Unreasonable Financial Burden

Where registered holding company proposes to issue 25-year bonds for purpose of making temporary advance to subsidiary to aid it in compliance with Commission divestment order under Section 11 and for purpose of investing funds in subsidiaries upon repayment of advance over 2-year period, where no demonstration is made of necessity for such investment in subsidiaries, and where only financial burden claimed to result from denial of bond issue would occur in event of issuance of common shares at future date, held, bonds not within exception to Section 7(c) (1) provided by Section 7 (c) (2) (D) *** Page 728

PRACTICE AND PROCEDURE

Denial of Privilege to Practice before Commission

Where, in Commission investigation to determine, among other things, whether certain registered holding company and other persons made political contributions in violation of Section 12(h) of Public Utility Holding Company Act of 1935, testimony given by attorney contained false and misleading statements concerning check drawn by him and deposited in private account of state official, held, attorney engaged in improper professional conduct within meaning of Rule II (e) of Commission's Rules of Practice, and should be denied the privilege of practicing before Commission until he obtains the approval of the Commission * Page 82

Evidence

Offer of proof, made in a proceeding with respect to a plan filed pursuant to Section 11(e) of the Public Utility Holding Company Act of 1935, which plan is proposed to comply with an order issued pursuant to Section 11(b) (1) of the Act requiring the separation of gas and electric utility assets, and which offer purports to prove that the severance of the gas utility assets from the electric utility assets would increase operating expenses, held, properly rejected by the hearing officer as irrelevant to the issues involved in the proceeding on the plan *** Page 129

SIMPLIFICATION OF HOLDING COMPANY SYSTEM

Plan Under Section 11(e)—Appropriate to Effectuate Provisions of Section 11(b)

Plan, filed pursuant to Section 11(e) of the Public Utility Holding Company Act of 1935 by a combination gas and electric utility subsidiary of a registered holding company, as a first step in a program of compliance with an order issued pursuant to Section 11(b) (1) of the Act requiring the divestment from the holding company system of the gas utility assets of the combination company, whereby the gas utility assets are to be transferred to a newly created subsidiary company, held, necessary to effectuate the provisions of Section 11(b) of the Act *** Page 129

Plan under Section 11(e)-Fair and Equitable

Plan filed pursuant to Section 11(e) of the Public Utility Holding Company Act of 1935 by a combination gas and electric utility subsidiary of registered holding company, which plan provides for creation of subsidiary gas utility company all the securities of which are to be held by the combination company, held, fair and equitable to the security holders of the gas and electric utility company and its parent holding company since their respective interests in the underlying assets are changed in form only *** Page 129

Unfair and Inequitable Distribution of Voting Power in the System

Where non-redeemable preferred stock of a registered holding company
represents a relatively insignificant part of the capitalization and surplus of
such company and the affirmative vote of the holders of two-thirds of such
stock present and voting at a meeting at which a quorum is present is required
to approve and adopt important corporate action, held, existence of preferred
stock results in unfair and inequitable distribution of voting power between the
holders of the preferred and common stock contrary to the standards of Section
11(b) (2) of the Public Utility Holding Company Act of 1935, and elimination
of preferred stock is required under that Section *** Page 276

Declaration filed pursuant to Section 12(e) of the Public Utility Holding
Company Act of 1935 and Rule U-62 promulgated thereunder, with respect to
proxy solicitation material proposed to be mailed by management of registered
holding company, permitted to become effective, provided the proxy solicitation
material is amended in certain respects, the Commission finding no basis for
concluding that the material as so amended could not appropriately be sent to
stockholders *** Page 240

SOLICITATION OF PROXIES

Declaration filed pursuant to Section 12(e) of the Public Utility Holding
Company Act of 1935 and Rule 62 promulgated thereunder, with respect to
proxy solicitation material proposed to be mailed by management of registered
holding company which omitted various proposals submitted by stockholders,
will be permitted to become effective, provided the proxy solicitation material
is amended in certain respects, the Commission finding the omission of the
stockholder proposals was consistent with the Commission's policies with respect
to the solicitation of proxies as expressed in Regulation X-14 under the Securities
Exchange Act of 1934 *** Page 921

SOLICITATION OF SECURITY HOLDERS

Declaration filed by registered holding company which is also a public-utility
company, pursuant to Section 12(e) of the Public Utility Holding Company Act
of 1935 and Rule 62 thereunder, proposing the solicitation of holders of common
and preferred stock of a non-affiliated company to effect a voluntary exchange
of their securities for common stock to the former and for cash, permitted to
become effective, the Commission observing no basis for adverse findings, par-
ticularly in the light of the proposal of the declarant to include a copy of the
Commission's Findings and Opinion as part of the solicitation material to be
sent to the holders of the securities solicited *** Page 358

PART IV

INVESTMENT COMPANY ACT OF 1940

DECEPTIVE NAME OF INVESTMENT COMPANY

Name as Indication of General Character of Investments

Where policy of registered investment company is to invest at least 80% of its funds in insured accounts in insured savings and loan institutions and the balance in accounts in insured banks, United States Government obligations and cash, held, name "Insured Accounts Fund" is sufficiently descriptive of general character of company's investments not to be deceptive or misleading within the meaning of Section 35 (d) of Investment Company Act *** Page 123 Implication of Investment and Other Advantages

Name of registered investment company, "Civil and Military Investors Mutual Fund, Inc.", and specifically words "Civil and Military Investors" therein, held, deceptive and misleading, in violation of Section 35 (d) of Investment Company Act of 1940, as implying that company's securities have investment and other advantages for civilian and military government personnel to whom sales are to be directed *** Page 451

Implication of Approval by United States

Name of registered investment company, "Civil and Military Investors Mutual Fund, Inc.", and specifically words "Civil and Military" therein, held, not to violate Section 35(a) of Investment Company Act of 1940 since not likely to carry implication that company or its securities have been sponsored, recommended, or approved by the United States *** Page 451

EXEMPTIONS

Acquisition by Investment Company of Stock of Insurance Company and Issuance of Notes

Proposed acquisition by registered closed-end investment company of stock of insurance company, with a view to liquidation of insurance company and retention of its portfolio, and proposed borrowing of funds to finance acquisition, held, entitled to exemption under Section 6(c) of Investment Company Act of 1940 from provisions of that Act restricting investments by investment companies in insurance companies and in other investment companies and prohibiting the issuance of debt obligations where asset coverage is less than 300% Page 506

Acquisition by Investment Company of Stock of Insurance Company from Affiliates

Proposed acquisition by registered closed-end investment company of insurance company stock from affiliated persons, as part of acquisition of controlling interest in insurance company, at cost to affiliated persons plus interest on funds borrowed by such persons to purchase stock, such cost being equal to amount paid to other shareholders of insurance company, held, entitled to exemption under Section 17(b) of Investment Company Act of 1940 from provisions of that

969

Act prohibiting affiliated persons from selling securities to registered investment
companies *** Page 506

Denial of Exemption

Application by registered investment company, sponsored by group of savings
and loan associations and organized as Massachusetts trust to make investments
primarily in insured accounts in such associations and a majority of whose
trustees are affiliated with sponsor, for exemption to permit issuance of
certificates of beneficial interest without voting rights in selection of trustees,
denied, in view of all circumstances including those surrounding applicant's
organization, the existence of trustee's discretion with respect to investments,
and potential conflicts of interests between sponsor and applicant's investors
** Page 123

Offer of Redeemable Securities to Limited Group

Where registered investment company whose shares have been sold only by
direct mail solicitations by underwriter proposes to expand its selling operations
to include sales by broker-dealers and salesmen and to increase sales load to
cover resulting increases in expenses, and seeks an exemption permitting it to
continue to charge existing sales load for the periodic purchases of redeemable
securities by subscribers who have entered into agreements under applicant's
accumulation plan, held, exemption granted in view of all circumstances, includ-
ing the facts that exemption will be limited to small and self-liquidating group
of existing public shareholders whose future periodic subscriptions will not
involve any greater sales expense than past payments, that applicant will receive
full net asset value for all shares, and that applicant's underwriter-sponsor has
joined in application *** Page 286

REGISTRATION

Grounds for Revocation of Registration-Injunction

Where registered investment adviser is permanently enjoined from employing
any device, scheme or artifice to defraud clients or prospective clients, held,
injunction is against "engaging in or continuing any conduct or practice in
connection with" investment advisory activity, within meaning of Section 203 (d)
of Investment Advisers Act of 1940, it being immaterial that registrant had no
clients at time of conduct on which injunction was based, and it is in public
interest to revoke registration as investment adviser * * Page 256

REGISTRATION OF FOREIGN INVESTMENT COMPANY

Application by investment company organized in Union of South Africa for
permission to register and to make public offering of shares in United States,
pursuant to Section 7(d) of Investment Company Act of 1940, granted, the
Commission finding that in view of company's charter and by-law provisions,
undertakings in application, and the law of South Africa, it is feasible effectively
to enforce provisions of Act against company and that order is otherwise con-
sistent with public interest and protection of investors *** Page 546

TRANSACTIONS AFFILIATED PERSONS AND COMPANY

Where terms of proposed merger of registered closed-end investment company
and an affiliated company are reasonable and fair and do not involve over-
reaching and are consistent with the stated policies of the registered investment
company and the general purposes of the Investment Company Act of 1940, held,
the proposed merger transactions between affiliates exempted from Section 17(a)

PART V

INVESTMENT ADVISERS ACT OF 1940

INVESTMENT ADVISER REGISTRATION

Grounds for Revocation-Injunction

Where registered investment adviser in amendment to registration application willfully misstated his business address as being in one State when in fact it was located in another State where he is enjoined from acting as an investment adviser, held, in the public interest to revoke registration *** Page 87

Where registered investment adviser is enjoined, on basis of findings by Court of willful violations of Commission's net capital requirements by broker-dealer of which registrant was president and a director, from engaging in securities transactions while not in compliance with such requirements, held, in the public interest to revoke registration *** Page 577

О

971