The theory of the Duker & Duker, Jansen, and Hope cases is that, in a transaction between a securities dealer and an uninformed customer, a statement by the former with respect to the price of securities which are being traded on an exchange or over-the-counter carries with it the clear implication that such price bears some reasonable relation to the prevailing market price. When that is not the case, the dealer is under a duty so to advise the customer. His failure so to do clearly constitutes an "omission of a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading." We reaffirm our decisions in those cases in this respect and hold also that respondent's activities constituted a willful violation of Section 17 (a) of the Securities Act, Section 15 (c) (1) of the Securities Exchange Act and Rule X-15C1-2. National Quotation Bureau Sheets.-As evidence bearing on the question of the prevailing market prices of the securities sold by the respondent, counsel for the Trading and Exchange Division introduced in the record several quotation sheets published by the National Quotation Bureau. These sheets contain daily quotations with respect to a large number of over-the-counter securities, including those sold by the respondent. For each security there are listed the dealers subscribing to the service who are willing to trade in the particular security, the number of shares or bonds on which prices are quoted, and the bid and offering prices of such dealers. Over-the-counter dealers who subscribed to the service testified that, subject to price fluctuations or cancelations of orders, the sheets afforded information about the marketability and salability of the securities listed therein. and the price range within which transactions in the securities might be effected, and that they regarded the sheets as trustworthy guides. They also testified that they were willing to trade with nonsubscribers on the basis of the prices they quoted. The secretary of the National Quotation Bureau testified in detail on the methods employed to compile the quotations. The quotations have been used as a basis for comparison between the quoted prices for a large number of the securities in which the respondent dealt, the prices at which the respondent's purchases were made, and the prices which the customers paid. Counsel for the respondent objected to the admission of these sheets in evidence, on the ground that the quotations were not offers by the houses submitting them but were merely expressions of willingness on the part of subscribers to trade with one another, which could be withdrawn or altered. Counsel further contended that these quotations did not establish a market value or price; that they reached only those who subscribed to the service; that the re spondent was not a subscriber; and that the quotations applied only to transactions between one dealer and another and not to transactions between a dealer and a member of the public. We agree with counsel that these sheets do have a limited circulation, that the quotations do not indicate actual transactions and do not necessarily represent firm bids and offers, and that, in any event, the quotations are with respect to transactions between dealers. We do not think, however, that these limitations affect the admissibility of the sheets. We certainly do not regard the quotations as conclusively determining prevailing market prices. But we do think they are a persuasive indication of the prevailing market price among dealers, and this prevailing market price among dealers would, in turn, furnish some indication of the prevailing market price in dealers' transactions with the public. We hold that the quotation sheets were admissible in evidence for this purpose.24 The evidence was supplemented, moreover, by testimony as to actual offers and transactions by dealers in many of the securities sold by the respondent, all of which fell within the range of the quotations. And it is also highly significant to note that the respondent's own purchases, in the great majority of cases, also fell within this range. By all standards the cost to the respondent, the range of quotations published by the National Quotation Bureau, and the offers made and the transactions executed-the prices charged by the respondent bore no reasonable relationship to the prevailing market prices. CONCLUSION On the basis of the foregoing, we find that respondent's activities constitute willful and flagrant violations of the antifraud provisions of Section 17 (a) of the Securities Act of 1933, Section 15 (c) (1) of the Securities Exchange Act of 1934 and the Commission's Rule X-15C1-2 promulgated thereunder, and that it is in the public interest to revoke its registration.25 An appropriate order will issue. By the Commission: (Chairman Eicher and Commissioners Healy, Pike and Purcell) Commissioner Burke not participating. 24 It is clear that compilations of this nature are admissible in evidence, especially when supplemented by testimony as to the method of compilation and as to price. Coplin v. United States, 88 F. (2d) 652 (C. C. A. 9th, 1937); Ford v. H. W. Dubiske Co., 105 Conn. 572, 136 Atl. 560 (1927); 6 Wigmore, Evidence (1940) § 1704; cf. Virginia v. West Virginia, 238 U. S. 202 (1915). 25 At the argument before us, counsel for the Trading and Exchange Division filed a motion for an order suspending respondent's registration pending final determination of the question whether registration should be revoked. Under the circumstances, we felt that we could not dispose of that motion without further consideration of the record in the case. In view of our order herein, the subject matter of the motion is now moot and the motion is hereby dismissed. |