THE DISTRICT OF COLUMBIA EIGHTY-EIGHTH CONGRESS FIRST SESSION ON H.R. 4200 TO PROVIDE FOR THE REGULATION OF THE BUSINESS OF 29-313 MAY 2, 1963 Printed for the use of the Committee on the District of Columbia U.S. GOVERNMENT PRINTING OFFICE WASHINGTON: 1964 UNITED STATES OF AMERICA CONTENTS H.R. 4200, a bill to provide for the regulation of the business of selling STATEMENTS Acheson, David C., Esq., U.S. attorney for the District of Columbia----- District of Columbia government: Bryan, Irving, Office of the Corporation_ Investment Bankers Association of America: Calvert, Gordon L., assistant general counsel. Nees, Bernard, chairman, Washington Legislative Committee_. Johnson, George E__ 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__ Shaw, Clarence E., president, Clarence E. Shaw & Co--- MATERIAL SUBMITTED FOR THE RECORD Association of Casualty & Surety Companies: Marsh, David M., assistant McCarthy, Leland S., managing director, letter dated May 2, 1963, to Department of Justice: Resolution of March 27, 1961_ Acheson, David C., U.S. attorney for the District of Columbia: Letter dated June 21, 1963, to Chairman Abernethy (appendix). Katzenbach, Nicholas deB., Deputy Attorney General: Letter dated District of Columbia government: Bryan, Irving, Assistant Corporation Counsel: Separate statement, dated July 15, 1963 (appendix).... 160 Clarke, E. J., Acting President, Board of Commissioners: Letter dated 45 159 139 Gilbertson, Larry D., vice president and general counsel, Variable Annuity Commerce Clearing House, Inc., General Guide: 133 Letter dated May 7, 1963, to James T. Clark, clerk, enclosing rules 148 Senate Report 2109, 82d Congress, 2d session, "Constructive Sale 134 132 MATERIAL SUBMITTED FOR THE RECORD-Continued Investment Bankers Association of America: Statement of re H.R. 4200__ Investment Company Institute: Augenblick, Robert L., general counsel: Johnson, George E.: Letter dated April 22, 1963, to Chairman McMillan___ Reprint from Georgetown Law Journal, summer 1960, entitled "The Variable Annuity-Insurance, Investment, or Both?". Maryland Securities Act, rules under___ Midwest Securities Commissioners Association: Statement of policy, dated February 22, 1963, regarding variable companies and trusts.. National Association of Securities Dealers, Inc.: Goodwin, A. Jackson, Jr., chairman, Legislation Committee: Letter dated June 4, 1963, to Oulahan, Courts, Esq.: Letter dated May 1, 1963, to Chairman McMillan, 142 81 The Washington Star, Ottenberg, Miriam, staff writer, articles entitled U.S. Court of Appeals (3d circuit), opinion dated January 20, 1964, in The Prudential Insurance Co. of America v. S.E.C. et al. (326 F. 2d 383) Vieth, G. Duane, Esq., of Arnold, Fortas & Porter: Letters dated June 20, 21, 1963, to Chairmen McMillan and Abernethy together with suggested Wellington Management Co., Joseph E. Welch, president: Letter dated 50 148 REGULATING THE SALE OF SECURITIES THURSDAY, MAY 2, 1963 HOUSE OF REPRESENTATIVES, 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 |