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  • Nineteenth Annual Report

    of the

    Securities and Exchange

    Commission

    Fiscal Year Ended June 30, 1953

    JNITED STATES GOVERNMENT PRINTING OFFICE, WASHINGTON: 1954

    For sale by the Superlutendent or Docnmenls, U. S. GoveI'nment Prlntln& OfficeWashillllfon 25, D. C. Price 50 eents (Paper cover)-

  • SECURITIES AND EXCHANGE COMRlISSION

    Headquarters Office

    425 Seoond Street NW.

    Washington 25, D. C.

    COMMISSIONERS

    RALPHH. D E M ~ E R ,Chairman

    PAULR. ROWEN

    CLARENCEH. ADAMS J. SINCLAIRARMSTRONG A. JACKSON JR.GOODWIN,

    ORVALL. DUBOIR,Se.e~eta~y

    January 15, 1954.

  • LEITER OF TRANSMIITAL

    SECURITIES AND EXCHANGE COMMISSION,

    Washington, D. C., January 15, 1954. SIR: I have the honor to transmit to you the Nineteenth Annual

    Report of the Securities and Exchange Commission, covering the fiscal year July 1, 1952 to June 30, 1953, in accordance with the provisions of section 23 (b) of the Securities Exchange Act of 1934, approved June 6, 1934; section 23 of the Public Utility Holding Com-pany Act of 1935, approved August 26, 1935; section 46 (a) of the Investment Company Act of 1940, approved August 22, 1940; section 216 of the Investment Advisers Act of 1940, approved August 22, 1940; and section 3 of the act of April 25, 1949, amending the Bretton "\V"oodsAgreements Act.

    Respectfully, RALPH H. DEMMLER,

    Chairman. THE PRESIDENT OF THE SENATE,

    THE SPEAKER OF THE HOUSE OF REPRESENTATIVES,

    Washington, D. C. ill

  • TABLE OF CONTENTSPage

    Forevvord_________________________________________________________ xiCommissioners and staff officers_____________________________________ xiiRegional and branch offices_________________________________________ xiiiBiographies of commissioners_______________________________________ xiv

    PART I

    ADMINISTRATION OF THE SECURITIES ACT OF 1933Description of the registration process____________________________ 1

    The registration statement and prospectus____________________ 1Examination procedure______ 1Time required to complete registration_______________________ 2

    Volume of securities registered__________________________________ 2Number of atatementa; ; _ _ 3Type of industry 3Type of offering____________ 4Investment oompanies , , _ _ 4Purpose of issue___________________________________________ 4

    Registration statements filed____________________________________ 4Exemption from registration under the act________________________ 5

    Exempt offerings under regulation A_________________________ 6Exempt offerings under regulation A-M______________________ 6Exempt offerings under regulation B-oil and gas securities_____ 6

    Disclosure problems in examination process_______________________ 7Changes in rules, regulations and forma, __ 9

    Identilyingstatement______________________________________ 9Changes in rules providing exemptions_______________________ 10Otherchanges_____________________________________________ 12

    Litigation under the Securities Act_______________________________ 13Injunctiveactions_________________________________________ 13Participation as amicus curiae_______________________________ It)

    PART II

    ADMINISTRATION OF THE SECURITIES EXCHANGE ACT OF1934

    Regulation of exchanges and exchange trading____________________ 18Registration and exemption of exchanges_____________________ 18Disciplinary action by exchanges____________________________ 19

    Registration of securities on exchanges___________________________ 19Purpose and nature of registration___________________________ 19Examination of applications and reports______________________ 20Statistics of securities registered on exchanges_________________ 21

    Market value and volume of securities traded on exchanges_________ 22Stocksonexchanges_______________________________________ 22Bonds on exchanges________________________________________ 25

    Over-the-counter market; 25Special offerings on exchanges___________________________________ 26Secondary distributions approved by exchanges___________________ 26Unlisted trading privileges on exchanges__________________________ 27

    Number of issues admitted to unlisted trading________________ 27Volume of unlisted trading in stocks on exchan/tes_____________ 28

    v

    _

    _

  • VI TABLE OF CONTENTS

    ADMINISTRATION OF' THE SECURITIES EXCHANGE ACT OF1934-Continued

    Unlisted trading privileges on exchanges-Continued PageApplications for unlisted trading privileges____________________ 29Changes in securities admitted to unlisted trading privileges., _ __ 29

    Delisting of securities from exchanges____________________________ 29Securities delisted by application , ___________________________ 29Securities delisted by notifieation., ___________________________ 30

    Manipulation and stabilization, _________________________________ 30Manipulation_____________________________________________ 30Btabihzation., ______ __________ _____________ ____ 31

    Security ownership of corporation insiders ________________________ 32Description of regulation , _ ____________ ___ 32Publication of data contained in reports; _____________________ 32Volume of reports filed and examined________________________ 32Preventing unfair use of inside information___________________ 33

    Solicitations of proxies, consents, and authorizations_______________ 33Regulation of brokers and dealers in over-the-counter markets ___ ___ 34

    Registration , _ _ ____ ____ ____ 36Administrative proceedings , _ ______________________ _ __ 37Broker-dealer inspections ___________________________________ 38Investigations.; _ ________ __ 39Financial reports , _________________________ ________ __ 39

    Supervision of activities of National Association of Securities Dealers., , 39~iembership______________________________________________ 39Disciplinary actiona., , __________________ _ 40Commission review of disciplinary action_____________________ 41Commission review of action on membership__________________ 42

    Changes in rules, regulations and forms__________________________ 42Litigation under the Securities Exchange Act of 1934______________ 46

    Participation as amicus curiae_______________________________ 48Kaiser-Frazer investigation and litigation with Otis & Co_______ 50

    PART III

    ADMINISTRATION OF THE PUBLIC UTILITY HOLDINGCOMPANY ACT OF 1935

    Integration and simplification-summary of dovelopments.,., _ _______ 52Integration and simplification-individual systems_________________ 53Financing of registered public utility holding company systems______ 74Litigation under the Public Utility Holding Company Act of 1935___ 80

    PART IV

    PARTICIPATION OF THE COMMISSION IN CORPORATE REOR-GANIZATIONS UNDER CHAPTER X OF THE BANKRUPTCYACT, AS AMENDED

    Summary of activities__________________________________________ 85Problems in the administration of the estate __________________ 85Activities with respect to allowances_________________________ 87Consummation of plan_____________________________________ 88

  • TABLE OF CONTENTS

    PART V

    ADMINISTRATION OF THE TRUST INDENTURE ACT OF 1939

    Purpose of trust indenture regulation .............................

    Qualification procedure .........................................

    PARTVI

    ADMINISTRATION OF THE INVESTMENT COMPANY ACT OF 1940

    Companies registered under the act .............................. Types of investment companies registered during the fiscal year ..... Applications for registration of Canadian investment companies ..... Sellimg literature ............................................... Ststistical data ................................................ Applications filed .............................................. Litigation under the Investment Company Act of 1940............1

    PART VII

    ADMINISTRATION OF THE INVESTMENT ADVISERS ACT OF 1940--.---------------------.-.---.-----.-.---.----.-----------

    PAW VIII

    OTHER ACTIVITIES OF THE COMMISSION

    Court proceedings .............................................

    Civil proceedings ..........................................

    Criminal proceeding8 .......................................

    Com~laints and investieatiuns ...................................

    Section of securities violations ...................................

    Activities of the Commission in accountinz and auditing .............. Office of opinion writing ........................................

    International and financial and economic matters ..................

    Confidential treatment of applications, reports, or documents ........

    Statistics and special studles ....................................

    Capital marke ts...........................................

    All new sccurit~es o5erings ..............................

    Issues registered under Securities Act .....................

    Investment companies ......................................

    Cost of flotation ...........................................

    Stockmarkets.............................................

    Saving study ..............................................

    Plant and equipment expenditures of United States business ....

    Financial position of corporations... .........................

    Working capital position ................................

    Balance sheet and income statements .........................

    Recommendations for further legislation ..........................

    Personnel.....................................................

    Fiscal affairs ..................................................

    Publicatione.................................

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