Section 21 would amend the caption of section 20 of the Securities Exchange Act of 1934, as amended, to read as follows: "LIABILITIES OF CONTROLLING AND ASSOCIATED PERSONS" Section 22 would amend subsection (b) of section 20 of the Securities Exchange Act of 1934, as amended, as follows: "(b) [It shall be unlawful for any person, directly or indirectly, to do any act or thing which it would be unlawful for such person to do under the provisions of this title or any rule or regulation thereunder through or by means of any other person] It shall be unlawful for any person indirectly, or through or by means of any other person, to do any act or thing which it would be unlawful for such person to do directly under the provisions of this title or any rule or regulation thereunder. It shall be unlawful for any person to aid, abet, counsel, command, induce or procure the violation of any provision of this title or any rule or regulation thereunder by any other person, These provisions shall not constitute a limitation with respect to the applicability to this title of section 2 of title 18, United States Code." Section 23 would amend subsection (a) of section 21 of the Securities Exchange Act of 1934, as amended, as follows: "(a) The Commission may, in its discretion, make such investigations as it deems necessary to determine whether any person [has violated or is about to violate] has violated, is violating or is about to violate any provision of this title or any rule or regulation thereunder, and may require or permit any person to file with it a statement in writing, under oath or otherwise as the Commission shall determine, as to all the facts and circumstances concerning the matter to be investigated. The Commission is authorized, in its discretion, to publish information concerning any such violations, and to investigate any facts, conditions, practices, or matters which it may deem necessary or proper to aid in the enforcement of the provisions of this title, in the prescribing of rules and regulations thereunder, or in securing information to serve as a basis for recommending further legislation concerning the matters to which this title relates." Section 24 would amend subsection (e) of section 21 of the Securities Exchange Act of 1934, as amended, as follows: "(e) Whenever it shall appear to the Commission that any person has engaged, is engaged or is about to engage in any acts or practices which constitute or will constitute a violation of the provisions of this title, or of any rule or regulation thereunder, or that any person has failed to comply with the provisions of this title, any rule or regulation thereunder or any order of the Commission made in pursuance thereof or with any undertaking contained in a registration statement as provided in subsection (d) of section 15 of this title, it may in its discretion bring an action in the proper district court of the United States, [the Supreme Court of the District of Columbia,] or the proper United States court[s] of any Territory or other place subject to the jurisdiction of the United States, to enjoin such acts or practices and to enforce compliance with this title or any rule, regulation or order thereunder. [, and] Upon a proper showing that such person has engaged, is engaged, or is about to engage in any such act or practice, or that he has failed to comply with this title or any such rule, regulation or order, a permanent or temporary injunction, [or] restraining order, or other order, shall be granted without bond. The Commission may transmit such evidence as may be available concerning such acts or practices to the Attorney General, who may, in his discretion, institute the necessary criminal proceedings under this title." Section 25 would amend subsection (f) of section 21 of the Securities Exchange Act of 1934, as amended, as follows: "(f) [Upon application of the Commission the district courts of the United States, the Supreme Court of the District of Columbia, and the United States courts of any Territory or other place subject to the jurisdiction of the United States, shall also have jurisdiction to issue writs of mandamus commanding any person to comply with the provisions of this title or any order of the Commission made in pursuance thereof or with any undertaking contained in a registration statement as provided in subsection (d) of section 15 of this title] In any proceeding under subsection (e), the court, upon application of the Commission, may adjudge a broker or dealer a bankrupt if the court finds that the broker or dealer is unable to meet his debts as they mature. The court shall thereupon appoint a qualified trustee in bankruptcy, who may be a re ceiver theretofore appointed by the court in the proceedings under subsection (e). Thereafter the estate of such broker or dealer shall be administered as provided in the Bankruptcy Act, as now in effect or as it may hereafter be amended. For purposes of adjudging a broker or dealer a bankrupt under this subsection, the provisions of section 3 of the Bankruptcy Act shall not apply." Section 26 would amend the last sentence of subsection (a) of section 25 of the Securities Exchange Act of 1934, as amended, as follows: "The judgment and decree of the court, affirming, modifying, and enforcing or setting aside, in whole or in part, any such order of the Commission, shall be final, subject to review by the Supreme Court of the United States upon certiorari or certification as provided in [sections 239 and 240 of the Judicial Code, as amended (28 U.S.C. 346, 347] section 1254 of title 28, United States Code." Section 27 would amend the fourth sentence of section 27 of the Securities Exchange Act of 1934, as amended, as follows: "Judgments and decrees so rendered shall be subject to review as provided in [sections 128 and 240 of the Judicial Code, as amended (28 U.S.C. 225, 347)] sections 1254, 1291, 1292, and 1293, of title 28, United States Code." Section 28 would amend clause (A) of section 29 (b) of the Securities Exchange Act of 1934, as amended, as follows: "(A) that no contract shall be void by reason of this subsection because of any violation of any rule or regulation prescribed pursuant to subsection (b) of section 8 or paragraph (2) [or (3)] of subsection (c) of section 15 of this title, and". Section 29: Subsection (c) of section 32 of the Securities Exchange Act of 1934, as amended, is amended by redesignating that subsection as subsection (d) and making it read as follows: "(d) The provisions of this section shall not apply in the case of any violation of any rule or regulation prescribed pursuant [to paragraph (3) of subsection (c) of section 15] to subsection (b) of section 8 of this title, except a violation which consists of making, or causing to be made, any statement in any report or document required to be filed under any such rule or regulation, which statement was at the time and in the light of the circumstances under which it was made false or misleading with respect to any material fact." Section 30 amends the Securities Exchange Act of 1934, as amended, by adding the following new subsection (c) to section 32 to read as follows: (c) Any person who fails to file information, documents, or reports pursuant to any provision of this title or any rule or regulation adopted by the Commission thereunder shall forfeit to the United States the sum of $100 for each and every day such failure to file shall continue beyond the time established therefor by this title or any rule or regulation adopted by the Commission thereunder, or beyond such extension of time as may be granted by the Commission. Such forfeiture, which shall not be in lieu of any criminal penalty for such failure to file which might be deemed to arise under subsection (a) of this section, shall be recoverable in a civil suit brought by the Commission in its discretion on behalf of the United States." Section 31 would amend the Securities Exchange Act of 1934, as amended, by adding a new section to be designated as section 35, as follows: "LARCENY AND EMBEZZLEMENT "Sec. 35. Whoever steals, unlawfully and willfully converts to his own use or to the use of another, or embezzles any of the moneys, funds or securities of, or entrusted to the custody or care of, any member of a national securities exchange, any broker or dealer who transacts a business in securities through the medium of any such member, or any broker or dealer registered pursuant to section 15 of this title, shall be deemed guilty of a crime, and upon conviction thereof shall be subject to the penalties provided in section 32 of this title." 42560 0-59-20 SECURITIES EXCHANGE ACT OF 1934' AS AMENDED TO AUGUST 10, 1954 [PUBLIC NO. 291-73D CONGRESS] [H. R. 9323] AN ACT To provide for the regulation of securities exchanges and of over-the-counter markets operating in interstate and foreign commerce and through the mails, to prevent inequitable and unfair practices on such exchanges and markets, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, TITLE I-REGULATION OF SECURITIES EXCHANGES Short Title SECTION 1. This act may be cited as the "Securities Exchange Act of 1934." Necessity for Regulation as Provided in This Title SECTION 2. For the reasons hereinafter enumerated, transactions in securities as commonly conducted upon securities exchanges and overthe-counter markets are affected with a national public interest which makes it necessary to provide for regulation and control of such transactions and of practices and matters related thereto, including transactions by officers, directors, and principal security holders, to require appropriate reports, and to impose requirements necessary to make such regulation and control reasonably complete and effective, in order to protect interstate commerce, the national credit, the Federal taxing power, to protect and make more effective the national banking system and Federal Reserve System, and to insure the maintenance of fair and honest markets in such transactions: (1) Such transactions (a) are carried on in large volume by the public generally and in large part originate outside the States in which the exchanges and over-the-counter markets are located and/or are effected by means of the mails and in 1 This pamphlet includes all amendments approved on or before August 10, 1954. The amendments are contained in the following public laws: Public No. 621, 74th Cong., approved May 27, 1936: Public No. 719, 75th Cong., approved June 25, 1938; Public No. 258, 78th Cong., approved March 17, 1944; Public No. 577, 83d Cong., approved August 10, 1954. 300 strumentalities of interstate commerce; (b) constitute an important part of the current of interstate commerce; (c) involve in large part the securities of issuers engaged in interstate commerce; (d) involve the use of credit, directly affect the financing of trade, industry, and transportation in interstate commerce, and directly affect and influence the volume of interstate commerce; and affect the national credit. (2) The prices established and offered in such transactions are generally disseminated and quoted throughout the United States and foreign countries and constitute a basis for determining and establishing the prices at which securities are bought and sold, the amount of certain taxes owing to the United States and to the several States by owners, buyers, and sellers of securities, and the value of collateral for bank loans. (3) Frequently the prices of securities on such exchanges and markets are susceptible to manipulation and control, and the dissemination of such prices gives rise to excessive speculation, resulting in sudden and unreasonable fluctuations in the prices of securities which (a) cause alternately unreasonable expansion and unreasonable contraction of the volume of credit available for trade, transportation, and industry in interstate commerce, (b) hinder the proper appraisal of the value of securities and thus prevent a fair calculation of taxes owing to the United States and to the several States by owners, buyers, and sellers of securities, and (c) prevent the fair valuation of collateral for bank loans and/or obstruct the effective operation of the national banking system and Federal Reserve System. (4) National emergencies, which produce widespread unemployment and the dislocation of trade, transportation, and industry, and which burden interstate commerce and adversely affect the general welfare, are precipitated, intensified, and prolonged by manipulation and sudden and unreasonable fluctuations of security prices and by excessive speculation on such exchanges and markets, and to meet such emergencies the Federal Government is put to such great expense as to burden the national credit. Definitions and Application of Title SECTION 3. (a) When used in this title, unless the context otherwise requires (1) The term "exchange" means any organization, association, or group of persons, whether incorporated or unincorporated, which constitutes, maintains, or provides a market place or facilities for bringing together purchasers and sellers of securities or for otherwise performing with respect to securities the functions commonly performed by a stock exchange as that term is generally understood, and includes the market place and the market facilities maintained by such exchange. (2) The term "facility" when used with respect to an exchange includes its premises, tangible or intangible property whether on the premises or not, any right to the use of such premises or property or any service thereof for the purpose of effecting or reporting a transaction on an exchange (including, among other things, any system of communication to or from the exchange, by ticker or otherwise, maintained by or with the consent of the exchange), and any right of the exchange to the use of any property or service. (3) The term "member" when used with respect to an exchange means any person who is permitted either to effect transactions on the exchange without the services of another person acting as broker, or to make use of the facilities of an exchange for transactions thereon without payment of a commission or fee or with the payment of a commission or fee which is less than that charged the general public, and includes any firm transacting a business as broker or dealer of which a member is a partner, and any partner of any such firm. (4) The term "broker" means any person engaged in the business of effecting transactions in securities for the account of others, but does not include a bank. (5) The term "dealer" means any person engaged in the business of buying and selling securities for his own account, through a broker or otherwise, but does not include a bank, or any person insofar as he buys or sells securities for his own account, either individually or in some fiduciary capacity, but not as a part of a regular busi ness. (6) The term "bank" means (A) a banking institution organized under the laws of the United States, (B) a member bank of the Federal Reserve System, (C) any other banking institution, whether incorporated or not, doing business under the laws of any State or of the United States, a substantial portion of the business of which consists of receiving deposits or exercising fiduciary powers similar to those permitted to national banks under section 11 (k) of the Federal Reserve Act, as amended, and which is supervised and examined by State or Federal authority having supervision over banks, and which is not operated for the purpose of evading the provisions of this title, and (D) a receiver, conservator, or other liquidating agent of any institution or firm included in clauses (A), (B), or (C) of this paragraph. (7) The term "director" means any director of a corporation or any person performing similar functions with respect to any organization, whether incorporated or unincorporated. (8) The term "issuer" means any person who issues or proposes to issue any security; except that with respect to certificates of deposit for securities, voting-trust certificates, or collateraltrust certificates, or with respect to certificates of interest or shares in an unincorporated investment trust not having a board of directors 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 such securities are issued; and except that with respect to equipment-trust certificates or like securities, the term "issuer" means the person by whom the equipment or property is, or is to be, used. (9) The term "person" means an individual, a corporation, a partnership, an association, a jointstock company, a business trust, or an unincorporated organization. (10) The term "security" means any note, stock, treasury stock, bond, debenture, certificate of interest or participation in any profit-sharing agreement or in any oil, gas, or other mineral royalty or lease, any collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit, for a security, or in general, any instrument commonly known as a "security"; or any certificate of interest or participation in, temporary or interim certificate for, receipt for, or warrant or right to subscribe to or purchase, any of the foregoing; but shall not include currency or any note, draft, bill of exchange, or banker's acceptance which has a maturity at the time of issuance of not exceeding nine months, exclusive of days of grace, or any renewal thereof the maturity of which is likewise limited. (11) The term "equity security" means any stock or similar security; or any security convertible, with or without consideration, into such a security; or carrying any warrant or right to subscribe to or purchase such a security; or any such warrant or right; or any other security which the Commission shall deem to be of similar nature and consider necessary or appropriate, by such rules and regulations as it may prescribe in the public interest or for the protection of investors, to treat as an equity security. (12) The term "exempted security" or "exempted securities" shall include securities which are direct obligations of or obligations guaranteed as to principal or interest by the United States; such securities issued or guaranteed by corporations in which the United States has a direct or indirect interest as shall be designated for exemption by the Secretary of the Treasury as necessary or appropriate in the public interest or for the protection of investors; securities which are direct obligations of or obligations guaranteed as to principal or interest by a State or any political subdivision thereof or any agency or instrumentality of a State or any political subdivision thereof or any municipal corporate instrumentality of one or more States; and such other securities (which may include, among others, unregistered securities, the market in which is predominantly intrastate) as the Commission may, by such rules and regulations as it deems necessary or appropriate in the public interest or for the protection of investors, either unconditionally or upon specified terms and conditions or for stated periods, exempt from the operation of any one or more provisions of this title which by their terms do not apply to an "exempted security" or to "exempted securities." (13) The terms "buy" and "purchase" each include any contract to buy, purchase, or otherwise acquire. (14) The terms "sale" and "sell" each include any contract to sell or otherwise dispose of. (15) The term "Commission" means the Securities and Exchange Commission established by section 4 of this title. (16) The term "State" means any State of the United States, the District of Columbia, Alaska, Hawaii, Puerto Rico, the Philippine Islands, the Canal Zone, the Virgin Islands, or any other possession of the United States. (17) The term "interstate commerce" means trade, commerce, transportation, or communication among the several States, or between any foreign country and any State, or between any State and any place or ship outside thereof. (b) The Commission and the Federal Reserve Board, as to matters within their respective jurisdictions, shall have power by rules and regulations to define technical, trade, and accounting terms used in this title insofar as such definitions are not inconsistent with the provisions of this title. (c) No provision of this title shall apply to, or be deemed to include, any executive department or independent establishment of the United States, or any lending agency which is wholly owned, directly or indirectly, by the United States, or any officer, agent, or employee of any such department, establishment, or agency, acting in the course of his official duty as such, unless such provision makes specific reference to such department, establishment, or agency. Securities and Exchange Commission SECTION 4. (a) There is hereby established a Securities and Exchange Commission (hereinafter referred to as the "Commission") to be composed of five commissioners to be appointed by the Presi |