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200.785-11 Statement of employment and financial interests. 200.735-12 Special Government employees. 200.735-13 Disciplinary and other remedial action.

200.735-14 Employees on leave of absence. 200.735-15 Interpretative and advisory service.

Subpart A-Organization and Program Management

AUTHORITY: The provisions of this Subpart A issued under secs. 19, 23, 48 Stat. 85, 901, as amended, sec. 20, 49 Stat. 833, sec. 319, 53 Stat. 1173, secs. 38, 211, 54 Stat. 841, 855; 15 U.S.C. 77s, 78w, 79t, 77sss, 80a-37, 80b-11, unless otherwise noted.

SOURCE: The provisions of this Subpart A appear at 25 F.R. 12712, Dec. 22, 1962, unless otherwise noted.

§ 200.1

General statement and statutory authority.

The Securities and Exchange Commission was created in 1934 under the Securities Exchange Act. That Act transferred to the Commission the administration of the Securities Act of 1933, formerly administered by the Federal Trade Commission. Subsequent laws assigned to the Securities and Exchange Commission for administration are: Public Utility Holding Company Act of 1935, Trust Indenture Act of 1939, Investment Company Act of 1940, and Investment Advisers Act of 1940. By the terms of Chapter X of the Bankruptcy Act, as amended in 1938, the Commission also serves as adviser to United States District Courts in connection with certain proceedings for the reorganization of debtor corporations. Considered together, the laws administered by the Commission proved for the following.

(a) Public disclosure of pertinent facts concerning public offerings of securities and securities listed on national securities exchanges and certain securities trade in the over-the-counter markets.

(b) Enforcement of disclosure requirements in the soliciting of proxies for

Part

271

274

275

276

279

281

285

286

Interpretative releases relating to the Investment Company Act of 1940 and general rules and regulations thereunder.

200.10 200.11

Forms prescribed under the Investment Company Act of 1940.
Rules and regulations, Investment Advisers Act of 1940.

Interpretative releases relating to the Investment Advisers Act of 1940 and general rules and regulations thereunder.

200.16

200.17 200.18

Forms prescribed under the Investment Advisers Act of 1940.
Interpretative releases relating to corporate reorganizations under Chapter
X of the Bankruptcy Act.

Rules and regulations pursuant to section 15(a) of the Bretton Woods
Agreements Act.

287 General rules and regulations pursuant to section 11(a) of the Asian Development Bank Act.

General rules and regulations pursuant to section 11(a) of the Inter-American Development Bank Act.

PART 200-ORGANIZATIONS; CON-
DUCT AND ETHICS; AND INFOR-
MATION AND REQUESTS

Subpart A-Organization and Program
Management

Sec.

200.1 General statement and statutory authority.

200.2 Statutory functions.

GENERAL ORGANIZATION

The Commission.

Headquarters Office-Regional Office
relationship.

200.12 Functional responsibilities.
200.13
200.14
200.15 Director of the Office of Opinions

The Secretary of the Commission.
Hearing Examiners.

and Review.

Executive Assistant to the Chairman.
Chief Management Analyst.

Director of the Division of Corpora-
tion Finance.

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Sec.

200.30-3 Delegation of authority to Director of Division of Trading and Markets.

200.30-4 Delegation of authority to Regional Administrators.

200.30-5 Delegation of authority to Secretary of the Commission.

200.30-6 Delegation of authority to Director of Office of Opinions and Review.

200.30-7 Delegation of authority to hearing officers.

Subpart B-[Reserved]

200.50

200.51

200.52

200.53
200.54

200.55 Statutory obligations.

Personal conduct.

200.56
200.57
200.58

Relationships with other members.
Maintenance of independence.

200.59 Relationship with persons subject to
regulation.

200.60 Qualification to participate in particular matters.

200.61

200.62
200.63

200.64

200.65

200.66

200.67

200.68

200.69

Subpart C-Canons of Ethics

Authority.

Policy.

Copies of the Canons.
Preamble.

Constitutional obligations.

200.70

200.71

200.72

Impressions of influence.

Ex parte communications.
Commission opinions.
Judicial review.
Legislative proposals.
Investigations.

Power to adopt rules.

Promptness.

Conduct toward parties and their counsel.

Business promotions.

Fiduciary relationships.

Supervision of internal organization.

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sions.

200.735-11 Statement of employment and financial interests. 200.735-12 Special Government employees. 200.735-13 Disciplinary and other remedial action.

200.735-14 Employees on leave of absence. 200.735-15 Interpretative and advisory service.

Subpart A-Organization and Program Management

AUTHORITY: The provisions of this Subpart A issued under secs. 19, 23, 48 Stat. 85, 901, as amended, sec. 20, 49 Stat. 833, sec. 319, 53 Stat. 1173, secs. 38, 211, 54 Stat. 841, 855; 15 U.S.C. 77s, 78w, 79t, 77sss, 80a-37, 80b-11, unless otherwise noted.

SOURCE: The provisions of this Subpart A appear at 25 F.R. 12712, Dec. 22, 1962, unless otherwise noted.

§ 200.1

General statement and statutory authority.

The Securities and Exchange Commission was created in 1934 under the Securities Exchange Act. That Act transferred to the Commission the administration of the Securities Act of 1933, formerly administered by the Federal Trade Commission. Subsequent laws assigned to the Securities and Exchange Commission for administration are: Public Utility Holding Company Act of 1935, Trust Indenture Act of 1939, Investment Company Act of 1940, and Investment Advisers Act of 1940. By the terms of Chapter X of the Bankruptcy Act, as amended in 1938, the Commission also serves as adviser to United States District Courts in connection with certain proceedings for the reorganization of debtor corporations. Considered together, the laws administered by the Commission proved for the following.

(a) Public disclosure of pertinent facts concerning public offerings of securities and securities listed on national securities exchanges and certain securities trade in the over-the-counter markets.

(b) Enforcement of disclosure requirements in the soliciting of proxies for

meetings of security holders by companies whose securities are listed on exchange, public utility holding companies, and their subsidiaries and investment companies.

(c) Regulation of the trading in securities on national securities exchanges and in the over-the-counter markets.

(d) Investigation of securities frauds, manipulations, and other violations, and the imposition and enforcement of legal sanctions therefor.

(e) Registration, and the regulation of certain activities, of brokers, dealers and investment advisers.

(f) Supervision of the activities of mutual funds and other investment companies.

(g) Administration of statutory standards governing protective and other provisions of trust indentures under which debt securities are sold to the public.

(h) Regulation of the purchase and sale of securities, utility properties, and other assets by registered public utility holding companies and their electric and gas utility subsidiaries; enforcement of statutory standards for public utility holding company system simplification and integration; and approval of their reorganization, mergers and consolida

tions.

(i) Performance of advisory services to Federal courts in corporate reorganization proceedings under Chapter X of the Bankruptcy Act.

(j) Administrative sanctions, injunctive remedies and criminal prosecution. There are also private rights of action for investors injured by violations of the Acts.

§ 200.2

Statutory functions.

Following are brief descriptions of the Commission's functions under each of the statutes it administers:

(a) Securities Act of 1933. (1) Issuers of securities making public offerings for sale in interstate commerce or through the mails, directly or by others on their behalf, are required to file with the Commission registration statements containing financial and other pertinent data about the issuer and the offering. A similar requirement is provided with respect to such public offerings on behalf of a controlling person of the issuer. Un

less a registration statement is in effect with respect to such securities, it is unlawful to sell the securities in interstate commerce or through the mails. (There are certain limited exemptions, such as government securities, non-public offerings, and intrastate offerings.) The effectiveness of a registration statement may be refused or suspended after a hearing if the statement contains material misstatements or omissions, thus barring sale of the securities until it is appropriately amended. Registration is not a finding by the Commission as to the accuracy of the facts disclosed; and it is unlawful so to represent. Moreover, registration of securities does not imply approval of the issue by the Commission or insure investors against loss in their purchase, but serves rather to provide information upon which investors may make an informed and realistic evaluation of the worth of the securities.

(2) Persons responsible for filing false information with the Commission subject themselves to the risk of fine or imprisonment or both; and the issuing company, its directors, officers, and the underwriters and dealers and others may be liable in damages to purchasers of registered securities if the disclosures in the registration statements and prospectus are materially defective. Also the statute contains antifraud provisions which apply generally to the sale of securities, whether or not registered.

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(b) Securities Exchange Act of 1934. This Act requires the filing of registration applications and annual and other reports with national securities changes and the Commission, by companies whose securities are listed upon the exchanges. Annual and other reports must be filed also by certain companies whose securities are traded in the overthe-counter markets. These must contain financial and other data prescribed by the Commission for the information of investors. Material misstatements or omissions are grounds for suspension or withdrawal of the security from exchange trading. This Act makes unlawful solicitations of proxies, authorizations or consents from holders of listed securities in contravention of rules prescribed by the Commission. These rules provide for disclosures to securities holders of information relevant to the matters which are the subject of solicita

tions. The Act also requires disclosure of the holdings and the transactions by officers, directors and large (10%) holders of equity securities of companies having such securities listed on a national securities exchange. The Act also provides for registration with the Commission and for regulation by the Commission of national securities exchanges, brokers and dealers engaged in an over-the-counter securities business, and national associations of such dealers. It gives the Commission rule making power with respect to short sales, stabilizing, floor trading, activities of specialists and odd-lot dealers, and such matters as excessive trading by the exchange members. The Act empowers the Board of Governors of the Federal Reserve System to prescribe minimum margin requirements with respect to listed securities.

(c) Public Utility Holding Company Act of 1935. This Act provides for regulation by the Commission of the purchase and sale of securities, properties, and other assets by companies comprised within electric and gas utility holding company systems, their intrasystem transactions and service and management arrangements. It further provides for limitation of system operations to physically integrated and coordinated properties, and simplification of complex corporate and capital structures and elimination of unfair distribution of voting power. The issuance and sale of securities by holding companies and their subsidiaries, unless exempt (subject to conditions and terms which the Commission is empowered to impose) as an issue expressly authorized by the state commission in the state in which the issuer is incorporated, must be found by the Commission to meet statutory standards, namely: that the new security is reasonably adapted to the security structure and earning power of the issuer; that the proposed financing is necessary and appropriate to the economical and efficient operation of the company's business; that the consideration received, and fees, commissions, and other remuneration paid are fair; and that the terms and conditions of the sale are not detrimental to investors, consumers, or the public. The purchase and sale of utility properties and other assets may not be made in contravention of rules,

regulations, or orders of the Commission regarding the consideration to be received, maintenance of competitive conditions, fees and commissions, accounts, disclosure of interest, and similar matters. In passing upon proposals for reorganization, merger, or consolidation, the Commission must be satisfied that the objectives of the act generally are complied with and that the terms of the proposals are fair and equitable to all classes of security holders affected.

(d) Trust Indenture Act of 1939. This Act is designed to safeguard the interests of purchasers of publicly offered debt securities issued under trust indentures through provisions requiring in such indentures the elimination of certain types of exculpatory clauses and the inclusion of certain protective provisions. The act also requires that the indenture trustee, who is a representative of the debt holders, shall be “independent” by proscribing certain relationships which might conflict with the proper exercise of his duties.

(e) Investment Company Act of 1940. This Act provides for the registration with the Commission of investment companies and subjects their activities to regulation in accordance with standards prescribed in the interests of protecting investors. Various transactions of investment companies, including transactions with affiliated interests, are prohibited unless exempted by the Commission. The Commission is authorized to prepare reports to security holders on the fairness of plans of reorganization, merger or consolidation; it may institute court action to enjoin the consummation of plans considered grossly unfair to security holders, or to enjoin acts and practices of management involving gross misconduct or gross abuse of trust and to disqualify from office officials responsible therefor.

(f) Investment Advisers Act of 1940. Persons who, for compensation, engage in the business of advising others with respect to their security transactions must register with the Commission. Their activities in the conduct of such business are subject to standards of the act which make unlawful those practices which constitute fraud or deceit and which require, among other things, disclosure of any interests they may have

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