

•

=

-
APPENDIX IV

List of publications available as of November I, 1937

Copies of the material listed below may be procured from the Publications Unit, Securities and Exchange Commission, Washington, D. O.'

ACTS:

Securities Act of 1933, as amended.

Provisions of Federal Laws Relating to the Securities Act of 1933, as amended.

Securities Exchange Act of 1934, as amended.

Public Utility Holding Company Act of 1935.

MISCELLANEOUS:

Addresses by Commissioners and members of the staff of the Commission.

Offieia! Summary of Security Transactions and Holdings of Officers, Directors, and Principal Stockholders. (Issued twice monthly, beginning with

Vol. 1, no. 1, of April 1935.)

Directory of Over-the-Counter Brokers and Dealers Registered With the

Securities and Exchange Commission as of January 31, 1936.

Directory of Brokers and Dealers in Oil or Gas Interests Registered With the

Securities and Exchange Commission as of October 18, 1936.

Securities Traded on Exchanges Under the Securities Exchange Act of 1934.

Work of the Securities and Exchange Commission. (This pamphlet describes briefly the duties and activities of the Commission.)

RELEASES:

Releases are issued covering the Commission's official actions, orders, rulings,

opinions, etc., under the Securities Act of 1933, the Securities Exchange

Act of 1934, and the Public Utility Holdfng-Company Act of 1935. An

order blank is provided for placing names on the mailing list.

Compilation of Releases Under the Securities Act of 1933, to and including

December 31, 1936.

Compilation of Releases Under the Securities Exchange Act of 1934, to and

including December 31, 1936.

Compilation of Releases Under the PUblic Utility Holding Company Act of

1935, to and including December 31, 1936.

I Copies of the materialilsted below may be procured from the Superintendent of Documents, Govern.

ment Prmtmg Office, Washington, D. C.

Decisions of the Securities and Exchange Commission: Volume 1, no. 1 (July 2, 1934 to Sept. 3, 1935),

price 15cents; Volume I, no 2 (Sept. 4,1935 to June 30,1936), price 25 cents; Volume 1, 110. 3 (July 1, 1936

to Dec. 31, 1936), price 45 cents.

Official Summary of Holdings of Officers, Directors, and Principal Stockholders as of December 31,1935.

Price 35 cents.

First .Annual Report of the Securities and Exchange Commission, fiscal year ended June 30, 1935. Price

10 cents.

Second Annual Report ofthe Securities and Exchange Commission, fiscal year ended June 30, 1936. Price

15 cents.

Report on the Study and Investigation of the Work, Activities, Persounel, and Functions of Protective

and Reorganization Committees: Part I-Strategy and Techmques of Protective and Reorganization

Committees, price $1; part II-Committees and Conflicts of Interest, price 60 cents; part III-Com.

mittees for the Holders of Real Estate Bonds. price 25 cents; part IV-Committees for Holders of

MuniCipal and Quasi-MunICipal Obligations, price 15cents; part V-Protective Committees and Agencies

for Holders of Defaulted Foreign Governmental Bonds, price $1; part VI-Trustees Under Indentures,

price 20 cents.

124
THIRD ANNUAL REPORT 125

REPORTS:

Report on the Government of Securities Exchanges. (Published as House

Document No. 85.)

Report on the Feasibility and Advisability of the Complete Segregation of

the Functions of Dealer and Broker.

Preliminary Summary of the Progress of the Study of Investment Trusts and

Investment Companies.

Report on Trading in Unlisted Securities Upon Exchanges.

RULES, REGULATIONS, AND FORMS:

General Rules and Regulations Under the Securities Act of 1933.

Guide to Forms Adopted Under the Securities Act of 1933, as amended.

Rules and Regulations Under the Securities Exchange Act of 1934.

Guide to Forms Adopted Under the Securities Exchange Act of 1934, as

amended.

Rules, Regulations, and Forms Under the Public Utility Holding Company

Act of 1935.

Rules of Practice.

Statement Regarding the Sale of Copies of Registered Information.

UNIFORM SYSTEMS OF ACCOUNTS:

Uniform System of Accounts for Mutual Service Companies and Subsidiary

Service Ccmpanies.

Uniform System of Accounts for Public Utility Holding Companies.
APPENDIX Y 


TABLE 1.-Statistics, by months, of new securities,l induded in registration slotemenla 


juEly effediueSept. I, 193.4-June SO, 1957 
THIRD .ANNUAL REPORT 127

TABLE 2, PART I.-Type clas8ijication, months, of neto securitiea, included in

registration statementsjully eJ!ect~fJeJuly 1, 10SB-June SO, 10S7

[Amounts in dollars]

Common stock Preferred stock

Total securities Total (after Total securities Total (after

elJllI.'ti vely reg. Total,lass other de- elJectively reg. Total,less other deistered securities ductfons)" istered securities ductlons)

registered proposed to registered proposed to Month for reserve be olJered for reserv& be olJ&ed

against forcasb for against for cash for

account of account of Num. Estimated conversion- regis- Num- Estunated eonversiou-« regis.

berof gross pro- Estimated trants- her of gr~o- Estimated trants- issues ceeds gross pro- Estimated issues gr~o- Estimated ceeds gr:s:o- gross proceeds

1938

July ••.••••••• 46 $84, 066, 432 $78, 029, 082 $38,315,717 14 $15, 131, 020 $15, 131,020 $13, 375, 820

August .•••••• 46 92,749,674 67,024, 430 24,034, 198 16 35,728,188 34,806,568 27,718,932

September •••• 40 76,140,112 53,258,260 27,867,758 16 29, 270, 540 29, 270, 640 18,086, 684 October .•. 59 112, 776, 931 92, 704,278 52,228,502 23 55,642,713 55,642,713 39,722,762 November •. _. 32 47,420,718 30,160,811 20,088, 647 11 30,201,325 30,lIO,325 23,536, 200

Deoember; , •• 53 167,125,958 144, 142, 401 101,291,051 27 34, 531,323 34,531,323 19,318,863

19fJ7

January •••••. 30 85,621,980 38,758,695 12,598,044 10 134, 719, 496 134, 719, 496 71, 1I2, 044

February ••••• 43 168,474,244 154, 457, 738 126,036, 989 13 38,214, 725 36. 764, 725 35,557,736 March .••••• _. 68 231, 005, 652 199, 153, 220 109,381, 767 19 36,363,504 36,363,504 29,727,048

ApriL ••••••• 78 139, 396, 970 109,048,749 50,882,509 35 49,496,615 49,296,615 25,784, 190

May ••••••••• 64 1I4, 789, 312 63,875,895 29,952,727 14 34,441,994 34,141,994 24,830,248 June .•• _. 43 67,055,355 61,202,470 24,700,779 10 78,592, 350 78,692,350 77,168,760

Total 592 1,386,623,338 1,091,816,029 617, 378, 688~ 720s 572, 333, 703 569, 371, 173 405, 939, 266

Certi1lcates of participation, beneficial Secured bonds mterest and warrapts

1938 July .••••• 28 $32, 897, 985 $32, 897, 985 $31,666,616 13 $165,786,744 $166,786,744 $165,786,744

August •.• 6 4, 660,000 4,660,000 4,583,046 7 45,633,748 45,633,748 45,051,741

September 11 17,211,558 17,211,558 17,000,000 9 127,918,475 127,918,475 126, 455, 258 October 10 29,245,488 29,245,488 24,524,581 14 104, 752, 280 104,752, 280 103, 093, 400 November •• _. 10 7,191,536 7,191,536 4, 389,164 11 159, 036, 349 159,036,349 159,036,349 December 9 39,548,228 39,548,228 22,511,728 21 234, 634, 897 234, 634, 897 234, 134,897

19fJ7

January _._ ••• 7 11,082,200 11,082,200 10,649,700 18 146, 508, 654 146,508,654 127,391,280

February ••... 17 52,248, 920 52, 248, 920 23,460,000 14 212, 560, 260 212, 560, 260 2lJ, 075, 260

March._ •••.•• 14 16,542,909 16,542, 909 15,090,000 7 164, 468, 263 164, 468, 263 163,468,263

ApriL ••••••. 25 9,166,688 9,166,688 5,010,476 12 52, 198,000 52, 198, 000 51,607,000

May •••••• _._ 10 11,179,547 11,179,547 10,000,000 3 2, 778, 000 2,778,000 2,778,000

June ••••••••• 13 16,982, 943 16,982,943 15,498, 600 9 136, 339, 632 135, 595, 257 135,595, 257

Total ••• 160 247,958,002 247, 958, 002 184,383,911 138 1,553,615,302 1,552,870,927 1,525,473,449

Debentures and short-term notes I Totel all securities

1986 July._ ••••••.. 9 $64,042, 725 $64, 042, 725 $64, 042, 725 1I0 $362,924,906 $356, 887, 556 $313, 187, 622

August. ••.•.• 4 107,250,000 107, 250,000 107, 250, 000 79 286,021, 610 259,374,746 208,637,917

September .••• 3 9,538,826 9,538,826 7,078,288 79 260,079.511 237, 197, 659 196,487,988

October •••••• 8 223, 912, 600 223,912,600 217,962, 600 1I4 526, 329, 912 606,257,259 437,531,735

November •••. 3 22,175,825 22,175,825 22,175,825 67 266, 025. 753 248,674,848 229, 226, 185

December._._ 14 222, 567, 630 222, 667, 630 222, 567, 630 124 698, 408, 036 675,424,479 699, 824, 169

19fJ7

January •••••• 4 52,057,424 52,057,424 52,057,424 69 429,989,764 383, 126, 469 273,808, 492 February. 6 19,901,569 19,901,569 19,589,500 93 491, 399, 718 475,933,212 415, 719, 484 March 5 21,527,1I5 21,527,115 21,527,115 113 469, 907, 443 438,055,011 339,194, 193 ApriL ••••.•. 11 37,817,714 37,817,714 20,685,914 161 288,075, 987 257,527,766 153, 970, 089 May_._ ••• _._ 7 74,878,773 74,878,773 74,878,773 88 238, 067, 626 186, 864, 209 142,439,748 June 6 70,095,144 70,095,144 70,095,144 81 369, 065, 424 362, 468, 164 323,058, 630

Total_ •• 80 925, 765, 245 925, 765, 245 899,910,838 1,178 4,686,295,680 4,387,781,376 3,633,086,152

1Six issues of short-term notes (the entire amounts of which were Intended to be olJered for cash for the account of the registrants) were elJectlvely registered during the fisCal year as followb: July 1936, 3 issues for $2,000,000; January 1937. 1 issue for $834,924; Aprlll937, 1 issue for $1,000,000; June 1937, 1 issue for 474,375;

total, 6 issues for $4,679,299.

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THIRD A},WUAL REPORT 129

TABLE 3, PART I.-GrOUP classification, by months, oj issuers oj new securitilBjuUy

effective July 1, 1936-June 30, 1937

[.Amounts in dollars l

Extractive industries Manufacturing industries

Total securities

=iVe1Y regisTotal securities

effectively regis- tered Month

1996

July

August

September __ October

November __ December

1987

6

4

2

4

3

4

6 $3,7m,256

4 3,212,116

2 2,958,478

5 3,237,534

4 1,903,845

4 14, 274,128

$3,701,256

3,212,116

2,958,478

2,425,034

1,903,845

14,274,1ll8

$1,261,671

2,282,116

1,250.000

1,994,097

612,345

13,581,300

25 35 $61,402, 188 $57,090,488 $39,668,746

30 43 55,473,098 48, 229, 073 24, 575, 165

29 46 116,051,932 97,786,669 77, 127,713

41 60 109,923, 115 101,463,075 58,206, 208

29 42 109,419,449 lOU,389, 792 83,287,567

30 47 79,234,265 69,839,547 44,124, 530

73 88

January

February March

AprIL

May

June

Total_

7 8 5, 430, 766

6 8 3,642,505 17 24 10,437,683 6 7 4, 457, 227

8 9 2,985,473

6 7 9,571,527

65,812,538

5,430,766

3,642,505

8,138,811

3,874, 459

2,985,473

8,521,527

61,068,398

2,170,651

3,037,290

6,794,343

1,904,500

1,253.694

3,759,027

39.901,034

17 24 185, 533,130 1~, 345, 626 75,305,043

27 48 205,491,010 194,202, 004 142,032, 288 43 61 97,427,511 79.389,386 50,057,060

531 93 159,782,271 138,911,972 72,485,089 31 50 155, 131, 227 105,812,810 75,948,716

33 46 117,685,392 115,872,832 93,730,252

388 595,1,452,554,588 1,249,333,2741 836,548, 377

Financial and investment companies Merchandising companies

1996

July _________ 15 42 $106,653,559 $104,927,909 $97,789,040 4 8 $4, 948, 234 $4,948,234 $1,846,196 August ______ 5 6114,140,000 114,140,000 113,015,000 7 10 46,071,039 34,543,851 18,670,491 September __ 10 16 56, 455,976 51,839,387 36,493,117 1 1 204,DOO 204,000 ____________

October _____ 13 17 90, 346, 550 87,945,300 85,047,444 5 10 11,990,165 9,657,665 3,440,360 November __ 4 5 7,248,800 7,182,800 6,458,164 1 2 16,957,500 8,835,000 8,835,000 December ___ 15 20 89, 565, 209 86,833,009 70,457,853 13 23 119, 133,524 110, 089, 385 82,964,992

1997

January _____ 8 15 48,374,480 48,374,480 31,295,900 4 8 14,547,03P 12,871,249 9,049,924 February ___ March 12 20 37,211,404 35,471,404 31,661,664 2 3 5,345,074 4,407,574 4,181,324 ______ 9 10 154, 179,093 154, 179, 093 97,842,934 4 11 45,297,557 33,782, 122 25,275,257 ApnL ______ 12 23 13,892,614 13,577,614 11,457,773 13 23 37,754,793 29,174, 639 14,386,477 May ________ 7 10 14, 984, 742 14,684, 742 14,519,305 8 10 8,114, 229 7,794,229 3,732,908 June ________ 8 9 52, 731,850 52, 731,850 51,914,850 5 6 20,237,120 19,749,620 17,721,250

Total_ U8 193 785, 784, 277 771,887,588 647,953,044 67 113 330, 600, 265 276,057,568 190, 104, 179

.-

Transportation and communication Electric light and power, gas, and water companies companies

1996 July _________ 2 2 $22, 002, 274 $22,002, 274 $22, 002, 274 11 13 $158,604, 895 $158, 604, 895 $1~9,619, 695 August ______ 1 1 2, 766, 921 2, 766, 921 5 8 49,516,236 47,173,925 45,005,135 September __ 2 2 3,861,250 3, 861, 250 3, 782, 500 7 9 79,997,875 79,997,875 77,334,658 October _____ 5 7 190,918, 007 188, 140,194 184, 183,375 10 14 119,774, 541 116,485,991 104, 520, 251 November __ 4 4 18, 723, 078 18, 723, 078 18,723, 078 4 4 63,543,271 63,543,271 63,543,271 December ___ 4 7 198, 393, 497 197, 080, 997 193, 792, 532 12 16 193,570,962 193,570,962 193, 570, 962

1997 January_. ___ 1 1 4,657,500 4,657,500 4,657,500 8 10 86,696,848 86,696,848 67,579,474 FebnIery _______

6 -27;765;599 --27;765;599 --25;974;599 5 8 143,962, 760 142, 462, 760 140,977,760 March______ 4 2 3 134, 800, 000 134, 800, 000 133, 250, 000 Apnl ________ May 4 4 23, 005, 000 23,005,000 6,925,000 4 4 10,547,250 10,547,250 9,956, 250 ________ 1 1 43, 375, 000 43,375,000 43,375,000 2 2 2,492, 000 2,492,000 1,022,000 June_. ______ 2 2 26,099, 677 26,099,677 26,099,677 6 10 142, 339, 858 139,092,658 129,433,474

Total. 30 37 561,567,803 557,477,490 529,515,535 76 1011,185,846,496 1,175,468,435 1,115,902,930

_

_

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_

_

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--- _________
130 SECURITIES A~"!])EXCHANGE eOMMISSION

TABLE 3, PART l.--Group classification, by months, of issuers of new securities fully effective July 1, 1936-June 30, 1937-Continued

[Amounts In dollars J

Other registrants 1 Total, all registrants

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1986 . July _________ August 4 4 $5,612, 500 $5,612.500 $1,000,000 67 110 $362, 924, 906 $356, 887, 556 $313. 187, 622 ______ 4 7 14, 842, 200 9.308,860 5,000,010 56 79 286,021, 610 259,374,746 208, 637. 917 September __ I 3 550,000 550,000 500.000 52 79 260.079, 511 237, 197, 65lI 196.487.988 October _____ 1 1 140,000 140,000 140,000 79 114 526,329.912 506,257.259 437,531,735 November __ 4 6 48,229,810 48,097.060 47.766.760 49 67 266,025.753 248. 674, 846 229, 226, 185 December ___ 4 7 4, 236,451 3,736,451 1,332,000 82 124 698,408, 036 675.424,479 599, 824, 169

1987 January _____ 2 3 84,750.000 84,750,000 83.750,000 47 69 429,989,754 383,126,469 273, 808. 492 February ___ March 4 6 95,746,965 95,746,965 93,829,158 56 93 491,399, 718 475,933,212 415, 719, 484 ______ . .------- .----------- 79 113 469.907,443 438, 055, 011 339.194, 193 ApnL May ________ Ij 7 38,636, 832 38,438,832 36,855,000 97 161 288,075,987 257,527,766 153, 970. 089

5 6 10,984,955 9,709,955 2,588,125 62 88 238, 067, 626 186, 854, 209 142, 439, 748 June ________ 1 1 400,000 400,000 400.000 61 81 369,065,424 362, 468, 164 323, 058, 530 ,

Total_ 35 61 304, 129, 713 296, 468, 623 273, 161, 053 787 1178 4,686,295,680 4,387,781,376 3,633,086,162

1 Includes agriculture, real estate, constmction and allled industries, service industries, miscellaneous

domestic companies and foreign governments.

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APPENDIX VI

LITIGATION INVOLVING STATUTES ADMINISTERED BY THE

COMMISSION

This appendix lists the court proceedings in which this Commission

or the Acts administered by it have been involved. Included are those

cases instituted during the period from June 30, 1936 to June 30,1937,

as well as those instituted before that date in which no final disposition

had been made on June 30, 1936. The more important litigation is

described at some length; the less important cases are indicated by a

brief notation. Although the cases are grouped and discussed under

three main headings with reference to the statute primarily in issue

in the particular case and into subheadings depending on the principal

topic in issue, each case is also classified under all statutes and subheadings which it involves. The status of litigation is described only

as it existed as of June 30, 1937, no attempt being made to describe

developments occurring subsequent to that date.

I. SECURITIES .ACT OF 1933, AS AMENDED

Suits under the Securities Act of 1933, as amended, are considered

under seven groupings: (1) Suits against the Commission under that

Act to enjoin enforcement of its provisions; (2) miscellaneous proceedings instituted by the Commission pursuant to Section 20 (b) of the

Act to enjoin violations thereof, generally violations of Sections 5 and/or

17; (3) suits against brokers and dealers operating "bucket shops";

(4) suits involving the use of the "sell and switch" device; (5) cases

dealing with the definition of "security"; (6) criminal prosecutions;

and (7) civil litigation between private parties involving the civil

liability provisions of the Securities Act.

SUITS TO ENJOIN ENFORCEMENT OF THE SECURITIES ACT

Three suits brought directly against the Commission for the purpose of enjoining the enforcement of the Securities Act were pending

during the fiscal year. The Commission was also forced to intervene

in an action brought by one person to enjoin another from complying

with subpenas issued by the Commission in the course of its investigations under the Securities ,Act and the Securities Exchange Act.

These cases are:

157
158 SECURITIES AND EXCHANGE COMMISSION

TABLE I

Name of ClIS8 District in which Date blh filing Status suit -brought

Benjamin L. A/n'a1Iamv. &curi- Eastern district of June 13, 1935 Pending.

tlu and &cllange Comml"lon Pennsylvania. et ai.

R. R. Crawford v, &curltlu and N orthern district Aug. 9,1935 Solt dismissed without prejudice . EUhange Gbmmfulon et al. of Oklahoma. NoV. 4, 1936. National Short Term StcurUlu District of Colum- Feb. 21, 1936 Preliminary Injunction denied Mar.

Corporalion v. Securltus and bla, 6.1936. On Apr. 13. 1937. the ClIS8

&chanqe CommfBrion et 01. was dismissed under Law Rnle 74

for want of prosecution.

McMann v. Engel et 01., Securl- Southern district July 21, 1936 PlaInt!1f.s motion for a preliminary

ties and &cllange C'ammi"lon. of New York. Injunction to restrain compUance

. illterlJener •. with the Commission's subpena denied Aug. 5, 1936 (16 F. Supp.

446). On appeal from this decree the Circuit Court of ApPM!s for the Second Circuit on Jan. 19. 1937, a1IIrmed the order of the court below (87 F. (2d) 377). A

~tition for certiorari was denied y the Supreme Court on Apr. 12. 1937.

MISCELLANEOUS INJUNCTION PROCEEDINGS

The majority of injunction proceedings instituted by the Commission under the Securities Act have been to enjoin violations of Sections 5 and/or 17. Section 5, subject to the exemptions therefrom

provided in Sections 3 (a) and 4 and in the Commission's rules promulgated pursuant to Section 3 (b), prohibits in paragraph (a) the

use of the mails or the channels of interstate commerce to offer, sell,

or' deliver after sale unregistered securities, and in paragraph (b)

prohibits the use of the mails or facilities of interstate commerce to

transmit a prospectus relating to registered securities unless it meets

the requirements of Section 10, or to deliver registered securities after

sale unless accompanied or preceded by such a prospectus. Section

17, in general, prohibits fraud in the sale of securities by the use of

the mails or the channels of interstate commerce. .

McDowell Mines, Inc. et al.-This action was instituted on April

16, 1937, in the District Court of the United States for the Distrl.ct

of Colorado to enjoin defendants from violating the provisions of Section 17 (a) (2) in the sale of delendents -stock, . The complaint

alleged that the company, in the sale of its securities, had misrepre-

-sented the proven quality as well as the state of development-of its

mine, arid that ..there had been omissions to state material facts

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

circumstances under which they ~were rnader.-not misleading .. -The

court, in an oral opinion rendered May 14~'193'1,granted a permanent

injunction against violation of Section 17 (a) (2);Y . . . ,.," '

Otis &: Oompany.-The Commission filed a bill in the District

Court'for the Northern District of Ohio on April 1, 1936, alleging that

the defendants in the sale to its customers of stock of the Murray-
THIRD ANNUAL REPORT 159 

Ohio Company had violated and would continue to violate Section 

17 (a) (2) of the Securities Act and Section 9 (a) (2) of the Secuities 

Exchange Act. The defendants in acquiring a block of approximately 

5,000 shares of this stock had received agreements from the vendors I thereof that they would withhold the balance of their stock, some 

17,000 shm of a total issue of 60,000 shares, from the market for 

sixty days. During this period the price of the stock on the Cleveland 

Exchange was stimulated by a series of purchases made by the defendant. These purchases constituted approximately 90 percent of the 

trading. The Commission claimed that the failure of the defendants 

to disclose these facts in selling the stock to the public "at the market" 

constituted an "omission to state a material fact necessary in order 

to make the slatenlents made, in the light of the circumstances under 

which they were made, not misleading." On December 28, 1936, 

Judge West sustained this argument and granted an injunction against , 

violation of Section 17 (a) (2) by such omissions. With respect to 

Section 9 (a) (2) of the Securities Exchmge Act, the court held that 

the evidence was "insufficient to establish with the necessary degree 

of certainty to warrant an injunction" the claim that the defendants 

contemplated any future v~olation of that Section (18 F. Supp. 100). 

An appeal by the defendants is pending. 

Boise Petroleum Co~poration and C. S. Hassler -On April 15, 1@37, 

the defendant corporation and its sales manager, C. S. Hmsler, 

consented in the District Court for the Distuct of Idaho to the entry 

of a permanent injunction restraining them from selling unreg~stered 

oil and gas leasehold interests in an area known as "Beacon Hllls, 

Idaho", contrary to the provisions of Sect~on 5 (a) of the Securities 

Act of 1933, and in the sale of these securities from obtaining money 

or property by means of certain untrue statements of material facts 

in violation of Section 17 (a) (2) of that Act. The decree also enjoined 

Hassler from acting as a broker or dealer in the sale of securities 

unless registered as such with the Commission in accordance uitb the 

requirements of Section 15 (b) of the Securit~es Exchange Act. Later, 

t.he Commission instituted criminal contempt proceedings against 

the corporation and Hassler on the ground that they were continuing 

to engage in the acts and practices against which the court had issued 

the injunction. The defendants in their answer admitted that 

since the entry of the decree, the mails had been used in the sale and 

delivery of the securities, but alleged as a defense that such sales 

and deliveries had been made solcly uithin the State of Idaho. The 

court held that the use of the mails violated the injunction order, 

and on June 7, 1937, fined the oorporation $500 and Hassler $300. 

This is the first case in which a penalty has been imposed in contempt 

prooeedings for violation of an injunction obtained by the Commission. 

Other miscellaneous cases are: 
160 SECURITIES ,ANp, EXQHANGE COMMISSION

TABLE JI

Prmclpal d~fenda~ts United States dis. Date bill trret court filed Violations alleged

lOS. Stock Market Fl. New York ..• _. Aug. 17 nance, Inc.

Aldrich make, Inc., District of Co- Sept. 7 et al. lumbla.

Sco.17 ••••....••..

Sees.5and'17 .. ...•

Stipulation to diseontlnue

fIled Oct. 30,'1936:

P.erlpanent injunction

granted May 19. 1936.

4Ppeal d~IIlissed ,sept. 18.1936.' .

Montana _. Nov. 2 ._.• .do ••. .

District of ootum- Sept. 23 ••..• do... bla.

Western district May 20 Sees.5 (b) and 17(a) of

ofPennsylvania. 1933act, and sees. 7

(cl (2) and 11 (d) (2) of 1934 act.

Southern distrtet June 21 Sees. 5 and 17. •.••.. of New York . do_._ _.... June 24 ._ ... do ......•• _._

New lersey .... Oct. 14

Permanent Injunction en. tered on O1::derpro <Ofl'

!~&30on Dec. 11,1936.

On Ian. 11, 1937,tJ\l) C9!l' sent decree entered on June 14, 1935, was va- cated on application of

defendants.

Hearing; on merits seheduled for Dec. 15,1937.

Hearing on -merits-seheduled forNov. 15,1937.

Motion for preliminary injunction scheduled for

hearing In fall of 1937.'

No further action has been

talren In suit for injunction pending dlspo- sitron of crimlnal pro- ceedings.

Permanent injunction en. tered by CQllS6Ilt,oflIM.

fendants May 19,1937.

Motion to vacate order to show cause and dis.

miss amended bill denied Mar. 30, 1937;

defendants granted 10

days withm which to plead further; bill taken

pro COll!U&O as to de.

fendant corporation and

2 other defendants on May 10.1937;casepend. ing as to remaining defendants.

Temporary injunctions granted Feb. 21, 1936;

pendmg.

A preliminary injunction was granted onNov 25,

1935,and a permanent decree ofinjunction was entered With the con- sent of the dafendant on Feb. 2, 1937.

A temPQr;ary injunction was granted 'May 4.

1936. A.n appeal was taken to the C. C. A.

and the order was re- versed on Ian. 18, 1937.

On May 11, the hearing on the permanent In.

junetion was adjourned to Oct. 4, 1937.

Preliminary injunction as to all defendants en- tered on luly 9. !l136;

preliminary Injunction vacated, Feb. 17. 1937;

amended bU1filed June

10. 1937;case scheduled

fcirbear!ngIOJt-tllerit:s 'on

date to be fixed on mo- tion.

Temporary injunctions were granted lune 15 and Sept. 12, lll36, case

pending.

Sees. 5 and 17 (a)_•. __

Sec. 17(a)•.. .•....

Sec. 17 (a) of the 1933 act and Sec. 9 (a)

of the 1934act.

Sees. 5 and 17.... ._.

Sec. 17..•.. ....

lune 15 Sec. 17(a)••..••••.••.•

Nov. 2

1936 Mar. 30 •••.. do•••• .•.••.

Dec. 23

Nov. 12

10S5

Feb. 4 ...•. do, •.. •...... ••. Pending.

Oct. 21

Feb. Zl .•. _.do. .••••••...•..

Levett'" Company ..• Eastern district

of Michigan.

Universal Service As. Northern district

800lationet al. ofTIllnols.

Kerpel'" Co Southern district

ofNew York.

lack R. Vale__. __..... Northern dlstrlet

ofMISSissippi.

John M. Torr, et al.. Southern district

of New York.

GOldfields Consoli.

dated Mmes, Ine.,

eta\.

Boyette, W. E ._.__ Southern district

of Florida.

Secord,Vanderpoel'"

Co Ltd., et al.

Durante, A. A. (A. A.

Durante Co. and J. W. Goodwin).

DIrect Royalty Sales

Corporation.

Whealton Co., Ine.,

etal.

K.W. Tol1dCo., Ine., et al.

J. Edward 10nes._. Southern district

of New York.

Wall Street Security Northern district

Corporation et al, of Illinois.

••• _

__• _ _

__

__ •• •••• ••••• ••••••

'"

•__ _ ' •••••

__•__ __

- _

__

•

_
THIRD aNNUAL REPORT 161

TABLE II-Continued

Prlnci-' defendants United States dis. Date bill ..... trlct court filed Violations alleged Disposition

WIlliam Huke et aI••• Massachusetts .••. sept. 2 ..•.. do•••••••••••••••.•

R.TlJ. Koeppe Co. Northern district Sept. 14 Sec. 17 (a) (2) of 1933 et al. of Illinois, act; sec. 9 (a) (1) (A) and 9 (a) (2) and (3) . of1934act. FrancisJ. Sullivan •••. New Hampshire .• Sept. 25 Sec. 17 (a) (2) and (3)•.

Great-Western Mine ,Oolorado •.•• : •..• do . .'.: •.••• do..••.•••••••• : .•• Trust et-aI. .. :

a Gordon Oborg :._ Massachusetts Feb •. 3' do "."" ..• _._ ':

Anaconda Mlmng Colorado .•• :••.•.. Nov. 21 Sec. 17 (a)•••••••••...• Milling Co. et al,

E. R. Perry et al, Northern district Nov.24 .•••. do.•..•••••..•••••. (Seminole Provi- of Oklahoma.

dent'l'rust).

Permanent consent In

junction entered on Jan,

29.1937.

Permanent Injunction entered on order pro

un!u,oonJune26,1937.

Permanent consent In

junction entered on Aug. 21,1936.

Injunction pendente lit

denied without prelu dice on Dec. 19, 1936.

Suit dismissed on Jan.

26, 1937. on stipulation that defendants would

discontinue practices

eomplalned of.

Permanent consent In

[unction entered on Sept. a, 1936.

Permanent injunction granted Apr. 13, 1937;

defendants are' taking an appeal.

Permanent consent in

junction entered on Sept. 25,1936.

Permanent consent in

junction entered on Dee.

16,1936.

Permanent consent in

junction entered as to 5

defendants and suit dis

missed as to remaining 2

defendants, Nov. 2

1936.

Permanent consent in

junction entered Nov

5,1936.

Preliminary Injunction denied Nov. 7, 1936,

defendants' motion to dismiss suit granted June 30, 1937.

Permanent consent in

junction entered Nov

21,1936.

Suit dismissed on Jan. 1

ce3,1937, WIthout prejudi

on agreement of defend ants to correct practlces complained of.

Permanent consent in

[unction entered Dec

16, 1936.

Permanent consent In

junctlon entered Jan

22, 1937.

Application for prelim!

nary Injunctlon denied

Mar. 15, 1937.

Preliminary Injunction granted Jan. 28. 1937

pending on petition for

special appeal

Permanent consent In

junctlon entered Jan

8,1937.

Court reserved decision on a motion to dismiss

argued Jan. 29,1937.

Permanent consent In

junctlon entered Jan

Zl,I937.

'Permanent C<U!SOntIn

junction entered Feb

23, 1937.

Permanent consent In

junction entered Feb

3,1937.

Massachusetts .••• Jan. Zl Sec. 17 (a)..•••••.•.•..

Nevada........... Oct 24 Sec. 5 {a).••......•...

Colorado.......... Jan. 11 Sec. 5 (a)••••.••••.•••.

Western district of Nov. 5 ••.. do..••.....•.••.... Tennessee.

Colorado.......... Oct. 8 Sees. 5 (a) and 17 (a)

(2).

ootorador.; .•.•••• Oct. 19 Sec. 17 (a) (2)....•....

.do...•.••••••• Jjn~ 8 ..••• do••••.••.• ._•..

United Goldfields

Companyet al,

Federai Compress and

Warebouse Company et al.

Tbe Metala Tunnel

Company et aI.

Crusader Aircraft Cor.

poration et al,

The Columbia -Oompany et al,

',l'be Union -Trust

Company et al.

Harold-Alton Meyer

A. D. Beck ..••.• Northern district Dee. 16 sees, 5 (a) ana 17 (a).. of Texas.

E.RandaII Henderson. Western district Dec. 22 do••••.••.••.•••.• of Tennessee.

William La Vey et st., Eastern district of Dec. 28 Sec. 5 (a)••.••.•..••... W8$hlngton.

Hertz Company, DlstrictofColum' Dec. 29 Sec. 17 (a) (2).•••.•.•• 'Inc:. at aI. bia,

19S8 'Ilbe~ Gb4miIcal DistrictolColum- Jul1' 10 sec. 17 (a)••••••••••••• Oompany.Inc.,etal. bia.

Centennial Consoli. Southern district July 13 .•.•• do.•••••••••••••••• dated Mines Corp. ofNew York. et al.

J. G.Jarvis et al_..... Northern district Aug. 14 .•••• do•.••••••••••••••• of Texas.

Aaron S. Saphier et al. Southern district Aug. 2S Sec. 17 (a) (2) 01 1933

of New York. act; sec. II(a) (I) (2) and (4) of1934act.

-'

~

-

'"

- '

_

_

'"

_••• _

•••••

'"

•

••__ __

••

••• ' _

•• •••• ••••• ••• ••• -
162 SECURITfES AND EXCHANGE'COMMISSION

T A-BLJt.U-Continued

DisposItion

Permanent consent iii.

junction entered Mar.

17,1937.

Corpomte defendant con. sented to entry ota per- manent injunction on Mar. 18, 1937;pending as to other defendants.

Permanent consent injunction entered Mar.

31.1937.

Do.

Permanent consent In.

junction entered Apr.3, 1937.

Permanent consent In.

junetlon entered Apr. 10,1937.

Permanent consent In.

Junction entered Apr. 16, 1937; vacated June

30,1937.

Permanent consent injunetlon entered Apr. 22, 1937:' .'

Permanent consent in.

Junction entered Apr, 23,1937.

Prellmluary consent in-

[unetlon entered Iunl!

14,1937.

Permanent consent injunction entered Apr. 28 1937. . On May 20, 1937,1 otthe

defendllnt8 appeared specially and moved to qll/l8h 8Ilrvlce ofprocess. This rootIon Is pencUng. On MiiY 26, 1937, the

CommIssion 1IIed a praet:iJl&fgr.an-onl ... , COfl[U'O lllrto another defen(lant.

Permanent conaent Injunction entered May 6.

1937.

Permanent COD86IItIn.

junction entered May? 1937.

Violations aJ1'eged

do Sec. 6 (a) of 193311ct; sec. 15(a) of 1934act.

Mar. 18 Sec. 5 (a)

Western district

ofWashIngtDn.

District of Oolnmbia,

Westemdlstrictof Mar. 6

Washington.

Utah ._ Mar. 12

Sec. 17 (a) ._.__ Preliminary consent In.

Junction entered Feb.

23..1937:pIltldlng. Sec. 6 (b) (2)__________ PreIIm!Ulll'Y cbnsent -In)

junlltion entered Feb.

19. 1937:pending. Bee. 17 (a) ._._._.____ PreJlmlnary consent b~

junction entered Mar. 8,

1937; answer 11100Mar.

19,1937; pending. Maryland Mar. 3 Sec. 17 (a) (2). Permanent Injunotlon en.

tered on Apr. 26. 1937. on order pro COfI/t8!o. Colomdo _._. _._do. do Suit dismissed on motion

of defendants on Apr. 14,1937.

Sees. 5 (a) and 17 (a) Permanent consent In.

(2) of 1933'&Ct; see.. junctloJ11entel:eltMur.6. 15 (a) of 1934act. 1937.

Sees. II (a) and 17 (a) Permanent consent In. (2). Junction entered on Mar. 13, 1937.

Southem district Mar. 17 Sees. 5 (a), 17 (a) and Permanent consent In.

of New York. 17 (b). junction entered on Apr. 12.1937. Northern district .do Bec. Ii (b).--.------- Permanent consent In.

or illinois. Junction entered on May 6, 1937. .do., ._ do.; do Do.

Principal defendants United States dis. Date bill

trict court tiled

1DS! Consolidated Gold Southern district Feb. 12

MInes Company, of ArIzona.

Ltd(i et aI.

Harm M. Saddle- Eastern district of Feb. 19

mire et al. Michigan.

W. A. Nash &< co., Massachusetts. _._ Feb. 26

Inc.

Viking Gold Mines Colomdo Mar. 31 Sec. 17 (a) (2)..

Corpomtion et aI.

Indian Creek Mining Western district do_____ Sec. 5 (a)_.

p~~;Ufv:~1r~_~~ ... ~~:_~~~~~.__Apr. 3 Sec. 5 (a) of 1933act; sec. 15(a) ofl934 act.

Sunbeam Gold Mines .do, . Apr. 10 Sec. 17 (a) (2) of 1933

Co. act; sec. 15(a) of 1934 act. Submarine Gold Min. Idaho _. A.pr. 15 Bec.5 (a). ._.....

lug Company.

Dry Lake 011 Com. do Apr. 22 do ..

pany.

Granite Creek: Dredf do ., Apr. 23 ._do

Ing Company et a .

C. Raymond Wickes. Eastern district of Apr. 26 Sees. 5 (a) and 17 (a)

Ine., et aI. Pennsylvania.

C. S Parks Southern district Apr. 28 see, 5 (a) (2).-_.

of Ohio.

Walter P. Spielberger Western district of Apr. 30 Sees. 5 (~ and (b) and

etal. Virginia. 17 (a) 2).

Golden West Consoli. West8mcUstrlctof May 5 Bee. 5 (a) of 1933act;

dated Mines et aL Washington. sec. 16 (a) of 1934 act. Lawrence R. Hannah. Montana May 7 .do.._ ._

-Associated Pharmacists of BaItlmore,

Ine., et al,

Tip-Top Gold Mines.

Ino .• etaI.

Northwest Gas and

Oil Properties, Ine.,

etaI.

The Royalty Securi.

ties Company et aI.

Connor. Leach &< Co

Ine., et al,

Edman Company et aI.

R.I. Koeppe &< Co.,

Ine., etaI.

Becord Gold MInIng Co. etaI.

Automatic GUDB,Ine., et aI.

-

>

>

__ >

•• __••

••• • •••• __

' '

__ •••••••

••

__ __••• __•

••••

___

•• __

•••__

•• •__•• __

' "

•__•• _

_

•__ _

__•• •

__•• __• •

_____ __________•_ _____ ••__•__•______ _

_____ ___________ ___ ________•________

__

••• _••••• __ ______

~

••••••• ••__ •• •••
THIRD AXNUAL REPORT 163 

TABLE11-Continued 

Sees s (8) and 17 (8) Permanent consent In-

(2). junetionentered Maya, 1837. 
 BBPI~Ooldfi~ld~, Ltd .....do.. .......... May 10 Sex 5 (b) rmd 17 (a) P-anent consent in- et 81 (2). jvnction entered May 

10, 1937. I,. 0 Piokett ......... Eastern distr~alof May 12 Se. S (a) and 17 (a) Permanent wnssnt inWashingtan (2) and (3) juoctnon entared May 12, 1937. MontmsDmm Lum. .....do.. .... See 5 (a) .............. DO. 
 man Extetannon, Ina 

Ben Bmner........... 	 .....do................. Permanent consent ln. 


juoction entered May 

13,!W. 


SunbPsm G4U Mines W~stem distriot May 14 .....do................ 	~earmgonapplie~ti&lor 


Compaoy et 81. I orW8sh1nEtOn. / 	 Erdlminary iniunotlon 

eld June 5 1W7; deddon reaemsd. 

United Em~ireOold Cotordo.......... May 21 .....do................ Preliminary inluoction 


Mines Company et 	 wanted Juoe 3, 1937. .I 

c ~.Hasseltlne...... Westerndistrlctof May 18 sec. 17 (a) (9) ......... Permanent mnsent In-


Wwhlngton 	 junotion entered May 28. 1837. Engineers Oald Min .....do............ June 1 800. 5 (a) ..............Permanent consent ID 
 ing Company et al. 	 junction entered Juoe 1 1937. 
 Gold Helm Mlning ..... do............ Jone 6 .....do................ Permanent consent in. 


co. 	 jun@lan entered June 5, 19'37. 
 LeoA.MeOraii& Co., Oregon............ June g ..... do................ Permanent consent in-


Inc., et el. 	 juootlonentsredJune 8, 1937. 
 Natiomi Rererenoe Distriotoroeium- June 11 Bw. 17 (a) (2)......... Permanent consent in. 


Library, Inc.. et 81. bia. 	 iunotion entered June is,1837. 
 The Hlokor Finance North- district June 14 Seo. 17 (a) (I), (2). and Permanent mnsent in0-mtion et al. ot Ohio. (3). . 	 Junction entered June 

24, 1837. H. EenryAnthonget Massachusetts.... June 28 Boo. 17 (a) (2) and (3). 	 Permanent consent in 

sl. 	 lunetion entered Jun. 

28,1937. 

PROCEEDINGS AGAINST BROKERS AND DEALERS OPERATING 

"BUCKET SHOPS" 

Securities are often sold on margin or deferred payment plans 

wherein the broker or dealer makes no provision for acquiringsecurities 

with which to fulfill his commitment to the customer. In the normal 

case this involves "bucketing" orders, a fraudulent practice which is 

specifically dehed as a crime under the laws of most States. In 

many instances the operator of a "bucket shop", in addition to failing 

to provide for the acquisition of securities with which to meet his 

commitment to his customer, embezzles the partial payments made, 

or the margin collateral deposited, by customers. The following 

cases instituted by the Commission involve this type of fraudulent 

operation: 
164 SECURITIES AND EXCHANGE COMMISSION

TABLE III

Principal defendants Umted Stetes dIstrict court Filed Violations

alleged Disposition

Kattleman & Co. (H. 1. Eastern district June 29 do

Kattleman). of Missouri.

1934

Turivas & Oo., Inc. (Louis Eastern district Dec. 7 Sees. 5and

Turivas et al). of Louisiana. 17.

Roberts, Howard M.

(Howard M. Roberts

Co.)

1935 District of Co- May 3 do

lumbia.

Principal defendants consented to

entry of permanent injunction on Jan. 9, 1935. On May 23, 1935,

indictments were returned

against 20 defendants. All defendants except 6 who have not yet been apprehended and 4

whose indictments are held in

abeyance to be used as Govern- ment witnesses when the fugitives are apprehended, pleaded guilty to the second indictment

and were sentenced in February 1937. Sentences ranged from 1 year and 1 day probation to 2

years and a f5,OOOline.

Temporary Injunctions granted

May 14, 1935, and May 17, 1935." Order vacated as to 2 defendants

and a permanent injunction granted as to the remaining 2

defendants on Dec. 10, 1935.

Decrees pro confuso entered

Aug. 26, 1935. On or about Sept. 9, 1935, defendants' motions to set aside these decrees were grant- ed and the court filed the following memorandum: "Motion of

defendants to set aside decree pro confuso, and to file answer sus- tained. Motion of plainti1l for

Injunction pendente liIe is over. ruled, without prejudice, as the reason and necessity therefor

does not now exist." On June

24, 1936 an indictment was re- turned against Kattleman and

others charging violations of sec- tion 17 (a) (1), (2) and (;I) of the

Securities Act and of the mail

fraud statute. Kattleman en- tered a plea of guilty on April 2,

1937, was sentenced to serve 5

years in the penitentiary and was lined $1,000. On May 7, 1937, 6

defendants pleaded guilty; 4were lined $500 each, 1 was sentenced to serve 1 year and 1 day in the

penltentiary, and the sentence of

1 was deferred. The case is

pending as, to the other defend- ants.

"SELL AND SWITCH" DEVICE

The practice of first selling seasoned, dividend-paying stocks listed

on major securities exchanges to customers, and after, gaining their

confidence, "switching" them to a low-grade speculative stock being

distributed by the dealer, which, of course, he. highly recommends,

has been' frequently encountered by the Commission, This device,

often involving as concomitant features the use of "tipster sheets" as

well as the misrepresentation of bid and asked prices in a fictitious

over-the-counter market, was involved in the following court

proceedings:

_

_

"
.THIRD ANNUAL REPORT

TABLE IV

165

United States ViolaPrincipal defendants district court Filed tions Disposition alleged

National Investment New Jersey ______ Sept. 14,1934 Sec. 17 Permanent Injunction entered by Transcript et aI. consent sept .. 24, 1936. Twenty defendants Indicted July 2, 1936.

14 mdividual defendants and 1

corporate defendant found gUIlty In

December 1936. Corporation sen. tenced to $10,918fine. Individual sentences vaned from 7 years Im- pnsonment and $5,000tine to 1 year and 1 day suspended sentence. One defendant testified for tbe

Government and received a sus- pende~entence. The mdletment IS still ndlng against the remainIng 4 defendants.

Benners, Owens & Co. Eastern district May 15,1936 ._.do._ Temporary Injunctions entered et al. of Michigan. against 3 defendants May IS, 1936.

One defendant has filed answer. Pending.

CASES INVOLVING THE DEFINITION OF "SECURITY"

Crude Oil Oorporationof America, et al.-On April 27, 1936, the

Commission filed a bill in the western district of WISconsin to restrain

the Crude Oil Corporation of America, B. C. Buckmann Company,

Wells-Kendall Company, and Douglas Winslow Adams from further

violations of Sections 5 and 17 of the Securities Act in the sale of certain

oil contracts. The bill alleged that while the oil contracts purported

to constitute a sale of a number of barrels of oil, such contracts were

sold to people who never intended to take delivery of the oil, and that

the contraots were in fact "investment contracts" within the meaning

of the term "security" as defined in Section 2 (1). The bill further

alleged that the defendants in the sale of these contracts had made

certain misrepresentations constituting violations of Section 17. On

December 1, 1936, Judge Stone in his findings of fact and conclusions

of law held that the contracts were "securities" within Section 2 (1),

.that the Securities Act was constitutional, that the petition should be

granted as against Crude Oil Corporation and B. C. Buckmann Company, and that the bill should be dismissed as to Wells-Kendall Company. The Commission had previously dismissed the bill as to the only

other defendant, Douglas Winslow Adams. A permanent injunction

was granted on January 21,1937. The case is now pending on appeal

by the enjoined defendants to the Circuit Court of Appeals for the

Seventh Circuit.
166 SECURITIES AND EXCHANGE COMMISSION

Other cases involving the definition of the term "security" are:

TABLE V

PrIncipal dBrendants United States FIl8d Violations Disposition district court alleged

1936 Cultivated Oyster Farms ,Southern district lan. 10 Sees Sand Temporary injunction granted Corporation. of Florida. 17 May ~,1936. Pending. Irwin Kott et aL•••••••••• Southern district luly 11 Sec 17(a) Criminal prosecution involving ofTems. (1) and question ofwhether forgedbonds

(3) of are "securities." Two defendthe 1933 ants pleaded guilty and were a c t: sentenced to 3 years Imprison- m a i I ment, 1 was sentenced to 32 r r a u d: months and indictments werediseonsprr- missed as to 3 defendants. One

acy to defendant who was convicted

violate -and sentenced to serve 5 years fame. appealed and the Cireult Court ... of :Appealsfor the Fifth Circuit

remanded the case fer new trial

-- -------- -- -- - - -- on May 28,1937,on the ground of an error in the admission of evidence, bnt the Court expressly c held the forged bonds to be "securities" (90F. (2d) 88).

CRIMINAL PROSECUTIONS UNDER THE SECURITIES ACT OF 1933, AS

AMENDED

The Commissio~ has frequently exercised the authority conferred

upon it 'by Section 20 (b) to transmit 'evidence accumulated in' the

course of its investigations into violations of the Securities Act to the

Attorney General for use in criminal proceedings involving unlawful

securities transactions. ' '.

Arizona-Oomstock Oorporation.-An indictment was returned on

September 14, 1934, in the 'western district of Washingt<m against

fifteen individuals. Three of the defendants, Alexander S. Coplin,

Ben F. Serlis, and Joseph Konwiser, were convicted in J'anuary 1936

on the ninth count of the mdictment which charged a Violation of

Section 17 (a) (2) of the Securities Act in using a means of eommunieation in interstate commerce, 'the long distance telephone, to obtain

'money and property by omitting to 'state' a: material fact necessary to

'make. the statements made; 'in the light of the circumstances under

which they were made, not misleading. Coplin' received a sentence

of two years' imprisonment and a fine of $2,500; Serlis, three years-and

a $4,060 fine; and Konwiser, eighteen months and a $500 'fine. On

appeal to -the Circuit Court of Appeals for the Ninth Circuit the judgment was unanimously affirmed on March 1, 1937 (8S"F. (2d) 652).

The Supreme Court denied a petition for a writ of certiorari on May

24, 1937.

-

~

-
'<' -:. , , 'THIRD ANNUAL REPORT 167

Benners, Owenll<6 Oompany.-Qu October 19, 1936, an indictment

was returned in the eastern district of Michigan against Melvin D.

Haynes, A. Paul Benners, Angelo Fraino, alias Angelo Franco, Leroy

Brooks, alias John Bookbinder, Douglas F. Wood, Harry Goldman,

and William WlSeman. The indictment charged violations of the

fraud provisions of the Securities Act, Section 17 (a) (1) and (2), and

a mail fraud conspiracy: to violate both of these statutes through

misrepresentations in the sale of the stock of the Old Dutch Refining

Company, of Muskegon, Michigan, and through artificial manipulation'~f, the .market price of this stock. The ease.is pending.

Irwin Eott, et al.-.An indictment was returned on July 11, 1936,

in the southern district of Texas, -charging; certain individuals with

violations of Section 17 ,(a);(l) and 1(3), of, the Securities' Act, the mail

frAud; statutes, and with eonspiraey-to- violate these statutes in the

aale,of.certain forged. securities. Of the seven' defendants, two pleaded

guilty and were sentenced to three years' imprisonment'[ bne was,

sentenced, to .serve thirty-two months; while the indictments 'were

dismissed -as to' three; of the, defendante.: One of. the' defendants,

Jerihem Seemen.ioonvioted and.sentenced to,Se1'VS five ye&:rs;appealed,

to the Circuit Court of Ap,peals for the Fifth Circuit. On May 26,

1937, that court held that the forged bonds were within the scope

of the Securities Act, but remanded the case for a new trial because

of errors in the admission of evidence (Seeman v. United States,

90 F. (2d) 88).

Polymet Manufacturing Oorporation.-Indictments were returned

in the district of Massachusetts on February 8, August 20, and September 9, 1935, charging W. L. Jarvis, and others, with violation of

the mail fraud statute and conspiracy to violate Section 17 (a) of the

Securities Act. The indictments charged Jarvis and his co-defendants

with aelling 'Polymer Manufacturing Corporation stock to the investing public by means of a high pressure telephone sales campaign

run in conjunction with the circulation of a so-called investment

service which purported to be unbiased, at a market price previously

inflated by defendants' manipulative transactions. Jarvis and his

principal co-defendant, Gaines, as well as certain others, have been

convicted and sentenced. On appeal, the Circuit Court of Appeals

for the First Circuit in an opinion rendered by Judge Morton on May

24, 1937, sustained the conviction (90 F. (2d) 243). Jarvis, Gaines,

and two of his associates were also indicted in the southern district of

New York in connection with manipulative operations in the stock of

Atlas Tack Corporation listed on the N ew York Stock Exchange.

The trial, held in October 1935, ended in a jury disagreement. A

new trial has been scheduled.

Oolonial Investment Syndicate.-Indictments were obtained in the

District Court for the Western District of Tennessee on February

~ '
168 SECURITIES .AND EX(ilRA.NGE:O@MMISSION

14, April 13, April 14, and April 10,., 1939, .ohargiag' violation of the

mail fraud statute, Section 17,,(a) of the ,1933.Act and conspiring-to'

violate the same. During-the fiscal y,ear,.one"defenaant, who .pleaded

guilty, and two-who were convicted, were sentenced to terms ranging

from five to seventeen years. Judge Martin, in-an exhaustive opinion

treating all phases of the case, held the.Securities .Act constitutional

(United States -Y. Bogy, 16 F. Supp. 407). The 'two defendants who

were. convicted have :filed notices of Uheir intention to appeal.

. Ernest R.Jllooley.-Qn October 28, 1~36, the.defendant was indicted

in the southern disteiet of California for perjury.ithe charge being that

be falsely testified in an investigation by the Commission of the Cota

Oil Company. 'wLNovember 1936. the defendant .demurred to the

indictmento.alleging, inter alia, that the Securities 'Act of 1938 :was

unoonstitutional. This demurrer. was overruled-by the court without

opinion on January' 5., :1937" v The case was pending at the end, of

the.,1iacal year. ' . '. r..' '. . \' . :

.Other.criminal, prosecutions arising under the Securities Aet or the

mail fraud .statute in the preparation .of which the Commission took

part, pending or instituted during the fiscal year are as follows: '

i-

,

-

-

" ' " •

/
--~amp_ a~NUAL REPORT 169

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THIRD ANNUAL REPORT. 173

CIVIL LITIGATION UNDER THE SECURITIES ACT OF WHICH THE

COMMISSION IS INFORMED

. 'Oontinental Distillers and Importers Oorporation.-Various purchasers of securities of the Continental Distillers and Importers Corporation sued the corporation and its directors in the District Court

for' the District of Columbia under Section 11 of the Securities Act,

alleging that they had purchased these securities which were then

registered under the Act, relying partly upon false and misleading

representations in a prospectus filed with the Federal Trade Commission. Nineteen suits of identical nature brought in the District of

Columbia against the' same defendants were by agreement stayed

pending the determination of a single such action by the Court of

Appeals for the District of Columbia. On June I, 1937, the latter

court held in Martin v. Hull et al. that the standard of care which

must be exercised by a director in submitting for filing with the

Commission statements compiled on the authority of experts was

one of reasonableness and was not "the high degree of care necessary

m the protection of the interests of the stockholders of the corpora

tion." A petition for re-argument was filed on June 14, 1937.

, Lawrence Adams &1 Oompany.-Three bills were filed under Section 12 (1) and (2) of the Securities Act in companion suits in the

District Court for the District of Columbia on May 8, 1936, by

Arnold K. Balls, Charles A. Browne, and Marion E. Lapp against

Lawrence Adams & Company and Clarence Falk to rescind certain

sales of oil royalty interests. The bills alleged that the defendants

in failing to register the interests sold had violated Section 5, and

further alleged that the sales had been induced by certain misrepresentations in charts purporting to show the location of producing oil

wells and in misleading omissions to disclose that the oil wells were

not in condition to begin production. Lawrence Adams & Company

moved to quash service made upon it in New York. This motion was

overruled on the theory that a plea in abatement should have been

filed. The case is pending.

, II. THE 'SECURITIES EXCHANGE ACT OF 1934, AS

, , . AMENDED

MIS~ELLANEOUS INJUNCTION PROCEEDINGS

Archie M."A,)w,rews'et al.-O~ August 12,'1936, suit was instituted

by the Commission in the southern district of New York to enjoin

the defendants from effecting wash sales, matched orders, and other

manipulative transactions in the capital stock of the Dictograph

Products Company, Inc., in violation of the provisions of Section 9 (a)

of the Securities Exchange Act of 1934. On September 24, 1936, one

of the defendants consented to the entry of a permanent injunction.

While the suit was pending as to the other defendants upon the bill,
174 SECURITIES AND: EXOlU:N..GE.:eO~ISSION

answer, an&pltiintiff's monon fot a pFellinin8.Ij,injiinctioii;~ tlle Conimission by order dated November Ii, '193f(au.'thorized an investigation to determine whether unlisted trading privileges on the New York

Curl> Exchange in the Dictograph stock should .be suspended 9f

terminated. The plaintiff's motion for an injunction pende,'(/,telite

was denied Novemb~r,23, 1936.' On the same date the-defendanta

filed a cross bill seeking to enjoin the Commission from engaging in

any activity or investigation with rlilspe~t, to th~ capital stock o~

Dictograph Products.Company, Inc., and the trading therein,until

final determination of ,~heCommission's suit. The relief requested in

the cross bill was predicated upou numerous grounds, among them the

unconstitutionality of the Act. ' The Commission moved to dismiss

the cross bill for lack, of jurisdiction and failure of the.cross bill to state,

a cause of action in equity. That motion was granted, and 'on

November 25, 1936, defendants took an appeal-from the entry of the

order granting the motion. On March I, 1937, the Circuit Court of

Appeals of the Second Circuit affirmed the order dismissing the cross

bill, on the ground that a suit against the Commission could only be

maintained in the manner and upon the terms specified in the statute

(88 F. (2d) 441). The time for filing an application for a writ of

certiorari was extended to July 29, 1937, and the defendants' petition

was pending before the Supreme Court on June 30, 1937.

Aaron S. Saphier et al.-Qn August 25, 1936, the Commission filed

suit in the southern district of New York to enjoin the defendants

from further violations of Sections 9 (a) (1), (2) and (4) of the Securities

Exchange Act and 5 (a) and 17 (a) of the Securities Act. An injunction pendente lite was denied without prejudice by Judge Mack on

December 19, 1936. The suit was dismissed on January 26, 1937, on

stipulation that the defendants would discontinue the practices of

which complaint was made.

Northwest Gas and Oil Properties, Ine., et al.-This represents the,

first case in which an injunction was obtained against violation of

Section 15 (a) of the Securities Exchange Act. A bill was filed

March 5, 1937, in the western district of Washington, charging violations of Section 15 (a) of the Securities Exchange Act and of sections 5

(a) and 17 (a) (2) of the Securities Act and a permanent consent

injunction was entered o~: the ~ame date.

Additional cases involving miscellaneous injunctions, under the

Securities Exchange Act are as follows:

J ':
195 TYIRD ANPUG.REPORT 


TABLEVII : ., , 


Principal defendants 	 ~ Violadona slleged, ~ ,, ~ $ D$i:ui t ~ Dislxlsition~ 

' 16% 

K. W. Todd Co.,Ino., Western distriot May 20 	 Baa. 5 (b)and 17 (a) On Jan.11 1937 the cbn- et el. ~IPenanyhania. 	 of 1033 act and sem. sent de&ee edtered on 7 (0) (2) &d 11 (dl JWI4 1835 wss va- (2) of 1934 act. cated od sppiioation of 

defendants. 

JohnM.Tonetal ..... Southern nlstrlct Deo. 21 Seo. 17 (a) of the lCm Pending.
 of NBW YO*. eat an4 see. 9 (8) 01 


th~1034 BCt. 


10s 

Otis & Co............. Northetn dlstriet Apr. 1 	 Sec. 1701 I933 sot, and Permanent inlunction re-
 of Ohzo. BBO. 9 d 1834 act. 	 straining vialstion of 

section 17 (a) (2)

uanted; as to violation 

of section 9 (a) (2)

denied on Dec. 28, 1936 

(18 F. SUPp.?W). R. I. Koeppe & Ca. Northern district Sept. 14 	 Sec. 17 (a) (2) d I933 Permanent rnjunctioo et d. ol IUinais. 	 M;secs. punted Apr. 13 1937-

(A) and $1 $1 'defendants are ip~ini and 3) of 1934 act, an,appeal. R. A. adlagher et d.. MBSSBC~~~~~~S.~.. NOP.13 	 8ee. 9 is) (1) and (2) Prebmmsry injunction eTBDted Nov. 23, 1036. 

Pending. 1657 

Remrd Qold Mining western district Mar. 17 	 Seo. 5 (a) of 1933 act: Permanent mnsent ioCO.st ai. of Wa8hingmn. 	 sec. 15 (a) of 1'234 lunction entered War. act. 17, IW. 

P.I.lsmb ............ Oregon............ Mar. 29 	 See.l6(a) ............. Permanent oonsent h-


junction entered Mar. 

29, 1937. 

Peter Ivanoh ......... Western dishicl Apr. 3 8eo. 5 (8) of l@33act; .Permanent consent in. 

of Warhington. seo. 1s (a) of 1934 lunotion entered Apr. Sot. 3, 1037. 

Sunbsam Gold Mines .....do............ Apr. 10 Seo. I7 (a) (2) of 1933 Permanent consent in. Co. 	 act; see. 15(a) of 1934 junction entered Am. act. 10. 1937. Rsnk V. Breoka et ai. Southern district Am. 13 Sea. 9 (8) (1) and (21.. Permanent consent inof New York. junction entered as to one defendmt on Apr. 13, and ss to another 

defendant on Apr. 24, 1937. Willis E.Smith....... Idaho............. Apr. 15 So. 16 (a)....... Permanent consent injunction entered Apr. 16. 1937. Boise~ktrleum~orp......do............. Apr. 16 Bee. 5 (a), I7 (a) (2) Permanent consent in- et 81. of 1833 act' see. 15 junotion entered Apr. 

(%) of 1834ktet. 15,1937. George D. Gottiieb .........do............. Apr. 28 	 Set. 16 (8)............. Perma~ent consent in-


unction entered Apr. ?23 1997. Golden West Consoli- Western ,distrjct May 5 Seo. 5 (8) of 1933 not: ~er&anent consent in- dated Minesat d. of Washmgton. seo. 15 (a) of 1934 lunction entered May ant. 6, 1937. hwreneeR.Hannah. Mona......... May 7 .....do................. Pemsnent marsot in-


junction entered May

7 1937. Butte Mines Holding .....do............. May 8 6ec. 15 (8)............. ~kmansnt consent In- Co. Junotion entered Mag 8, 1937. EdasrdL. Wsbstsr... Idaho............. June 4 ...do ................. Pmanent aonnent in. 

junction entered June 

4 1937. Geara Herbert He? southern district June 18 Sec. 9 (a) (11, (2), and ~eimanent manent in- man. of New York. (4). jooction entered June 

18, 1937. 
176 SECURITIES AND EXCHANGE COMMISSION

CRIMINAL PROSECUTIONS INVOLVING THE SECURITIES EXCHANGE

ACT- - -

Three criminal prosecutions were instituted during the fiscal year

involving the Securities Exchange Act. Violations of Section 9 were

alleged in each of these cases. Their status is as follows:

TABLE VIII

Dateof I NumUmted States dis- ber of

Name of case triet courtwbere Charges de- Disposition indictment re- indIct. fendturned ment ants

named

19S6 Joseph Mendel. Southern district Aug. 30 Sec. 9 (a) (2) of 1934 act; Ii Pending. son etal. of New York. conspimcy to vIolate same. 1996 n. B. Vaughn Western district Sept. 30 Sees. 17 (a) (1) and 5 (a) 4 Two convicted defend- et al, of Pennsylvania. (1) of 1933 act; sec. 9 ants and one who

(a) (2) of 1934 act; pleaded gnilty gfven mail fraud; and con. 3-yearsuspended sen. spiracy to violate sees. tences and placed on 17 (a) (1), (2) and (3), probation lor 5 years 5 (a) (1) of the 1933 ill March 1937; one act and the mail fraud defendant acquitted. statute. 1991 Morey Oetz et MassachllSetts_. __ lan. 4 Sec. 9 (a) (1) (A), (B), 2 Pending. aI. and (C) 011934 act and

eonspiracy to violate same. H. W. Schmid Soutbern district Mar. 30 Mail fraud; sec. 17 (a) 7 Do.

Company. of New York. (1) of 1933 act; sec. 9

(a) (1) (A) and 9 (a)

(2) of 1934 act; con- s prr a cy to violate same.

CASES INVOLVING SUBPENA POWERS

Mc1vlann v. Engel et al, Securities and Exchange Oommiseion, intervener.-On July 21, 1936, McMann filed suit in the District Court

of the United States for the Southern District of New York to enjoin

the defendant Engel and others, partners in the stock brokerage

firm of Engel and Company, from producing statements of the plaintiff's' account in response to subpenas issued by the Securities and

Exchange Commission in the course of its investigation to determine

whether the plaintiff and others were engaged or about to engage in

manipulative and other fraudulent acts and practices in the stock

of the Budd Wheel Company and Wil-Iow Cafeterias in violation of

the Securities Act of 1933, and the Securities Exchange.Act of 19.34.

The bill of complaint alleged that the transactions in question were

confidential; that the information called for by the subpenas was

privileged and protected by the fourth amendment: that the subpenas infringed the plaintiff's immunity against "unreasonable

searches"; and that the statutes under which the subpenas were

issued were unconstitutional and void. Engel and Company, the

primary defendant, took a neutral position and the Commission

"
THIRD AJ.~NUALREPORT l77

found it necessary to intervene to protect its rights. On August 5,

'1936, the district court decided against the plaintiff on all questions

raised and denied the motion for a preliminary injunction (16 F.

Supp. 446}. From this decree McMann appealed to the Circuit

Court of Appeals for the Second Circuit. On January 19, 1937,

the circuit court of appeals affirmed the order of the court below

(87 F. (2d) 377). McMann secured a stay pending application to

the Supreme Court for a writ of certiorari but the petition was denied

by the Supreme Court on April 12, 1937.

Ryan and Ryan Florida Gorp. v. Newfield and Western Union Telegraph Oo.; Ryan and Ryan Florida Gorp. v. Newfield and Postal

Telegraph-Gable o«,Inc.; Florida Tex. Oil Go. v. Ballentine and Postal

Telegraph-Gable 00., Inc.-These three cases, involving almost identical

questions, were consolidated for purposes of argument. The suits

were brought in March 1937 in the southern district of Florida against

representatives of the Commission and against Western Union and

Postal Telegraph to enjoin enforcement of and compliance with certain

subpenas duces tecum issued by the Commission, calling for the production by the telegraph companies of copies of certain telegrams in

their possession sent or received by the plaintiffs. The subpenas had

been issued only after preliminary investigations and the issuance of

formal orders of investigation to ascertain possible violations of Sections 5 and 17 of the Securities Act, and after the Commission had

expressly found that the telegrams called for in the subpenas were

relevant and material to the investigations authorized. On the

ground that the subpenas violated the plaintiff's rights under the

fourth and fifth amendments, the District Court for the Southern

District of Florida, on April 14, 1937, granted interlocutory orders

restraining enforcement and compliance. An appeal was taken by

the Commission's representatives to the Circuit Court of Appeals for

the Fifth Circuit, and on July 22, 1937, that court reversed the

decision of the district court. A unanimous court speaking through

Judge Hutcheson held. that the plaintiffs had no standing to invoke

the fourth and fifth amendments, and that the subpenas in question

had been issued pursuant to lawful authority and were valid process.

In a number of instances the Commission, under the authority

conferred by Section 22 (b) of the Securities Act and Section 21 (c)

of the Securities Exchange Act, has deemed it necessary to resort to

the courts to enforce compliance with subpenas issued in connection

with investigations of violations of the Acts. Although several applications to enforce subpenas have been fully argued before the courts,

many were continued indefinitely because the Commission, prior to

decision, obtained the required evidence from other sources: The

applications filed or pending during the fiscal year are: .
178 SECURITIES AND EXCHANGE COI\IMISSION 

TABLEIX 

1.0.. 


Prindp* defendants . Dist!iot in which Date of Bing mt Disposition brooght ap@imUon. 

- Vmer-Clay ' Co. Mid- Wwtern dJstrlct De. 16.1835 Order spplied for, granted Mar. 20 1837. : Continent c&s Oil ol Oklahoma. Raspondents havenoted sn apph. Purcb~ing00, and P. 

0. Cla presidint. Blsok &id Exploration Wastern dlstrict Deo. 17,1835 Cause dismlased July 21. 1036 on motion 

kt, et al. of Oklahoma. 01 the Commission. 

Xwstal Chemicd Co., DistdotoiColom- Jan. 29.1W Order granted by district wort Mar, aa st 81. bia. 1835: appe81 tskm and -kd in wort 

oi appeals Oct. 8 1838: Motion by Cornmid& to redand we to dlstrict court for dismissal granted Nos. 8 1838. on motion of the comassiod sn order to vacate was entered by the 

dislriet murt Nov. 10 1838. National Short Term Se- hlassachusehs.... Jan. 31,1838 Order entersdtfeb. 3, i838. ~eftmdant 

Ourltze~ Corporation et on Psb. 11 lm, moved to ~aeste on a1. varionsgrohndp Usging theinvalidit7 

d the Semitie8 Aot ol1833. OBSB111 

pndlng. Mins.J. Edvardetal ...... North- dlstrid Feb. 2.1838 Defendants on Peb. 29, 1838, moved to oi Texas. die sppiication on ground that 

Securities Aot of 1933 unoonstitutlonal. 

Cans dimised Jan. 21,1837. on agrea- meat or respondents to eppear and 

tsstiiy. Thomas Bracken, et a1 ..... Southern dlstrfot Feb. 18,1936 Order granted by distrlct eourt March 

of New York. 28. lm. Appd men and arsued in 

Comt of Appsalr and the ordsr wa. affirmed on IWB1. 1938. On Oct. 

12, 1838, cartid was granted by the 6UFoemB Court and the -remanded to the distrlct ~Urtwith directions to vacate the deem on the grounds that 

th8 ceuse was mwt sines the evidence 

had bean obtained imm other SO-. 

Amerioan Rand Carp ......Western district June 8.1838 Dismised July 18.1836, onmotionofthe 

ol Washington. Cornassion; after the required dm. 

men& had ban produced by the 

defendant. 

A. C. Smith ............... Western dirtriet Sept. 1.1838 Order applied for, granted Sapt. 2. 1836. 
 of Pennsylva- nia. 

APPEALS FROM ORDERS OF THE COMMISSION PROMULGATED 

UNDER THE SECURITIES EXCHANGE ACT 

Section 24 (b) of the Securities Exchange Act permits any person 

filing any application or report with the Commission to make written 

objection to the public disclosure of some or all of the information 

contained therein. Under Section 25 (a) of the Act provision is made 

for review in a circuit court of appeals or in the Court of Appeals for 

the District of Columbia of orders of the Commission rendered in a 

proceeding under this Act. More than 600 issuers seeking registra, 

tion upon national securities exchanges fled, in connection with their 

application for registration, objections to disclosure of certain information, for the most part relating to sales and itemized break-down 

of the cost of sales. In many other instances objection was made to 

public disclosure of salaries and other remuneration paid to officers 

and directors. At the request of the issuers concerned, pursusslt to 

Seqtion 24 (b) the Commission, in private hearings, heard the objections to public disclosure of the information for w-hich confidential 

treatment was sought. Approximately 30 issuers whose applications 

for confidential treatment of information filed had been denied by 
THIRD ANNUAL REPORT 179

the Commission, purportmg to act under Section 25 (a) of the Act,

filed petitions in various circuit courts of appeal and in the Court of

Appeals for the District of Columbia to review the Commission's

action. A group of these cases was consolidated and argument was

had June 11, 1937, before the Court of Appeals for the District of

-Oolumbia, on the question whether the Commission's determination

under Section 24 (b) is the type of order which is reviewable under the

special appeal section, 25 (a). As of the close of the fiscal year no

decision had been rendered in these cases, nor had any circuit court

of appeals made any disposition on. the merits of any such petition.

The names of the petitioners, the date of the filing of the petition,

'and the circuit court of appeals in which the petition is now pending

are as follows:

TABLE X

Name ot petitioner Date filed CircUit status

Do.

Do.

Dismissed by petitioner Apr. 27, 1937.

Dlsm!slled by petitioner June 3, 1937.

Pending.

Do.

Do.

.July 9,1936

Mar. '26,1936

.July 18,11136

Nov. 13,1936

Apr. 9, 11136 Becond. Pending. Dec. 27,1935 Thlrd Dismissed by petitioner Mar. le,

1937.

District of Pending. Columbia.

Second______ Dlsmlssed by petitioner Apr. 5, 11137. ___do_________Pending. .

District of Do.

Columbia. Mar. 25,1936 Third.

June 3,1936 Seventh

July 3,11136 DIStrict of

Columbia. Feb. 15,11136 Slxtb

Jan. 18,1936 do

Mar. 27,11136 Second

.July 23,11136 District of

Columbia.

Aug. 25,1936 do_._______ Do.

Mar_ 26,1936 Thlrd Dismissed by petitioner Apr. 12,1937.

Apr. 3,1936 Second______ Pending.

Nov. 26,11135 Third.______ Do.

Mar. 26,11136 do_________Dismissed by petitioner Apr.15,1V37.

.June 12, 11136 Becond._____ Dismissed by petitioner.June 14,11137 .July 24,'11136 do .___ Pending.

May 23,1936 Nlnth-_____ Do.

Sept. 4, 11136 Thlrd_______ Do.

Mar. 24, 1936 Fourth. Dlsm!slled by petitioner Apr. 12,11137.

Apr. 8,1936 Thlrd_______ Pending;

.June 4, 1936 Seventh_____ Do.

May 15,11136 Second______ Do

.June 25, 1936 Eighth __~___ Do.

Nov. 6,1936 Second Dlsmissedbypetltloner Apr. IS, 11137.

Apr. 23, 1936 do ._.___ PenWng.

Nov. 17,1936 do_________ Do.

Mar. 24, 1936 do ~_.__ Dismissed by petitioner Apr. 12,11137.

AJ1IedChemical Dye Corporation .AmerIcan Can Company

American Sumatra Tobacco Corp

The American Tobacco Company. __ Brillo Manufacturing Company Bulova Watch Company, Inc

Congoleum-Nairn, Inc

The Cuneo Press, Inc

The Dlamond M,atcj1Company

The Electric AutO-Lite Company Evans Products Company General Baking Company General Mills, Inc

The International Nickel Company of Canada, Limited. P. Lorillard Company -_ Mathieson Alkali Works

Masta Machine Company

National BlseuIt Company 1.1. Newberry Company

New York TrapRock Corp

Ollver United Filters, Inc.

-~~1~~~Yn~~~=O-comiiiiiiy:::

Sloss-Bhe1lleldSteel'" Iron Co A. Stein Com~y

The Superheater Company W. A. Sheaffer Pen Company The Torrington Company U. S. Industrial Alcohol Co

The United States Leather Co

,uJPted States Tobacco Company

'THE THIRD AV-ENUE RAILWAY"COMPANY

'0-':1July '31,'-1936, The Third- Aven,ue, Railway Company filed it

petition for review by the United States Circuit Court of Appeals for

the Second Circuit of an-alleged: order of the Securities and Exchange

Commission. The petitioners had requested that the Commission

~me~(l ~ts r~quiremenit. that the financial statements included in the

annual report subnmtea to 'the -'Comptission be certified by 'public

aceountants, to provide -that 'Where' 'the principal properties of the

'" __ - _

_

_

_

_ _ _ _

•

_ _

_ _ _ _ _

- • _

_

_

_ • _

_

_ '" • _

_ • _ • _ • _

_

_
180 SECCRITIES A~D EXCHANGE COMMISSION

registrant were common carriers, required by, the laws of New York

to make annual reports to the Department of Public Service, .they

could file annual financial statements not so certified. The Commission denied this request but there were no proceedings and it did not

enter a formal order. On October, 19, .J936, the Court of Appeals

dismissed the petition on the ground that since this was not a proceedings inter parties the court was without jurisdiction to entertain

the petition.

SUITS TO ENJOIN ENFORCEMENT OF THE SECURITIES

EXCHANGE ACT '

In addition to the case of McM,ann v. Engel et al in which the Commission intervened, and the cases brought by Ryan, Ryan Florida

Corp., and the Florida Tex., Oil Company against Agents of the

Commission, the Western Union Telegraph Company, and the Postal

Telegraph-Cable Company all of which are described above*, the

only action to enjoin the application of the Act is that commenced

by J. Edward Jones on January 2,1936 to enjoin enforcement against

him of Section 15 of the Act. This case is described in detail in the

Second Annual Report of the Securities and Exchange Commission.

On April 17, 1937 the suit was dismissed by the court for want of

prosecution.

III. THE PUBLI~ UTILITY HOLDING COMPANY

ACT OF 1935

Thus far, cases which have arisen under the Public Utility Holding

Company Act of 1935 have been for the purpose of obtaining an adjudication as to the constitutionality of the Act. The constitutional

question has been raised directly in suits by holding companies to

enjoin enforcement of the provisions of that Act, in suits by trustees

of holding companies in bankruptcy instituted for the nominal

purpose of obtaining instructions from the court as to whether to

comply with the Act, and in stockholders' suits against the corporation

to enjoin compliance with the Act. At an early date the Commission

instituted the Electric Bond and Share case in the southern district

of New York in order fairly to present all the issues in a single case.

The majority of the other suits were not defended by the Commission.

Electric Bond omd Share' Oompany et al.-The provisions of the

Public Utility Holding Company Act of 1935 became effective on

December 1, 1935. Even before this date the Government was faced

with a multitude of injunction suits, actual 'or anticipated, on the

part, of most of the larger holding companies. The Commission,

desiring a prompt and fair test of the provisions of the Act, brought

suit in the southern district of New York agains~.the Electric Bond

and Share Company and its principal intermediate holding companies

• Under the heading CIUU InliOlrifl{/ Subpena P01IIerI,
THIRD .ANNUAL REPORT 181

to enjoin activities which were declared unlawful by that Act. Other

defendants were subsequently added in order to bring before the

court as many typical situations to which the terms of the Act apply

as was possible without confusing the issues of the case. A stipulation

of facts, approximately 2,000 pages in length, was filed with the court

on June 30, 1936. Thus, the court had before it a record comprehensively detailing many of the more important instances in which

the Public Utility Holding Company Act impinged upon holding

company activities. On January 29, 1937, Judge Mack in an exhaustive opinion held that the defendant utility companies, under existent

circumstances, could only attack the registration provisions of the

Act, that these provisions were separable from the remainder of the

Act, and that they came within the ambit of congressional power to

regulate interstate commerce. A petition for certiorari directly to

the Supreme Court, joined in by all parties, was denied by that

Court on June 1, 1937. The case is now pending on appeal to the

Circuit Court of Appeals for the Second Circuit.

Landis v. North American Oompany.-:Seven suits were filed in the

District of Columbia to enjoin enforcement of the Holding Company

Act. On December 7, 1935, a motion was made by the Commission

to stay these suits pending a decision of the Supreme Court in the

Electric Bond and Share case.. This motion was granted by the district

court on January 6, 1936, but on special appeal the stay order was

reversed by the Court of Appeals for the District of Columbia on the

ground that the parties and issues were not identical with those in the

Electric Bond and Share case. Certiorari was granted by the Supreme

Court October 5, 1936. On December 7, 1936, the Supreme Court

reversed the decision of the court of appeals, vacated the order of the

district court, and remanded the cause to the lower court for a reconsideration of the motion for a stay. Mr. Justice Cardozo, speaking

for a unanimous Court (Mr. Justice McReynolds concurring in result

only), stated that although the Court did have the power to grant the

stay, the stay was excessive insofar as it was to continue in effect

beyond the decision of the district court in the Electric Bond and

Share case (299 U. S. 248). The cases are now in the District Court

for the District of Columbia awaiting further proceedings on the

motion to stay.

The status of the cases arising under the Public Utility Holding

Company Act which were pending during the fiscal year is as follows:
182 SECURITIES :ASD EXCHSNCTiE. COUblISSIOX 

T~sqrmXI.-Suits by holding eompanie 

,'.~. . > ~. .,: < 

Parties plaintit . Dgpasition , , 

...... . ,. 

12% 

distiic<of a0 . psons~lvanis.' 

~el~~are power co ...... NOT. 21 Order tab6 bl~'.~~o 

united aas ~m~rovemint c p..... ~~Ste~ '

NO? Pending. 

~leetxio Dslauare.......... mnfcsso end, 
 ... agsh9t Id Uated StsteS attorney 
 and postmaster Sept.. 25 1936. 


.Pending astb other delendadts. 

susquehanna utilities Co ...;..........do...,........ ...do..... Do. 

phuadslphia Electric CC~ .......... -EmterndmSrlct ol ...do..... Pendlnp. 


Pennsglvama, 

he Cammonw.altb & Southern Delaq ar~l .....r. Nor. 23 Order'takinc bill pro ronf~raoentered 


Coiporatien. agawt looal United States attorney 
 . ;.,. . and stmaster Ian. 30 1838. Bill 


disrnged as to +herv defendants 
 . 	 Apr. 22 11856. 

~~nrolidatedam Cd., of New Southern district NOV. i5 On Jan. 5.1836,'bill dismissed as ta 

York. . o[ New York. other than 1oee.I defendants. Tha mmt rded on Feb. 22, 1838 that the ., , httomsg Gsnksil and ~&tmastsr 

oenwd were pot neoessarr partias . . , 	 &lendant In sults aealnst tha local 

pastmaoters and Unlted Stat- mar-. sbd8 (rsmted Sub nomine (ma- ro4ida!rd LTaqGb. v.Hordpl,l4 F.Supp. 223). MoUon to dlsmfs? by thm 

perties WBS thetefore denre$ Bndpm . . . . , , . . coef- decrss &red. A Bna) dsCree-$nteredan oot. 24 1936. 

Texas Electric co..;: .... ~elaarua.....2. .. 'N~Y,Zd BUI dism- OnJune 25, 19%,(ss tqdl . . but bcnl d~fenpant~. Order taklw ' . , blll!@focoonlcrsa as to latW entered 

Ax.15 1W. , E] paso Eleetrio Do Delslaars: -l. ..ido.-. Do. ': 

~~~ineerr Publlo Semim .............. do- ... do..... Do. 


~h~ North americ8n.00....L.... Di&ri&oi Calm. ...do:.:. Dlscontlowi by plaintie on Apr. 28; 

hi.%. 	 1937. stme & Webster, ~nc............ Delaware.............do..... us amisred on &e B, lQ36as ta nu 
 bat local defend%-. 01dw tak! 

. 

.

. ~. biupro conlcaao a3 O latter entea hug. 25,1838. stone dr~ebstsr utilities Corpo .....do..: .......... ::.do..:.: . Do. 

ration. 

ameriarn oas & Pmer Co ..-.do ........ 2.... NOT. 21 Order tslrlna bill pro confirm enterad. 


against upited States attornex Se t . ,, ,. as: 1936: .Psndlng as to other &: 

Lendants. 8 

nmerfcnn Water Work3 and aec- District of Colum- :.do. Dismntinoed by pldntitI oh Apr. 28. 

tric Co. In*. bia. 1937. 

~~ui~~iiiiae~ & Electric co...... ~~ame .............do..... BIU &mi& on 0ot. 8. 1936, as tidl 


hut local defendants. Order taking billpromnfeato as tolatterentered 04 

Oot. 14, 1838. 

sierra Pacifio Elmtrlo O......... Malne.....l..........do..... Pending. 

standard power & Light Corpon* Delaaare.............do..... order *king bill pro mfeam entered 

tion. agslmt local dsleodant.3 8% t 25 leas. Pendlw as to other $@d: 

.nu. 


~h~ united Cormration st a1 ..... Boothern dbtrict ... do. Same disposition as in ConsaUdaWd

of N*la Yhk. . Was c*. care m8pt that the anal 

demse was entered on Nov. 10. 1838. 

DO Nm. 28 Order taking bill yro mnlraro entered B Bfmt local defendants Sept. 16 1136. PBndlng as to othw defend!. mu. 
 North Continent Ulllities Corp... .....do................ do..... Pendhg.
 cities servia, Co. et a1 ................. do................do..... Do. 


~lnerica~LlrhC & Traction Go.'.. DistrlctolColum- ...do..... Pending. bie. 

citlee servloe Co. era1............ Southam distdot .... do..... Barns dispoaltlon as i'h Oonsolidsted 


01 New Ymk. Gas Co. ~SBBOIOBP~ that the iinai 

dm wm entered on NO". 10. 1838. 

United States Electric Power Marylsnd ............do..... Pending. 

Corporstion. The Columbus Railway Power southern dbtrict ...do.... Order taking blll pro conlerao entered 

& Light Co. ol Ohio. against loc3! del811dants Marrh It, 1938. rendcog as to other defend- ants. Continental aao & Ek. Gorp.... DlstdatofColum- ...do..... Psndlng. bla.. 

E II~Tennessee Upht & Power Western dlstdct ... da..... Do. 

Po et al. of VMnis. 

IComplelnaota which bass registered under the Publlc Utlllty Holding Company Act, waerstog Ell 

mmtitotiooal dghts, and without aitbdrawlog sultl to snjalo enloroem?nt 01 the Act. 

DBlswam 
. 
183 THIRD ANNUAL REPORT 

TABLEXI.--Suits by holding companies--Continued 

Parties pldntlq ! Distridoourt Disposition 

1856 

Federal Light & Traotioo Co. Bouthem distdtrict Nor. 28 Same dieposition as in Consolidated et d. of New Yurk. aas Co. case except thnt the bnq decree was entered on No-. 18,1038. Northem Stat? Power Ce. st a].:. Minnesota........... do..... Biii dinmissad on Fsb. I0 1938, as to ail 


noniacal defendant% ' hotion dismissed by 17 of 22 plainti8s. Pend: 

ID by other 5 pl8intiffs. Public Ssrvios Co. af Colorado Colorsdo.............do..... pen&. .. 
 et d. 

The Toledo Edjaan 60. st sl...... Northern distrlct ...do..... Pending. of Ohio. 

United ~lght'andPower Co...... DistrlctofColum- ...do..... Do. , . bii. 

UnltedLight and RsUway Ca .........do................ do..... DO. 


Asmciated Gas & Electrk Co. Ddsware......... Nov. 30 Do. 
 et 81. , . H. DI. ByUsby & Co..-............do ................do..-..Bin dismissed on Oct. 6 193& &to all 

but local delendaots.' Order taking bill pro confaao ao to latter entered 

Oct. 14. 1936. 

The Byllssby Cmporation ... do................do..... Do. 


North Amsrim Edison Cb.1 ........-.do................do..... Order taking bill pro conlrsao entered 


aminat 1-1 defendant8 July 7. 1936. 

P~odiesBS to other defwdantr. 

Ruit dismntinued by pislotie April 

1937. 

North American Light & Power .....do................ do..... Bill dismissed on June8 1936, as to s!i 


CO. but local dsfendsnts. ' Order tak~ne 

bill pro confeaao aa M latter entered 

July 7, 1838. Soit dlmntinued by plaintie April lS7. 

Northeaste:n Water b. Electric .....do............. Deo. 4 Order taking bulpr. canJe8ao entared 

COTPD~B~IOD. ~gaiOBt 1-1 deIBndaots Se t 25, 1938. Pmdlog ao to ather &end ants. IsJ8 

Commuoity ass 6:Power.............do............. Jan. 20 Order taking bill ro confmao entered
 . akalnrt local vnzed stat- ~ttomey Mu.31, 1038. Pending. 

IComplainsots which have rwbtered under the Public Utiiitr Holding Company Act, raseruing all 

constitutional right5, end without althdrawing suits to enloln BnfarOement of the Act. 

TABLEXII.-SU~~Bby iruslees in bankruptcy or by the company as debtor 

Date of 

Com~an~ Dl~trictwmt flllng Dlaposltian suit 

1w 


Lehigh Vaiiey Transit Co ......... Eastern district 01 Nov. 25 Pending.
 Pennsyl7ania. Standard Ciao & Electric 00...... Delaware......... NOT.27 (tovernment officials, joined as de. 

lendants, movd to , dismiss on ounds 01 lack of Jurrsdiction and & ~mprvsnue on ~eo.16, 1035. 1938 Pending. North American Osn 61 Electric Bouthem district June 6 Trustees' petition lor instructions not Co. 01 New York. mwed and still pending. 
184 SECURITIES AND EXCHANGE cOMMISSIO~

TABLE XIII.-Stockhoiders' suits

Dateot

Case District court fiJ.ing Disposition suit

1~5

Cflarlu B. Barne. v: Ford et aL MlISllachusetts Nov. 30 Government officials made parties defendant moved to dismiss on Dec.

17, 1935, on procedural grounds,

ClUe v, Columbia Southern district

Case pending. TIleodore W. Nov. 20 Pending. GIU Electric Corporation. otNewYork. Albert E. Pierce v. COUI/hlin et al.. .do. Nov. 30 Temporary restraining order dismissed

as,.to a ~tl\.detendaDts on.Dec,

10, 1935. . JamWl's motion tor tem- porary Injunction continued. Albert E. Pier .. v, Central Public Delaware; Dec. 4 Temporary rastrlIinlnjl -order entered

UtiU, Corporation et at. Dec. 5, 1935. PrelIminarY Inlunetion denied Apr. 26, 1937. Public r:litit, 1meltinll Corpora- Eastern district Dec. l! Temporary injunction denied Dec. 17,

tion v, VIlliti., POlJJer LI9t.t ot Virginia. 1935, on ground ot want ot equity.

Corporation et al. Ti¥l Oircult Court ot Appeals tor the

Fourth Circuit denied temporary restraining order j!ending appeal on same grounds on eb. 22, 1936 (82 F.

(2<1) 21). PendlDg. .

TABLE XIV.'-Stockholders' suits under section 30

, Date ot Case District court filmg Disposition suit

1936 Filher v. Landi8 et at District of Oolum- July 27 Bill to enjoin Commissioners trom com. bia. ~11Dg his appearance to testify.

emporary injunction denied Aug. 11, 1937, on the ground ot want ot equity. F .. her v. TIle Equit, Corporation _._._do_. do. Bill to enjoin the officersat the corpora. el at. lion troll! Klving .evidence and the

Commission trom compellIng the

giving of evidence. Temporary injunction denied Aug. 11, 1937, on the ground of want of equity.

o

•• ••••

~

~

_ ____ __• •

•• _••• __

____ ___

•• ___• ___••• __

__•__________ ___