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THE DISTRICT OF COLUMBIA
HOUSE OF REPRESENTATIVES

EIGHTY-EIGHTH CONGRESS

FIRST SESSION

ON

H.R. 4200

TO PROVIDE FOR THE REGULATION OF THE BUSINESS OF
SELLING SECURITIES IN THE DISTRICT OF COLUMBIA AND
FOR THE LICENSING OF PERSONS ENGAGED THEREIN,
AND FOR OTHER PURPOSES

29-313

MAY 2, 1963

Printed for the use of the

Committee on the District of Columbia

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON: 1964

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UNITED STATES OF AMERICA

CONTENTS

H.R. 4200, a bill to provide for the regulation of the business of selling
securities in the District of Columbia and for the licensing of persons
engaged therein, and for other purposes_
House committee staff memoranda__.

STATEMENTS

Acheson, David C., Esq., U.S. attorney for the District of Columbia-----
Bastable, Edwin F., partner, Harris, Upham & Co---

District of Columbia government: Bryan, Irving, Office of the Corporation_
Gilbertson, Larry D., vice president and general counsel, Variable Annuity
Life Insurance Co---.

Investment Bankers Association of America:

Calvert, Gordon L., assistant general counsel.

Nees, Bernard, chairman, Washington Legislative Committee_.

Johnson, George E__

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Metropolitan Washington Board of Trade: Press, William H., executive vice president__

Securities and Exchange Commission:

Brown, Alexander, Washington regional office__

Cary, William L., Chairman__

Loomis, Philip A., Director, Division of Trading and Exchanges__
Michaely, George, special counsel.

Shaw, Clarence E., president, Clarence E. Shaw & Co---

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MATERIAL SUBMITTED FOR THE RECORD

Association of Casualty & Surety Companies: Marsh, David M., assistant
counsel, letter dated March 27, 1963, to Chairman McMillan____.
Better Business Bureau of Metropolitan Washington:

McCarthy, Leland S., managing director, letter dated May 2, 1963, to
Chairman Abernathy-.

Department of Justice:

Resolution of March 27, 1961_

Acheson, David C., U.S. attorney for the District of Columbia:
Letter dated May 17, 1963, to Chairman Abernethy--

Letter dated June 21, 1963, to Chairman Abernethy (appendix).
Complete statement submitted for the record_.

Katzenbach, Nicholas deB., Deputy Attorney General: Letter dated
May 2, 1963, to Chairman McMillan___

District of Columbia government:

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Bryan, Irving, Assistant Corporation Counsel: Separate statement, dated July 15, 1963 (appendix)....

160

Clarke, E. J., Acting President, Board of Commissioners: Letter dated
February 25, 1963. to Hon. John W. McCormack, Speaker, U.S.
House of Representatives, enclosing draft of proposed legislation__.
Tobriner, Walter N., President, Board of Commissioners: Letter dated
July 22, 1963, to Chairman Abernethy (appendix).
Department of Insurance Rates and Regulations re variable annuity
contracts.

45

159

139

Gilbertson, Larry D., vice president and general counsel, Variable Annuity
Life Insurance Co. of America.

Commerce Clearing House, Inc., General Guide:
Excerpt from, re securities regulation---

133

Letter dated May 7, 1963, to James T. Clark, clerk, enclosing rules
under the Maryland Securities Act--

148

Senate Report 2109, 82d Congress, 2d session, "Constructive Sale
Price for Purposes of Certain Manufacturers Excise Tax"____
Statement of Larry D. Gilbertson___

134

132

REGULATING THE SALE OF SECURITIES

THURSDAY, MAY 2, 1963

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE No. 2 OF THE

COMMITTEE ON THE DISTRICT OF COLUMBIA,

Washington, D.C.

The subcommittee met, pursuant to notice, at 10 a.m., in room 445-A, Cannon Building, Hon. Thomas G. Abernethy (chairman of the subcommittee) presiding.

Present: Representatives Abernethy, Springer, and Mathias.

Also present: Representative Hastings Keith, 12th Congressional District of the State of Massachusetts.

James T. Clark, clerk; Donald Tubridy, minority clerk; and Leonard O. Hilder, investigator.

Mr. ABERNETHY. This subcommittee has been convened for the purpose of taking testimony on H.R. 4200.

(H.R. 4200 follows:)

[H.R. 4200, 88th Cong., 1st sess.]

A BILL To provide for the regulation of the business of selling securities in the District of Columbia and for the licensing of persons engaged therein, 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

SECTION 1. That title I of this Act may be cited as the "District of Columbia Securities Act".

DEFINITIONS

SEC. 2. When used in this title, unless the context otherwise requires—

(a) “Agent" means any individual other than a broker-dealer who represents a broker-dealer or issuer in effecting or attempting to effect purchases or sales of securities. "Agent" does not include any individual who represents an issuer in (1) effecting transactions in an exempt security, (2) effecting exmept transactions, or (3) effecting transactions with existing employees, partners, or directors of the issuer if no commission or other remuneration is paid or given directly or indirectly for soliciting any person in the Distrct. A partner, officer, or director of a broker-dealer or issuer, or a person occupying similar status or performing similar functions, is an agent only if he otherwise comes within this definition;

(b) "Broker-dealer" means any person engaged in the business of effecting transactions in securities for the account of others or for his own account. "Broker-dealer" does not include (1) an agent, (2) an issuer, (3) a bank, savings institution, or trust company, or (4) a person who has no place of business in the District if (A) he effects transactions in the District exclusively with or through (i) the issuers of the securities involved in the transactions, (ii) other broker-dealers, or (iii) banks, savings institutions, trust companies, insurance companies, investment companies as defined in the Investment Company Act of 1940, pension or profit-sharing trusts, or other financial institutions or institutional buyers, whether acting for themselves or as trustees, or (B) during any period of twelve consecutve months he does not direct more than fifteen offers

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