r; '_ ") 28th :AnnualReport /., - ,- --- of the II ( c : - ..), Securities and Exchange " Commission Fiscal Year Ended June 30, 1962 UNITED STATES GOVERNMENT PRINTING OFFICE, WASHINGTON , 1963 For eale by the Superintendent of Documents, U.S. Government Printing Office Wublngton 25, D.C. - Price 60 Cente (paper eov..r) SECURITIES AND EXCHANGE COMMISSION Headquarters Office 425 Second Street NW. Washington 25, D.C. COMMISSIONERS January 8, 1963 WILLIAM L. CARY, Chairman BYRON D. WOODSIDE J. ALLEN FREAR, JR. MANUEL F. COHEN JACK M. WHITNEY II ORVAL L. DuBOIS, Secretary II LETTER OF TRANSMl'lTAL SE~RITIESAND EXCHANGECO~~~ION, Washington $5, D.G. SIR:On behalf of the Securities and Exchange Commission, I have the honor to transmit to you the Twenty-Eighth Annual Report of the Commission covering the fiscal year July 1,1961,to June 30,1962, in accordance with the provisions of Section 23(b) of the Securities Exchange Act of 1934, approved June 6,1934; Section 23 of the Pub- lic Utility Holding Company Act of 1935, approved August 26,1936; Section %(a) of the Investment Company Act of 1940, approved August 22,1940; Section 216 of the Investment Advisers Ac5 of 1940, approved August 22, 1940; Section 3 of the Act of June 29, 1949, amending the Bretton Woods Agreement Act; and Section ll(b) of the Inter-American Development Bank Act. Respectfully, WILUABCL. CARY, Chairman. THE PRE~~ENTOF THE SENATE, THE SPEAKEROF THE HOUSEOF REPRESENTATIVES, Wmhington, D.C. 111 TABLE OF CONTENTS Page Commissioners and staff officers _____________________________________ XI Regional and branch offiees , ________________________________________ XII Biographies of Commlssloners, ______________________________________ XIII PART I CURRENT PROBLEMS BEFORE THE COMMISSION_________ 1 Foreword_____________________________________________________ 1 Special Study of securities markets; ________ _______________ 2 The Wharton School study of investment companies., , _____________ 3 Registration of new security offerings , __ _________________ 4 Enforcement activity _ _ ________________________________________ 5 Delegation of functions______ _ __ _______________________ 6 PART II LEGISLATIVE ACTIVITIES_ _ _______ _______________ i PART III REVISION OF RULES, REGULATIONS AND FORMS_______ 9 The Securities Act of 1933___ ____________ _____ ____ ____ q Adoption of Ru1e 152A_____________________________________ 9 Adoption of Ru1e 155______________________________________ 10 Adoption of Ru1e 236 ______________________________________ 11 Amendment of Ru1e 458 ____________________________________ 11 Adoption of Ru1es 462 and 263_ _____________________________ 12 Adoption of Revised Form 8-8______________________________ 12 Adoption of Form 8-1L___________________________________ 12 The Securities Exchange Act of 1934_____________________________ 13 Adoption of Ru1es 13a-15 and 15d-15 and Form 7-K__________ 13 Adoption of Ru1e 15d-21 and Form 11-K; Amendment to Form lo-I{__________________________________________________ 13 Proposed Ru1e 19a2-L___ __ _____________________ 14 Proposed Amendments to Form 8-I{_________________________ 14 Adoption of Ru1e 15c2-4___________________________________ 15 Adoption of Ru1e 15c2-5 _ __________________________________ 15 Amendment of Ru1e 15c3-L____________ ____________________ 16 Amendment of Ru1es 17a-3 and 17a-4____________________ 16 Amendment of Ru1e 15ag-L____________ _____ _______________ 17 The Trust Indenture Act of 1939________________________________ 18 Amendment of Form T-3___________________________________ 18 The Investment Company Act of 1940_ __ ___ _____________ 18 Amendments to Ru1es 31a-l and 31a-2; adoption of Ru1e 31a-3_ 18 Adoption of exemptive ru1es applicable to licensed small business investment eompanies.L, , _____________ _______ _____ 19 v VI TABLE OF CONTENTS REVISION OF RULES, REGULATIONS AND FORMS-Continued Page The Investment Advisers Act of 1940____________________________ 19 Adoption of Rules 206(4)-1 and 206(4)-2____ ______ _______ 19 Proposed amendment to Rule 204-2_ ________________________ 20 PART IV ADMINISTRATION OF THE SECURITIES ACT OF 1933____ 22 Description of the registration process.L, , ___ _________________ 22 Registration statement and prospectus; ______________________ 22 Examination procedure.L, , _______________________ 23 Time required to complete registration __________________ ____ 23 Volume of securities registered_________________________________ _ 25 Registration statements filedc , , ____ _______________ __________ _ 27 Stop order proceedings _________________________________________ 28 Examinations and investigations________ __ _______________________ 33 Exemption from registration of small issues; ______________________ 34 Exempt offerings under Regulation A_________________________ 35 Suspension of exemption.Lc , , _______________________________ 36 Exempt offerings under Regulation B_________________________ 38 Exempt offerings under Regulation E_ _____________________ 39 Exempt offerings under Regulation F_________________________ 39 PART Y ADMINISTRATION OF THE SECURITIES EXCHANGE ACT OF 1934___________________________________________________________ 40 Regulation of exchanges and exchange trading___________________ 40 Registration and exemption of exchanges - __ 40 Disciplinary aetion., _______________________________________ 41 Registration of securities on exchanges , _____________ _____________ 41 Statistics relating to registration of securities on exchanges, _____ 42 Market value of securities traded on exchanges__________ _ _ 43 Fiscal year share values and volumes_________________________ 44 Foreign stock on exchanges _________________________________ 45 Comparative exchange statistics_________ _______ _______ 46 Comparative over-the-counter statistics , _ _______ ___ __ 47 Reporting under Section 15(d)____ ______________________ _____ 48 Delisting of securities from exchanges ____________________________ 49 Delisting proceedings under Section 19(a) _____________________ 50 Unlisted trading privileges on exchanges_________________________ 51 Applications for unlisted trading privileges____________________ 52 Block distributions reported by exchanges - _ 53 Manipulation and stabilisation, _________________________________ 54 Manipulauon_____________________________________________ 54 Stabilization , _______ __ ____________ _ 55 Insiders' security holdings and transactions., __________________ ____ 56 Ownership reports.L, , _______ _ _________ 56 Recovery of short-swing trading profits by issuer _ _____________ 57 Regulation of proxies________ ____ _____ __ ___________ 57 Scope of proxy regulation___________________________________ 57 Statistics relating to proxy statements________________________ 52 Stockholders' proposals, ____________________________________ 59 TABU. 01<' CO.\'TEN1'S VII ADMINISTRATION OF THE SECURITIES EXCHANGE ACT OF 1934-Continued Regulation of proxies-Continued Page Ratio of soliciting to nonsoliciting companies__________________ 59 Proxy contests____________________________________________ 60 Investigations_____ __ ______ __ ___ 60 Regulation of broker-dealers and over-the-counter markets__________ 60 Registrative , ____ ____ __________ 60 Administrative proceedings; __ ____ ______________ 61 Revocation and denial proceedings_______________________ 63 Suspension proeeedings..c , , __ ___ ___ ____ 67 Other sanctions________ ________________________________ 68 Net capital rule , __ ____________ ________ _____ 69 Financial statements__ __________________ ______ ____ 70 Broker-dealer Inspeetions., _____________ ___ 71 Supervision of activities of National Association of Securities Dealers, Inc_________________________________________________________ 72 NASD disciplinary actions_____ ____ ____________ 73 Commission review of N ASD action on membership __ _________ 75 Commission review of N ASD disciplinary action, ______________ 7i PART VI ADMINISTRATION OF THE PUBLIC UTILITY HOLDING COM- PANY ACT OF 1935____________________________________________ 81 Composition of registered holding company systems________________ 82 Section 11 matters and other significant developments in active regis- tered holding company systems________________________________ 84 Section 11 matters_____ _______ _______ __ _ __ _______ 84 Other developments_______ ______ __ __ ___ ____ 86 Financing of active registered public utility holding companies and their subsidiaries., __ ___________ ____________ _ 87 Competitive bidding , __ __ __ ____________ _ 88 Protective provisions of first mortgage bonds and preferred stocks of public utility eompanies; __ ___ ____ ________ 89 Othermatters_________________________________________________ 93 Request for declaratory order_______________________________ 93 "Bottled Gas" companies___________________________________ 94 PART VII PARTICIPATION OF THE COMMISSION IN CORPORATE RE- ORGANIZATIONS UNDER CHAPTER X OF THE BANK- RUPTCY ACT____ ______ _ _ __________________________ 95 Summary of actlvities.L; _________________________________ ___ 96 Procedural and administrative matters___________________________ 97 Trustee's investlgatlon , __ ___ __ __ ____________________ 98 Advisory reports on plans of reorganization; ______________________ 98 Activities with regard to allowances______________________________ 100 Intervention in Chapter XI proceedings__________________________ 102 Publication of bar dates________________________________________ 104 PART VIII ADMINISTRATION OF THE TRUST INDENTURE ACT OF 1939__ 105 VIII TABLE OF CONTENTS