Montana oil and mining journal. [volume] (Great Falls, Mont.) 1931-1953, 1938-04-23

wen from your own point Of view to wait for
a couple Of weeks and see II the commission
has any comments.
Incidentally, I might say that 1t Is perfectly
proper under the rule to file your prospectus
IN typewriter form in the first instance, and
have the printing done and the final copies
filed after you have got your letter from the
commission.
This. I think completes the picture OF the
differences between the three ruIes-rules 200.
20i and 202 Before I close would ike to
discuss one OF two problems that arise equally
under all three rules.
The first OF these problems concerns the
extent TO which exemptions under these rules
may be combined with exemptions under other
provisions Of the act or with the registration
Of other securities OF the same class. For in
stance: We are often asked whether 10 is pos
sible to sell, say 100000 worth OF securities
residents Of the home state and selling the
other 100000 under rule 201 Or we are asked
whether Il is possible to file registration
statement covering the whole 100000 worth
and while waiting for It to become effective
start the sales campaign with q $4,000 offer
ing under rule 200. To both Of these, and all
similar questions. We are obliged TO say no
not just to be obstructive but because with
the act as It is we have no choice. Section
sob, under which all Of these rules are
adopted, is quite specific on the point, It for
bids US to exempt any Issue OF securities
where the aggregate amount at which
such issue is offered to the public exceeds
sIOO OOO" In the cases I have given, It seems
perfectly clear that the Issue" is one which
exceeds sI00,0 900 in aggregate offering price.
Securities of the same class, offered on the
same general terms to the public as a part
Of a single integrated financing program,
cannot be segregated into separate Issues
merely by announcing that one part win be
REGISTERED and another qualified under rule
202. Nothing be clearer than that our
exempting power was designed to cover small
financing, not small portions OF large IL
nancing operations. The exemptions provided
by these rules can be used only If the total
amount Of securities Of the same class in
voIved in the same general financing plan
or transaction falls within the maximum al
lowed by the particular rule concerned
$4,000 or 100000. as the case may be.
The second general problem is that Of as
sessable stock. have received letters accus-
ing the commission OF forbidding the sale Of
assessabIe stock. This is not true. What the
commission has done Is to prohibit the use
of these rules for the exemption Of assessaole
stock from registration where the total
amount Of assessments which may legally be
levied is more than the $4,000 or $4,000
top limit allowed by the rules. Stock assess
able above these limits may be registered
under the act as any other stock may. and
then offered to the public in the same manner
as worcestershire stock.
This exclusion OF fully assessable stock from
the benefit Of the exemption rules is not
based on an uniformed prejudice on the
commissions part. The commission knows
that, although assessable stock has been I'M
scrupulously used many times as q means OF
stripping the ignorant Of all their loose pen
mics without leaving them anything more than
an engraved piece Of paper to show for It,
it nevertheless has a legitimate place In the
honest financing OF mining development. But /
here again we are driven back to the fmita- /
tions imposed by the act upon the commits
sion's exempting power; the aggregate !
amount at which" an exempt issue may be
Offered to the public may not exceed $780, /
D00 When you give" away a share Of as
sessable stock, on an agreement to pay such
assessments as may thereafter be levied, or
even without such an agreement. it isn't /
really a gift, for in order to keep what you
nave purported to give him the recipient must |
pay such amounts as you may see fit to
levy on him as assessments The same is
rue II you purport to sell the stock to him
1t some nominal figure. In either case, the /
actual offering price, from any realistic point |
Of view, is not the original cash paid, If any
but the amount which by the terms Of the /
stock the buyer may be made to pay in the |
future If he is to keep his stock. When that
amount is unlimited. the aggregate offering /
price for the purposes Of the rule is likewise /
unlimited and no exemption is available.
This view has now been indicated expressly |
In the rules, by amendments adopted last
October which specifically state that the "ag-
yregate offering price" Of assessable stock for !