An Act to provide for the regulation of the business of selling securities in the District of Columbia and for the licensing of persons engaged therein, and for other purposes
PL 88-503 (H.R.9419), enacted 08/30/1964

620 
PUBLIC LAW 88-503-AUG. 30, 1964 
[78 STAT. 
Public Law 88-503 
August 30, 1964 
[H. R. 9419] 
AN ACT 
District of 
Columbia Securi-
ties Act. 
54 Stat. 789. 
15 u s e 80a-51, 
To provide for the regulation of tlie business of selling securities in the District 
of Columbia and for the licensing of persons engaged therein, and for other 
purposes. 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assembled^ 
SECTION. 1. This Act may be cited as the "District of Columbia 
Securities Act". 
DEFINITIONS 
SEC. 2. When used in this Act, unless the context otherwise 
requires— 
(a) "Agent" means any individual other than a broker-dealer who 
represents a broker-dealer or issuer in effecting or attempting to ef-
fect purchases or sales of securities. 
"Agent" does not include any 
individual who represents an issuer in (1) effecting transactions in 
an exempt security, (2) effecting exempt transactions, or (3) effecting 
transactions with existing employees, partners, or directors of the 
issuer or any of its subsidiaries if no commission or other remuneration 
is paid or given directly or indirectly for soliciting any person in the 
District. 
A partner, officer, or director of a broker-dealer or issuer, 
or a person occupying similar status or performing similar functions, 
is an agent only if he otherwise comes within this definition. 
(b) "Broker-dealer" means any person engaged in the business of 
effecting transactions in securities for the account of others or for 
his own account. 
"Broker-dealer" does not include (1) an agent, 
(2) an issuer, (3) a bank, savings institution, or trust company, or 
(4) a person who has no place of business in the District if (A) he 
effects transactions in the District exclusively with or through (i) 
the issuers of the securities involved in the transactions, (ii) other 
broker-dealers, or (iii) banks, savings institutions, trust companies, 
insurance companies, investment companies as defined in the Invest-
ment Company Act of 1940, pension or profit-sharing trusts, or other 
financial institutions or institutional buyers, whether acting for them-
selves or as trustees, or (B) during any period of twelve consecutive 
months he does not direct more than fifteen offers to sell or buy into 
the District in any manner to persons other than those specified in 
clause (A), whether or not the offeror or any of the offerees is then 
present in the District. 
(c) "Commission" means the Public Service Commission of the 
District of Columbia as so designated by section 21 of this Act. 
(d) "District" means the District of Columbia, either as a ter-
ritorial area as defined in the first section of the Act of June 22,1874, 
entitled "An Act to revise and consolidate the statutes of the United 
States, general and permanent in their nature, relating to the District 
of Columbia, in force on the first day of December, in the year of our 
Lord one thousand eight hundred and seventy-three" (D.C. Code, sec. 
1-101), or as the government and municipal corporation of that name 
as created by section 2 of such Act (D.C, Code, sec. 1-102), depending 
on the context. 
(e) For the purpose of subsection (a) of this section "exempt 
security" means— 
(1) 
any security (including a revenue obligation) issued or 
guaranteed by the United States, any State, any political sub-
division of a State, the District, or any agency or corporate or 
other instrumentality of one or more of the foregoing; or any 
certificate of deposit for any of the foregoing; 
78 STAT. ] 
PUBLIC L
A
W 88-503-AUG. 30, 1964 
621 
(2) any security issued or guaranteed by Canada, any Cana-
dian Province, any political subdivision of any such Province, 
any agency or corporate or other instrumentality of one or more 
of the foregoing, or any other foreign government with which 
the United States currently maintams diplomatic relations, if 
the security is recognized as a valid obligation by the issuer or 
guarantor; 
(3) any security issued by and representing an interest in or 
a debt of, or guaranteed by, any bank organized under the laws of 
the United States, or any bank, savings institution, or trust com-
pany organized and supervised under the laws of any State; 
(4) any commercial paper which arises out of a current trans-
action or the proceeds of which have been or are to be used for 
current transactions, and which evidences an obligation to pay 
cash within nine months of the date of issuance, exclusive of diays 
of grace, or any renewal of such paper which is likewise limited, 
or any guarantee of such paper or of any such renewal; or 
(5) any investment contract issued in connection with an 
employees' stock purchase, savings, pension, profit-sharing, or 
similar benefit plan. 
(f) For the purpose of subsection (a) of this section "exempt 
transaction" means— 
(1) any tr9,n.saction between the issuer or other person on 
whose behalf the offering is made and an underwriter, or any 
transaction among underwriters; 
(2) any transaction in a bond or other evidence of indebted-
ness secured by a real or chattel mortgage or deed of trust, or 
by an agreement for the sale of real estate or chattels, if the 
entire mortgage, deed of trust, or agreement, together with all 
the bonds or other evidences of indebtedness secured thereby, is 
offered and sold as a unit; 
(3) any transaction by a receiver or trustee in bankruptcy; 
(4) any offer or sale to a bank, savings institution, trust com-
pany, insurance company, investment company as defined in the 
Investment Company Act of 1940, pension or profit-sharing 
trust, or other financial institution or institutional buyer, or to a 
broker-dealer, whether the purchaser is acting for itself or in 
some fiduciary capacity; 
(5) any transaction pursuant to an offer directed by the offeror 
to not more than twenty-five persons in the District during any 
period of twelve consecutive months, whether or not the offeror 
or any of the offerees is then present in the District, if the seller 
reasonably believes that all the buyers in the District are pur-
chasing for investment; 
(6) any offer or sale of a preorganization certificate or sub-
scription if (A) no commission or other remuneration is paid 
or ^iven directly or indirectly for soliciting any prospective sulb-
scriber, and (B) the number of subscribers does not exceed 
twenty-five, and (C) no payment is made by any subscriber; 
(7) any transaction pursuant to an offer to existing security 
holders of the issuer, including persons who at the time of the 
transaction are holders of convertible securities, nontransferable 
warrants, or transferable warrants, exercisable within not more 
than ninety days of their issuance, if (A) no commission or other 
remuneration (other than a standby commission) is paid or given 
directly or indirectly for soliciting any security holder in the 
District, or (B) the issuer first files a notice specifying the terms 
of the offer and the Commission does not by order disallow the 
exemption within the next five full business days; or 
54 Stat. 789. 
15 use 80a-51. 
622 
PUBLIC LAW 88-503-AUG. 30, 1964 
[78 STAT. 
(8) any transaction effected with existing employees, partners, 
or directors of the issuer or any of its subsidiaries if no com-
mission or other remuneration is paid or given, directly or indi-
rectly, for soliciting any person in the District, 
(g) "Fraud", "deceit", and "defraud" shall not be limited to com-
mon law deceit. 
(h) "Guaranteed" means guaranteed as to payment of principal, 
interest, or dividends. 
(i) "Issuer" means any person who issues or proposes to issue any 
security, except that— 
(1) with respect to certificates of deposit, voting-trust cer-
tificates, or collateral-trust certificates, or with respect to cer-
tificates of interest or shares in an unincorporated investment 
trust not having a board of directors or persons performing sim-
ilar functions, or of the fixed, restricted management, or unit type, 
the term "issuer" means the person or persons performing the 
acts and assuming the duties of depositor or manager pursuant 
to the provisions of the trust or other agreement or instrument 
under which the security is issued; and 
(2) with respect to certificates of interest or participation in 
oil, gas, or mining titles or leases or in j)ayments out of produc-
tion under such titles or leases, there is not considered to be 
any "issuer". 
(j) 
Person" means an individual, a corporation, a partnership, 
an association, joint-stock company, a trust where the interests of 
the beneficiaries are evidenced by a security, an unincorporated orga-
nization, a government, or a political subdivision of a government. 
(k) (1) "Sale" or "sell" includes every contract of sale of, contract 
to sell, or disposition of, a security or interest in a security for value. 
(2) "Offer" or "offer to sell" includes every attempt or offer to 
dispose of, or solicitation of any offer to buy, a security or interest in 
a security for value. 
(3) Any security given or delivered with, or as a bonus on account 
of, any purchase of securities or any other thing is considered to con-
stitute part of the subject of the purchase and to have been offered and 
sold for value. 
(4) A purported gift of assessable stock is considered to involve 
an offer and sale. 
(5) Every sale or offer of a warrant or right to purchase or sub-
scribe to another security of the same or another issuer, as well as 
every sale or offer of a security which gives the holder a present or 
future right or privilege to convert into another security oi the same 
or another issuer, is considered to include an offer of the other security. 
(6) The terms defined in this subsection do n^ot include (A) any 
bona fide pledge or loan; (B) any stock dividend, whether the cor-
poration distriDuting the dividend is the issuer of the stock or not, if 
nothing of value is given by stockholders for the dividend other than 
the surrender of a right to a cash or property dividend when each 
stockholder may elect to take the dividend in cash or property or in 
stock; (C) any act incident to a class vote by stiockholders, pursuant 
to the certificate of incorporation or the applicable corporation stat-
ute, on a merger, consolidation, reclassification of securities, or sale of 
corporate assets in consideration of the issuance of securities of an-
other corporation; or (D) any act incident to a judicially approved 
reorganization in which a security is issued in exchange for one or 
more outstanding securities, claims, or property interests, or partly 
in such exchange and partly for cash. 
(1) "Security" means any note; stock; treasury stock; bond; de-
benture; evidence of indebtedness; certificate of interest or participa-
78 STAT. ] 
PUBLIC LAW 88-503-AUG. 30, 1964 
623 
tion in any profit-sharing agreement; collateral-trust certificate; pre-
organization certificate or subscription; transferable share; invest-
ment contract; voting-trust certificate; certificate of deposit for a 
security; certificate of interest or participation in an oil, gas, or mining 
title or lease or in payments out of production under such a title or 
lease; or, in general, any interest or instrument commonly known as a 
"security", or any certificate of interest or participation in, temporary 
or interim certificate for, receipt for, guarantee of, or warrant or right 
to subscribe to or purchase, any of the foregoing. "Security" does not 
include any insurance or endowment policy or annuity contract under 
which an insurance company promises to pay a fixed sum of money 
either in a lump sum or periodically for life or some other specified 
period or any contract issued by an insurance company pursuant to 
section 41 of chapter I I I of the Life Insurance Act, as added by 
Public Law 86-520 (D.C. Code, sec. 35-541). 
74 stat. 2is. 
(m) "State" means any State, territory, or possession of the United 
States, and the Commonwealth of Puerto Rico, but not the District of 
Columbia. 
FRAUD 
SEC. 3. It shall be unlawful for any person, in connection with the 
offer, sale, or purchase of any security, directly or indirectly— 
(a) to employ any device, scheme, or artifice to defraud; 
(b) to make any untrue statement of a material fact, or to 
omit to state a material fact necessary in order to make the state-
ments made, in the light of the circumstances in which they are 
made, not misleading; or 
(c) to engage in any act, practice, or course of business which 
operates or would operate as a fraud or deceit upon any person. 
LICENSE 
REQUIREMENT 
SEC. 4. (a) It shall be unlawful for any person to transact busi-
ness in the District as a broker-dealer or agent unless he is effectively 
licensed under this Act. 
(b) It shall be unlawful for any broker-dealer or issuer to employ 
an agent unless the agent is effectively licensed under this Act. 
The 
license of an agent shall not be effective during any period when he 
is not associated with a particular broker-dealer or a particular issuer. 
When an agent begins or terminates a connection with a broker-dealer 
or issuer, or begins or terminates those activities which make him an 
agent, the agent as well as the broker-dealer or issuer shall promptly 
notify the Commission. 
(c) Every license and renewal license shall expire one year from 
its effective date, but in any case in which timely and sufficient ap-
plication for a renewal license has been made in accordance with 
section 5(a) no license shall expire until final action of the Commis-
sion upon such pending application. 
The Commission may by rule 
or order fix a schedule for the first renewal of licenses so that subse-
quent renewals ma}^ be staggered over the one-year period. 
For this 
purpose the Commission shall reduce the license fee proportionately 
for any initial license which may expire before one year from its 
effective date. 
LICENSE PROCEDURE 
SEC. 5. (a) A broker-dealer or agent may obtain an initial license 
by filing with the Commission an application executed by all partners, 
directors, and officers of the applicant personally engaged in the securi-
ties business in the District, together with a consent to service of 
process pursuant to section 15(f) of this Act. 
The application for 
624 
PUBLIC LAW 88-503-AUG. 30, 1964 
[78 STAT. 
Initial license; 
publication an-
nouncement. 
Net capital 
requirement. 
54 Stat. 789. 
15 use 80a-51. 
each broker-dealer applicant shall contain the following information, 
and for each partner, officer, or director, each person occupying a 
similar status or performing similar functions and each person directly 
or indirectly controlling such broker-dealer the information prescribed 
in subdivisions (3), (4), (5) and (7); and the application for each 
agent shall contain the information specified in subdivisions (3), (4), 
(5) and (7) : 
(1) the applicant's form and place of organization; 
(2) the applicant's proposed method of doing business; 
(3) the qualifications and business history of the applicant; 
(4) each injunction or administrative order or conviction of a 
misdemeanor involving a security or any aspect of the securities 
business and any conviction of a felony; 
(5) each disciplinary action by a securities exchange or securi-
ties association within the ten years preceding the date of appli-
cation; 
(6) the applicant's financial condition and history; and 
(7) such other matters as the Commission may by rule pre-
scribe as being necessary or appropriate in the public interest or 
for the protection of investors. 
The Commission may by rule or order require an applicant for an 
initial license to publish an announcement of the application in one 
or more specified newspapers published in the District. 
If no denial 
order is in effect and no proceeding is pending under section 10, a 
license shall become effective at noon of the thirtieth day after any 
application is filed. The Commission may by rule or order specify an 
earlier effective date, and it may by order defer the effective date until 
noon of the thirtieth day after the filing of any amendment to an 
application. 
A license of a broker-dealer shall be deemed to consti-
tute a license of any agent who is a partner, officer, or director, or a 
person occupying a similar status or performing similar functions. 
(b) An applicant for an initial or renewal license shall pay a filing 
fee. 
The filing fee for an initial or a renewal license shall, except 
for agents, be fixed by the Commission but shall not exceed $125 for 
a broker-dealer, plus an amount not exceeding $12.50 for each partner, 
officer, and director, and each person occupying a similar status or per-
forming similar functions, who transacts business in the District. The 
filing fee for an initial license for an agent shall be $12.50. 
The 
filing fee for each renewal license for an agent shall be $5. 
(c) A licensed broker-dealer may file an application for a license of 
a successor, whether or not the successor is then in existence, for the 
unexpired portion of the period during which the license of such 
broker-dealer is effective. 
There shall be no filing fee. 
(d) Each broker-dealer licensed in the District shall have and 
maintain a minimum net capital of $25,000, except that the Commis-
sion may, by rule, fix a minimum net capital in lesser amounts, but in 
no case less than $5,000 net capital, for a broker-dealer with a limited 
license which authorizes such broker-dealer to engage only in trans-
actions in securities registered under the Investment Company Act of 
1940. The Commission may by rule prescribe a ratio between net 
capital and aggregate indebtedness. 
(e) The Commission may by rule require a licensed broker-dealer 
or the agent of an issuer to post a surety bond issued by a corporate 
surety company licensed to do business in the District of Columbia in 
such amounts up to $25,000 and on such conditions as the Commission 
may determine to be necessary or appropriate in the public interest 
or for the protection of investors, the surety bond of a licensed broker-
dealer to cover such broker-dealer and all licensed agents thereof in 
the District of Columbia. Every bond shall provide for suit thereon 
78 STAT. ] 
PUBLIC LAW 88-503-AUG. 30, 1964 
625 
by any person wlio may have a cause of action arising under section 14 
of this Act, and, if the Commission by rule or order requires, by any 
person who may have a cause of action not arising under this Act. 
Every bond shall provide that no suit may be maintained ,to enforce 
any liability on the bond unless brought within two years after the 
sale or other act upon which such liability is based. 
(f) The license of a broker-dealer or agent may be renewed by filing 
with the Commission prior to the expiration thereof an application 
containing such information as the Commission may require to indi-
cate any material change in the information contained in the original 
application or any renewal thereof, payment of the prescribed fee 
and, in the case of a broker-dealer, a financial statement showing the 
financial condition of such broker-dealer as of a date within one year 
prior to the date of such application for renewal. 
UNLAWFUL REPRESENTATION CONCERNING LICENSING 
SEC. 6. (a) Neither the fact that an application for a license has 
been filed nor the fact that a person is enectively licensed shall con-
stitute a finding by the Commission that smy document filed under this 
Act, or that any statement made therein, is true, complete, and not 
misleading. 
Neither any such fact nor the fact that an exemption is 
available for any person, security or transaction shall mean that the 
Commission has passed in any way upon the merits or qualifications 
of, or recommended or given approval to, any person, security, or 
transaction. 
(b) It shall be unlawful for any broker-dealer or agent to make, 
or cause to be made, to any prospective purchaser, customer, or client 
any representation inconsistent with subsection (a). 
RECORDS AND REPORTS 
SEC. 7. (a) Every licensed broker-dealer and agent shall make, 
keep, and preserve for such periods, such accounts, correspondence, 
memorandums, papers, books, and other records, and make such re-
ports, as the Cfommission by rule shall prescribe as necessary or 
appropriate in the public interest or for the j)rotection of investors. 
(b) All the records and reports referred to in subsection (a) shall 
be sumect at any time or from time to time to such reasonable periodic, 
special, or other examinations by the Commission, within or without 
the District, as the Commission may deem necessary or appropriate 
in the public interest or for the protection of investors. 
For the 
purpose of avoiding unnecessary duplication of examinations, the 
Commission, insofar as it may deem it practicable in administering 
this subsection, may cooperate with the securities administrator of 
any State, the Securities and Exchange Commission, and any na-
tional securities exchange or national securities association registered 
under the Securities Exchange Act of 1934. 
ff f\f* 881. 
15 u s e 78a. 
FILING o r 
SALES AND ADVERTISING 
LITERATURE 
SEC 8. The Commission may by order require any specific broker-
dealer or agent to file with the Commission any prospectus, pamphlet, 
circular, form letter, advertisement, or other sales literature or adver-
tising communication addressed or intended for distribution to 
prospective investors, except sales and advertising literature describ-
ing an exempt security as defined in section 2(e) or used in an exempt 
transaction as defined in section 2(f). 
626 
PUBLIC LAW 88-503-AUG. 30, 1964 
[78 STAT. 
MISLEADING FILINGS 
SEC. 9. It shall be unlawful for any person to make or cause to be 
made, in any document filed with the Commission or in any proceeding 
under this Act, any statement which is, at the time and in the light of 
the circumstances in which it is made, false or misleading in any 
material respect. 
DENIAL, REVOCATION, SUSPENSION, CANCELLATION, AND WITHDRAWAL 
OF LICENSES 
SEC. 10. (a) The Commission may by order deny, suspend, or 
revoke any license if it finds that the order is in the public interest 
and that the applicant or licensee or, in the<^ase of a broker-dealer, 
any partner, officer, or director, any person occupying a similar status 
or performing similar functions, or any person directly or indirectly 
controlling the broker-dealer— 
(1) has fUed an application for a license which as of its effec-
tive date, or as of any date after filing in the case of an order 
denying effectiveness, was incomplete in any material respect or 
contained any statement wliich was, in light of the circumstances 
under which it was made, false or misleading with respect to any 
material fact; 
(2) has willfully violated or willfully failed to comply with 
any j)rovision of this Act or any rule or order under this Act, or 
has violated or failed to comply with the minimum capital require-
ment of section 5(d) or any ratio rule prescribed thereunder; 
(3) has been convicted, within the past ten years, of any 
misdemeanor involving a fiduciary relationship or a security or 
any aspect of the securities business, or of any felony, or has been 
acquitted of any such offense within the same period solely on 
the ground that he was insane at the time of its commission; 
(4) is permanently or temporarily enjoined by any court of 
competent jurisdiction from engaging in or continuing any con-
duct or practice involving any aspect of the securities business; 
(5) is the subject of an order of the Commission denying, sus-
pending, or revoking a license as a broker-dealer or agent; 
(6) IS the subject of an order entered within the past five years 
by the securities administrator of any State or by the Securities 
and Exchange Commission denying or revoking a license or regis-
tration as a oroker-dealer or agent, or the substantial equivalent 
of those terms as defined in this Act, or is the subject of an order 
of the Securities and Exchange Commission suspending or expel-
ling him from a national securities exchange or national securities 
association, or is the subject of a United States Post Office fraud 
order; but (i) the Commission may not institute a revocation or 
suspension proceeding under clause (6) more than two years from 
the date of the order or action relied on, and (ii) it may not enter 
an order under clause (6) on the basis of an order under a State 
act unless that order was based on facts which would currently 
constitute a ground for an order under this section; 
(7) has engaged in dishonest or unethical practices in the 
securities business or while acting in any fiduciary capacity; 
(8) is insolvent, either in the sense that his liabilities exceed 
his assets or in the sense that he cannot meet his obligations as 
they mature; but the Commission may not enter an order against 
a broker-dealer under this clause without a finding of insolvency 
as to the broker-dealer; or 
78 STAT. ] 
PUBLIC LAW 88-503-AUG. 30, 1964 
627 
(9) is not qualified on the basis of such factors as training, 
experience, and knowledge of the securities business, except as 
otherwise provided in subsection (b). 
The Commission may b^ order deny, suspend, or revoke any license 
if it finds that the order is in the public interest and that the applicant 
or licensee— 
(10) has failed reasonably to supervise his agents if he is a 
broker-dealer; or 
(11) has failed to pay the proper filing fee; but the Commis-
sion may enter only a denial order under this clause, and it shall 
vacate any such order when the deficiency has been corrected. 
The Commission may not institute a suspension or revocation proceed-
ing solely on the basis of a fact or transaction known to it when the 
license became effective unless the proceeding is instituted within 
the next thirty daj^s. 
(b) The following provisions shall govern the application of sec-
tion 10(a)(9): 
(1) The Commission may not enter an order against a broker-
dealer on the basis of the lack of qualification of any person other than 
(A) the broker-dealer himself if he is an individual or (B) an agent 
of the broker-dealer. 
(2) The Commission may not enter an order solely on the basis 
of lack of experience if the applicant or licensee is qualified by train-
ing or knowledge or both. 
(3) The Commission shall consider that an agent who will work 
under the supervision of a licensed broker-dealer need not have the 
same qualifications as a broker-dealer. 
(4) The Commission shall by rule provide for an examination, 
which may be written or oral or both, to be taken by any class of, or 
all, applicants. 
(c) The Commission may bv order summarily postpone issuance 
of a license or suspend an effective license pending determination 
of any proceeding under this section. Upon the entry of the order, 
the Commission shall promptly notify the applicant or licensee, as 
well as the employer or prospective employer if the applicant or 
licensee is an a^ent, that it has oeen entered and of the reasons there-
for and that within fifteen days after the receipt of a written request 
the matter will be set down for hearing. If no hearing is requested 
and none is ordered by the Commission, the order will remain in 
effect until it is modified or vacated by the Commission. If hearing 
is requested or ordered, the Commission, after notice of and oppor-
tunity for hearing, may modify or vacate the order or extend it until 
final determination. 
(d) If the Commission finds that any licensee or applicant for a 
license is no longer in existence, or has ceased to do business as a 
broker-dealer or agent, or has been adjudicated to be of unsound 
mind or is subject to the control of a committee, conservator, or 
^ardian, or cannot be located after reasonable search, the Commis-
sion may by order cancel the license or application. 
(e) Withdrawal of a license of a broker-dealer or agent shall be-
come effective thirty days after receipt of an application to withdraw 
or within such shorter period of time as the Commission may deter-
mine, unless a revocation or suspension proceeding is pending when 
the application is filed or a proceeding to revoke or suspend or to 
impose conditions upon the withdrawal is instituted within thirty days 
after the application is filed. If a proceeding is pending or insti-
tuted, withdrawal shall become effective at such time and upon such 
conditions as the Commission shall by order determine. If no pro-
ceeding is pending or instituted and withdrawal automatically 
628 
PUBLIC LAW 88-503-AUG. 30, 1964 
[78 STAT. 
becomes eflfective, the Commission may nevertheless institute a revo-
cation or suspension proceeding under section 10(a) (2) within one 
year after withdrawal became effective and enter a revocation or 
suspension order as of the last date on which the license was effective, 
(f) No order may be entered under any part of this section except 
the first sentence of subsection (c) without (1) appropriate prior 
notice to the applicant or licensee (as well as the employer or prospec-
tive employer if the applicant or licensee is an agent), (2) opportunity 
for hearing, and (3) findings and conclusions, as well as the reasons 
or basis therefor, upon all the material issues of fact, law, or discretion 
presented on the record. 
INVESTIGATIONS AND SUBPENAS 
SEC. 11. (a) The Commission in its discretion (1) may make such 
public or private investigations within or without the District as it 
deems necessary to determine whether any person has violated or is 
about to violate any provision of this Act or any rule or order here-
under, or to aid in the enforcement of this Act or in the prescribing of 
rules and forms hereunder, (2) may require or permit any person to 
file a statement in writing, under oath or otherwise as the Commission 
may determine, as to all the facts and circumstances concerning the 
matter to be investigated, and (3) may publish information concern-
ing any violation of this Act or any rule or order hereunder, except 
that no public statement, notice, or release concerning any investiga-
tion, proceeding, or order under this Act which is not a finding of a 
hearing examiner or of a Commissioner or a final determination of the 
Commission shall allege a violation of this Act or a ground for denial, 
suspension, or revocation of a license, unless such statement, notice, 
or release specifies that such allegations are unproved until final deter-
mination, and that the purpose of the investigation or proceeding is to 
determine whether the allegations are true. 
wunesses °^c 
^^^ ^^^ ^^^ puTpose of auy investigation or proceeding under this 
Act, the Commission may administer oaths and affirmations, subpena 
witnesses, compel their attendance, take evidence, and require the 
production of any books, papers, correspondence, memorandums, 
agreements, or other documents or records which it deems relevant or 
material to the inquiry. 
(c) In case of contumacy by, or refusal to obey a subpena issued 
to any person, the United States District Court for the District of 
Columbia, upon application by the Commission with the approval 
of the United States Attorney ior the District of Columbia, may issue 
an order compelling such person to appear before the Commission, or 
the officer designated by it, there to produce documentary evidence if 
so ordered or to give evidence touching the matter under investigation 
or in question; and any failure to obey such order of the court may be 
punished by such court as a contempt thereof. 
(d) No person shall be excused from attending and testifying or 
from producing any document or record before the Commission, or 
the officer designated by it, in obedience to a court order pursuant to 
subsection (c), on the ground that the testimony or evidence (docu-
mentary or otherwise) required of him may tend to incriminate him 
or subject him to a penalty or forfeiture; but no individual may be 
prosecuted or subjected to any penalty or forfeiture for or on account 
of any transaction, matter, or thing concerning which he is by such 
order compelled, after claiming his privilege against self-incrimina-
tion, to testify or produce evidence (documentary or otherwise), except 
that the individual testifying shall not be exempt from prosecution 
and punishment for perjury or contempt committed in testifying. 
78 STAT. ] 
PUBLIC LAW 88-503-AUG. 30, 1964 
629 
(e) Any person compelled to appear in person before the Commis-
sion or a representative thereof shall be accorded the right to be ac-
companied, represented, and advised by counsel. 
INJUNCTIONS 
SEC. 12. Whenever it shall appear to the Commission that any 
person has engaged or is about to engage in any act or practice con-
stituting a violation of this Act or any rule or order hereunder, it may 
in its discretion bring an action in the United States District Court 
for the District of Columbia to enjoin the acts or practices and to 
enforce compliance with this Act or any rule or order hereunder. 
Upon a proper showing a permanent or temporary injunction, re-
straining order, or writ of mandamus shall be granted and a receiver 
or conservator may be appointed for the defendant or the defendant's 
assets. The court may not require the Commission to post a bond. 
CRIMINAL PENALTIES 
SEC. 13. (a) Any person who shall willfully violate any provision 
of this Act except sections 3 and 9, or who shall willfully violate 
section 9 knowing the representation to be false or misleading in 
any material respect, shall upon conviction be fined not more than 
$5,000 or imprisoned not more than three years, or both. 
(b) Any person who shall willfully violate section 3 of this Act 
shall upon conviction be fined not more than $5,000 or imprisoned 
not more than five years, or both. 
(c) Any person who shall willfully violate any rule or order under 
this Act shall upon conviction be fined not more than $5,000 or im-
prisoned not more than one year, or both; but no person may be im-
prisoned for the violation of any rule or order if he proves that he 
had no knowledge of the rule or order. 
(d) No person shall be prosecuted, tried, or punished for any offense 
under this Act or any rule or order hereunder unless the indictment is 
returned or the information is filed within five years next after such 
offense shall have been committed. 
(e) Nothing in this Act shall be construed to limit the power of the 
United States or of the District of Columbia to punish any person 
for any conduct which constitutes an offense under any other Act of 
Congress applicable in the District, or under any municipal ordinance 
or regulation of the District, or at common law. 
CIVIL LIABILITIES 
SEC. 14. (a) Any person who— 
(1) offers or sells a security in violation of section 4(a) or 
6(b) of this Act; or 
(2) offers or sells a security by means of any untrue statement 
of a material fact or any omission to state a material fact neces-
sary in order to make the statements, in the light of the circum-
stances under which they were made, not misleading (the pur-
chaser not knowing of such untruth or omission), and who shall 
not sustain the burden of proof that he did not know, and in the 
exercise of reasonable care could not have known, of such untruth 
or omission, 
shall be liable to the person purchasing such security from him, and 
the purchaser may bring a civil action to recover the consideration paid 
for the security with interest thereon and with costs and reasonable 
attorney fees less the amount of any income received on the security, 
630 
PUBLIC LAW 88-503-AUG. 30, 1964 
[78 STAT. 
upon the tender of the security, or for damages if he no longer owns 
the security. For this purpose damages shall be the amount that would 
be recoverable upon a tender, less the market value of the security 
w^hen the buyer disposed of it and interest from the date of disposition. 
(b) Any person who directly or indirectly controls a seller liable 
under subsection (a), any partner, officer, or director of such a seller 
and any person occupying a similar status or performing similar func-
tions, any employee of such a seller who materially aids in the sale, 
and any broker-dealer or agent who materially aids in the sale shall 
also be liable jointly and severally with and to the same extent as the 
seller, unless the nonseller who shall be so liable sustains the burden 
of proof that he did not know, and in the exercise of reasonable care 
could not have known, of the existence of the facts by reason of which 
the liability is alleged to exist. There shall be contribution as in cases 
of contract among the several persons so liable. 
(c) Any tender specified in this section may be made at any time 
before entry of judgment. 
(d) Any liability or cause of action under this section shall survive 
the death of any person who, if living, would have such a liability or 
cause of action. 
(e) No person may bring an action under this section after two 
years from the contract of sale. 
No person may bring an action 
under this section (1) if the buyer received a written offer, before 
suit and at a time when he owned the security, to refund the con-
sideration paid for the security together with interest at 6 per centum 
per annum from the date of payment, less the amount of any income 
received on the security, and if he failed to accept that offer within 
thirty days of its receipt, or (2) if the buyer received such an offer 
before suit and at a time when he did not own the security, unless he 
rejected the offer in writing within thirty days of its receipt. 
(f) No person who has made or engaged in the performance of 
any contract in violation of any provision of this Act or of any rule 
or order hereunder, or who has acquired any purported right under 
any such contract with knowledge of the facts by reason of which 
its making or performance was in violation, may base any suit upon 
the contract. 
(g) Any condition, stipulation, or provision binding any person 
who acquires any security to waive compliance with any provision 
of this Act or with any rule or order under this Act shall be void. 
(h) The rights and remedies provided by this Act shall be in 
addition to any other rights or remedies that may exist at law or 
in equity, but this Act shall not create any cause of action not speci-
fied in this or section 5(e). 
SCOPE OF ACT AND SERVICE OF PROCESS 
SEC. 15. (a) Sections 3, 4(a), 6, and 14 shall apply to persons who 
sell or offer to sell when (1) an offer to sell is made in the District, 
or (2) an offer to buy is made and accepted in the District. 
(b) Sections 3, 4(a), and 6 shall apply to persons who buy or offer 
to buy when (1) an offer to buy is made in the District, or (2) an 
offer to sell is made and accepted in the District. 
(c) For the purpose of this section, an offer to sell or to buy is 
made in the District whether or not either party is then present in 
the District, when the offer (1) originates from the District or (2) 
is directed by the offeror to the District and received at the place 
to which it is directed (or at any post office in the District in the 
case of a mailed offer). 
78 STAT. ] 
PUBLIC LAW 88-503-AUG. 30, 1964 
631 
(d) For the purpose of this section, an offer to buy or to sell is 
accepted in the District when acceptance (1) is communicated to 
the offeror in the District and (2) has not previously been communi-
cated to the offeror, orally or in writing, outside the District. 
Accept-
ance is communicated to the offeror in the District, whether or not 
either party is then present in the District, when the offeree directs 
it to the offeror in the District reasonably believing the offeror to be 
in the District and it is received at the place to which it is directed 
(or at any post office in the District in the case of a mailed acceptance). 
(e) An offer to sell or to buy is not made in the District oy any-
thing appearing in (1) any bona fide newspaper or other publication 
of general, regular, and paid circulation, circulated by or on behalf 
of the publisher in the District which is not published m the District, 
or which is published in the District but has had more than two-thirds 
of its circulation outside the District during the past twelve months, or 
(2) any radio or television program received in the District which 
originates outside of the District. 
(f) Any applicant for a license under this Act shall file with the 
Commission, in such form as it by rule may prescribe, an irrevocable 
consent appointing each member of the Commission or his successor 
in office to be his attorney to receive service of any lawful process in 
any noncriminal suit, action, or proceeding against him or his succes-
sor, executor, or administrator which shall arise under this Act or any 
rule or order hereunder after the consent has been filed, with the same 
force and validity as if served personally on the person filing the con-
sent, A person who shall have filed such a consent in connection with 
one application or offering need not file another. Service may be made 
by leaving a copy of the process in the office of the Commission, but it 
shall not be effective unless (1) the plaintiff forthwith shall send 
notice of the service and a copy of the process by registered mail to the 
defendant or respondent at his last address on file with the Commis-
sion, and (2) the plaintiff's affidavit of compliance with this subsection 
shall be filed in the case on or before the return day of the process, if 
any, or within such further time as the court may allow. 
(g) When any person, including any nonresident of the District, 
shafl engage in conduct prohibited or made actionable by this Act 
or any rule or order under this Act and he shall not have filed a 
consent to service of process under subsection (f) and personal juris-
diction over him cannot otherwise be obtained in the District, that 
conduct shall be considered equivalent to his appointment of each 
member of the Commission, or his successor in office, to be his attorney 
to receive service of any lawful process in any noncriminal suit, action, 
or proceeding against him or his successor, executor, or administrator 
which shall arise from that conduct and which shall be brought under 
this Act or any rule or order under this Act, with the same force and 
validity as if served on him personally. 
Service may b^ made by 
leaving a copy of the process m the office of the Commission, but it 
shall not be effective unless (1) the plaintiff forthwith shall send 
notice of the service and a copy of the process by registered mail to 
the defendant or respondent at his last known address or shall take 
other steps reasonably calculated to give actual notice, and (2) the 
plaintiff's affidavit of compliance with this subsection shall be filed 
in the case on or before the return day of the process, if any, or within 
such further time as the court may allow. 
(h) For the purposes of subsections (f) and (g) of this section, 
the term "plaintiff" includes the Commission in any suit, action, or pro-
ceeding initiated by it. 
31-667 0-65—43 
632 
PUBLIC LAW 88-503-AUG. 30, 1964 
[78 STAT. 
(i) After service of process under this section, the court, or the 
Commission in a proceeding before it, shall order such continuance 
as may be necessary to afford the defendant or respondent reasonable 
opportunity to defend. 
63 Stat, 954. 
5 u s e 1071 
note/Ante, p. 400. 
Trust fund. 
Quorum. 
Statements and 
reports, content. 
ADMINISTRATION OF ACT 
SEC. 16. (a) This Act shall be administered by the Public Service 
Commission of the District of Columbia. The Commission is hereby 
autlw>rized to establish such offices and with such names or titles, and 
to appoint and employ such officers and employees and prescribe their 
duties, as may be necessary to carry out the provisions of this Act, 
and such positions shall be subject to the Classification Act of 1949. 
(b) All collections, including fees, received pursuant tjo this Act 
shall be deposited in the Treasury of the United States in a trust 
fund from which may be paid, in the same manner as provided by law 
for other expenditures of the District, the expenses, as authorized by 
the Commission, of hearings held pursuant to this Act, including 
stenographic and reporting services (by contract lOr otherwise) and 
lental or purchase oi equipment. Whenever the amount of such trust 
fund exceeds $5,000, the excess shall be transferred to the funds de-
posited in the Treasury to the credit of the District of Columbia. 
(c) Appropriations to carry out the purposes of this Act are hereby 
authorized. 
(d) A majority of the members of the Commission shall constitute 
a quorum to do business, and any vacancy shall not impair the power 
of the remaining members to exercise all the j)0wers of the Commission. 
In the case of any application, investigation, inquiry, hearing, or 
proceeding under this Act, the Commission may designate one of its 
membei-s or a hearing examiner to examine documents, hear testi-
mony, and submit to the Commission the record of testimony and 
such documents with his proposed findings and conclusions of fact 
and law. 
(e) The Commission is hereby authorized to make, amend, and 
rescind such rules, orders, and forms as may be necessary to carry out 
the provisions of this Act, including, but not limited to, rules, orders, 
and forms governing applications and amendments thereto, investi-
gations, inquiries, hearings, and proceedings, and including by rule 
definitions of any terms, whether or not used in this Act, insofar as the 
definitions are not inconsistent with the provisions of this Act. 
For the purpose of rules and forms, the Commission inay classify 
persons and matters within it^ jurisdiction and may prescribe different 
requirements for different classes. 
(f) No rule, form, or order may be made, amended, or rescinded, 
unless the Commission finds that the action is necessary or appropriate 
in the public interest or for the protection of investors and consistent 
with the purposes fairly intended by the policy and provisions of this 
Act. 
In prescribing rules and forms the Commission may cooperate 
with the securities administrator of any State and the Securities and 
Exchange Commission with a view to effectuating the policy of this 
Act to achieve maximum unifonnity in the form and content of license 
applications, records, and reports, and other documents wherever prac-
ticable. 
(g) The Commission may by rule or order prescribe (1) the form 
and content of statements, records, reports, and other documents 
required under this Act or rules or orders thereunder, (2) the circum-
stances under which such statements, records, reports, or other docu-
ments shall be filed with the Commission, and (3) whether any required 
statements, records, reports, or other documents shall be certified 
by independent or certified public accountants. 
78 STAT. ] 
PUBLIC LAW 88-503-AUG. 30, 1964 
633 
(h) All rules and fornis of the Commission made under this Act 
shall be published. 
(i) No provision of this Act imposing any liability shall apply to 
any act done or omitted in good faith in conformity with any rule, 
form, or order of the Commission, notwithstanding that the rule, 
form, or order may later be amended or rescinded or be determined 
by judicial or other authority to be invalid for any reason. 
(j) A document shall be deemed to be filed or submitted to the 
Cornmission when it is received by it during regular business hours. 
(k) The Commission shall keep a register of all license applica-
tions which are or have ever been effective under this Act, and all 
denial, suspension, postponement, or revocation orders entered under 
this Act. Such register shall be open for public inspection during 
regular business hours. 
(1) License applications and materials submitted therewith or in 
connection therewith may be made available to the public under such 
rules as the Commission may prescribe. Such rules may include, but 
shall not be limited to, rules prescribing reasonable fees for fur-
nishing photostatic or otlier copies upon request. 
The Commission 
may certify under seal such copy or copies of any document avail-
able to the public or any entry in the register, and any copy so cer-
tified shall be admitted as evidence with the same effect as the exem-
plifications of record referred to in section 14-501 of the District 
of Columbia Code. 
(m) The Commission may refer evidence concerning violations of 
this Act or of any rule or order under this Act to the United States 
Attorney for the District of Columbia who may, with or without 
such reference, institute criminal proceedings under this Act. 
The 
Commission shall comply with any request of the Attorney General 
of the United States, the Postmaster General of the United States, 
the Securities and Exchange Commission, or the United States At-
torney for the District of Columbia for any information or evidence 
coming to it in the administration of the Act. 
The Commission in 
its discretion may refer any information or evidence coming to it 
in the administration of this Act to any department or agency of the 
United States, to the securities administrator of any State, or to any 
national securities exchange or national securities association registered 
under the Securities Exchange Act of 1934. 
(n) Any hearing held by the Commission pursuant to this Act 
shall be public unless the Commission in its discretion and with the 
consent of all the parties to such hearing order that the hearing be 
conducted privately. 
JUDICIAL REVIEW 
SEC. 17. Section 11-742 (a) of the District of Columbia Code is 
amended (1) by striking out "and" at the end of paragraph (8); (2) 
by striking out the period at the end of paragraph (9) and inserting 
in lieu thereof a semicolon and the word "and"; and (3) by adding 
at the end thereof the following new paragraph: 
"(10) final orders of the Public Service Commission of the 
District of Columbia under the provisions of the District of 
Columbia Securities Act." 
Nonliability pro-
visions. 
License appli-
cations, register. 
Document certifi-
cation. 
77 Stat. 520. 
Evidence of 
violations. 
48 Stat. 881. 
15 use 78a. 
77 Stat. 485. 
ADVISORY COMMITTEE 
SEC. 18. The President of the Board of Commissioners of the Dis-
trict of Columbia shall appoint a District of Columbia Securities 
Advisory Committee which shall consist of six members, who shall be 
residents of the District of Columbia or the State of Maryland or the 
State of Virginia, at least two of whom shall be actively engaged in 
634 
PUBLIC LAW 88-503-AUG. 30, 1964 
[78 STAT. 
Selection of 
members. 
Terms. 
the securities business and at least two of whom shall be members of 
the bar of the District of Columbia. In no case shall more than three 
members of the Advisory Committee be members of the same political 
party. 
The members shall be selected on the basis of their experience 
and qualifications to advise the Public Service Commission on all 
phases of the securities business. The members shall be appointed for 
staggered terms of three years each, with two members appointed each 
year, to serve without compensation and eligible for reappointment 
for additional terms, provided that not more than two of the terms 
are in succession. The duration of the terms of the first members 
appointed hereunder shall be designated by the President of the Board 
of Commissioners at the time of their appointment. The members of 
the Advisory Committee shall select their own chairman. 
Meetings 
of the Advisory Committee shall be held when called by the Chairman 
of the Public Service Commission and may be attended by members 
of the said Commission. The Advisory Committee shall give the Pub-
lic Service Commission the benefit of its advice on any and all matters 
pertaining to the administration of this Act, particularly the adoption, 
amendment or repeal of rules, regulations, and forms provided for 
herein. 
SEVERABILITY 
SEC. 19. If any provision of this Act or the application thereof to 
any person or circumstance shall be held invalid, the invalidity shall 
not affect other provisions or applications of the Act which can be 
given effect without the invalid provision or application, and to that 
end the provisions of this Act are severable. 
Public Service 
Commission of 
D.C., designa-
tion. 
44 Stat. 920. 
EFFECTIVE DATE 
SEC. 20. (a) Sections 3, 13(b), 13(d), 16, and 21 of this Act, 
together with definitions of terms used therein, shall take effect upon 
approval of this Act. 
(b) The remaining provisions of this Act shall take effect at 12:01 
antemeridian on the one hundred and eightieth day after approval of 
this Act, or, if the one hundred and eightieth day be a holiday in the 
District, at 12:01 antemeridian on the first business day thereafter. 
SEC. 21. The Public Utilities Commission of the District of Colum-
bia established by paragraph 97 of section 8 of the Act of March 4, 
1913, entitled "An Act making appropriations to provide for the 
expenses of the government of the District of Columbia for the fiscal 
year ending June thirtieth, nineteen hundred and fourteen, and for 
other purposes" (D.C. Code, sec. 43-201) hereafter shall be known as 
the "Public Service Commission of the District of Columbia". Where-
ever reference is made to the Public Utilities Commission of the 
District of Columbia in any Act of Congress, or in any compact 
authorized by an Act of Congress, or in any regulation or order, such 
reference shall be held to be a reference to the Public Service Com-
mission of the District of Columbia. 
Approved August 30, 1964.