Page images
PDF
EPUB
[ocr errors]

an

rules. These rules require disclosure of information about the subject of the solicitation to security holders. The Act requires disclosure of the holdings and the transactions by an officer, director, or beneficial owner of over 10 percent of any class of equity security of certain companies. It also requires disclosure of the beneficial owners of more than five percent of any class of equity securities of a registered company. It provides substantive and procedural protection to security holders in third-party and issuer tender offers. The Act also provides for the registration with, and regulation by, the Commission of national securities exchanges, brokers or dealers engaged in

over-the-counter securities business, and national associations of such brokers or dealers. It gives the commission rulemaking power with respect to short sales, stabilizing, floor trading activities of specialists and odd-lot dealers, and such matters as excessive trading by exchange members. The Act authorizes the Board of Governors of the Federal Reserve System to prescribe minimum margin requirements for listed securities.

(c) Public Utility Holding Company Act of 1935. This Act authorizes the Commission to regulate gas and electric public-utility holding companies under standards prescribed for the protection of the public interest and the interest of investors and consumers. The Act generally limits a public-utility holding company to a single integrated public-utility system, and requires simple corporate and capital structures. If not exempt, a public-utility holding company must register with the Commission. Generally, a registered holding company must obtain Commission approval before it can issue and sell securities, acquire utility securities or assets or any other interest in any business, or enter into transactions with its affiliates. It must also comply with extensive reporting and record-keeping requirements. Although largely free of these requirements, an exempt holding company remains subject to the geographic limitations of the Act. The Act permits the acquisition of interests in “exempt wholesale generators” and “foreign utility com

panies” unrelated to a system's utility operations.

(d) Trust Indenture Act of 1939. This Act safeguards the interests of purchasers of publicly-offered debt securities issued under trust indentures by requiring the inclusion of certain protective provisions in, and the exclusion of certain types of exculpatory clauses from, trust indentures. The Act also requires that an independent indenture trustee represent the debtors by proscribing certain relationships that could conflict with proper exercise of duties.

(e) Investment Company Act of 1940. This Act establishes a comprehensive regulatory framework for investment companies and subjects their activities to regulation under standards prescribed for the protection of investors. Among other things, the Act provides for the registration of investment companies with the Commission; requires them to disclose their financial condition and investment policies to their shareholders; prohibits them from substantially changing investment policles without shareholder approval; bars persons guilty of securities fraud from serving as officers or directors; prevents underwriters, investment bankers, or brokers from constituting more than a minority of the directors of an investment company; requires that management contracts be submitted to shareholders for their approval; prohibits transactions between investment companies and their directors, officers, or affiliated companies or persons, except when approved by the Commission; and prohibits investment companies from issuing senior securities except under specified terms and conditions. The Act also regulates advisory fees, sales and repurchases of securities, exchange offers, and other activities of investment companies. The Act authorizes the Commission to exempt any person or class of persons or securities from any provisions of, or rules under, the Act and to conduct any investigation it deems necessary to determine existing or potential violations of the Act. It also authorizes the Commission to prepare reports to security holders on the fairness of plans of reorganization, merger, or consolidation. The Commission may institute a (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.

(1) 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 consolidations.

(1) Protection of the interests of public investors involved in bankruptcy reorganization cases and in bankruptcy cases involving the adjustment of debts of a municipality.

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

ings on behalf of a controlling person of the issuer. Unless 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 gofernment 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 rep resent. 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.

(b) Securities Exchange Act of 1934. This Act requires the filing of registration applications and annual and other reports with national securities exchanges and the Commission, by companies whose securities are listed on the exchanges. Annual and other reports must be filed also by certain companies whose securities are traded on

the over-the-counter markets. These must contain financial and other data prescribed by the Commission for the information of investors. Material misstatements

omissions are grounds for suspension or withdrawal of the security from exchange trading. This Act makes unlawful any solicitation of proxies, authorizations, or consents in contravention of Commission

(15 U.S.C. 78d-1, 780-2; 11 U.S.C. 901, 1109(a)) (27 FR 12712, Dec. 22, 1962, as amended at 43 FR 13375, Mar. 30, 1978; 49 FR 12684, Mar. 30, 1984; 60 FR 14623, Mar. 20, 1995; 60 FR 32794, June 23, 1995)

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 malls, directly or by others on their behalf, are required to file with the Commission registration statements containing financial and other pertinent data about the 188uer and the offering. A similar requirement is provided with respect to such public offer

or

[ocr errors]

rules. These rules require disclosure of information about the subject of the solicitation to security holders. The Act requires disclosure of the holdings and the transactions by an officer, director, or beneficial owner of over 10 percent of any class of equity security of certain companies. It also requires disclosure of the beneficial owners of more than five percent of any class of equity securities of a registered company. It provides substantive and procedural protection to security holders in third-party and issuer tender offers. The Act also provides for the registration with, and regulation by, the Commission of national securities exchanges, brokers or dealers engaged in an over-the-counter securities business, and national associations of such brokers or dealers. It gives the Commission rulemaking power with respect to short sales, stabilizing, floor trading activities of specialists and odd-lot dealers, and such matters as excessive trading by exchange members. The Act authorizes the Board of Governors of the Federal Reserve System to pre

ibe minimum margin requirements for listed securities.

(c) Public Utility Holding Company Act of 1935. This Act authorizes the Commission to regulate gas and electric public-utility holding companies under standards prescribed for the protection of the public interest and the interest of investors and consumers. The Act generally limits a public-utility holding company to a single integrated public-utility system, and requires simple corporate and capital structures. If not exempt, a public-utility holding company must register with the Commission. Generally, a registered holding company must obtain Commission approval before it can issue and sell securities, acquire utility securities or assets or any other interest in any business, or enter into transactions with its affiliates. It must also comply with extensive reporting and record-keeping requirements. Although largely free of these requirements, an exempt holding company remains subject to the geographic limitations of the Act. The Act permits the acquisition of interests in “exempt wholesale generators” and “foreign utility com

panies" unrelated to a system's utility operations.

(d) Trust Indenture Act of 1939. This Act safeguards the interests of purchasers of publicly-offered debt securities issued under trust indentures by requiring the inclusion of certain protective provisions in, and the exclusion of certain types of exculpatory clauses from, trust indentures. The Act also requires that an independent indenture trustee represent the debtors by proscribing certain relationships that could conflict with proper exercise of duties.

(e) Investment Company Act of 1940. This Act establishes a comprehensive regulatory framework for investment companies and subjects their activities to regulation under standards prescribed for the protection of investors. Among other things, the Act provides for the registration of investment companies with the Commission; requires them to disclose their financial condition and investment policies to their shareholders; prohibits them from substantially changing investment policles without shareholder approval; bars persons guilty of securities fraud from serving as officers or directors; prevents underwriters, investment bankers, or brokers from constituting more than a minority of the directors of an investment company; requires that management contracts be submitted to shareholders for their approval; prohibits transactions between investment companies and their directors, officers, or affiliated companies or persons, except when approved by the Commission; and prohibits Investment companies from issuing senior securities except under specified terms and conditions. The Act also regulates advisory fees, sales and repurchases of securities, exchange offers, and other activities of investment companies. The Act authorizes the Commission to exempt any person or class of persons or securities from any provisions of, or rules under, the Act and to conduct any investigation it deems necessary to determine existing or potential violations of the Act. It also authorizes the Commission to prepare reports to security holders on the fairness of plans of reorganization, merger, or consolidation. The Commission may institute a court action to enjoin acts or practices of management involving, among other things, a breach of fiduciary duty and the consummation of plans of reorganization, merger, or consolidation that are grossly unfair to security holders.

[merged small][ocr errors]

(1) 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 in transactions executed for clients. The Act grants to the Commission rule-making power with respect to fraudulent and other activities of investment advisers.

(g) Chapter 11 of the Bankruptcy Code. Chapter 11 of the Bankruptcy Code (11 U.S.C. 1101 et seq.) provides for Commission participation as a statutory party in reorganization cases. Under section 1109(a) of the Bankruptcy Code (11 U.S.C. 1109(a)), which also applies to Chapter 9 cases regarding municipalities, the Commission "may raise and may appear and be heard on any issue in the case.”

8200.11 Headquarters Omice Re

gional and District Omce relation

ships. (a)(1) Division and Office Heads in the Headquarters Office (450 Fifth Street, NW., Washington, DC 20549) have Commission-wide responsibility to the Commission for the overall de velopment, policy and technical guidance, and policy direction of the operating programs under their jurisdiction.

(2) Each Regional Director is responsible, subject to the supervision of the Director of the Division of Enforcement, for the direction and supervision of his or her work force and for the execution of all programs in his or her region as shown in paragraph (b) of this section, in accordance with established policy. Each District Administrator 18 responsible, subject to the supervision of the relevant Regional Director, for the direction and supervision of his or her work force and for the execution of all programs through his or her office, in accordance with established policy.

(b) Regional Directors and District Administrators of the Commission. Region 1: Northeast Region. Connecticut,

Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hamp shire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, Virginia, West Virginia-Regional Director, 7 World Trade Center, suite 1300, New

York, NY 10048. Boston District

District Administrator, 73 Tremont Street, suite 600, Boston, MA

02108. Philadelphia District District Adminis

trator, The Curtis Center, suite 1005 E., 601 Walnut Stroet, Philadelphia, PA

19106. Region 2: Southeast Region. Alabama, Flor

ida, Georgia, Louisiana, Mississippi, North Carolina, Puerto Rico, South Carolina, Tennessee, Virgin Islands-Regional Director, 1401 Brickell Avenue,

suite 200, Miami, FL 33131. Atlanta District-District Administrator,

3475 Lenox Road, NE., suite 1000, Atlanta,

GA 30326. Region 3: Midwest Region. Illinois, Indiana,

Iowa, Kentucky, Michigan, Minnesota, Missouri, Ohio, Wisconsin-Regional Director, 500 West Madison Street, suite

1400, Chicago, IL 60661. Region 4: Central Region. Arkansas, Colo

rado, Kansas, Nebraska, New Mexico, North Dakota, Oklahoma, South Dakota,

(11 U.S.C. 901, 1109(a)) (27 FR 12712, Dec. 22, 1962, as amended at 49 FR 12684, Mar. 30, 1984; 60 FR 14624, Mar. 20, 1995)

GENERAL ORGANIZATION

$ 200.10 The Commission.

The Commission is composed of five members, not more than three of whom may be members of the same political party. The members are appointed by the President, with the advice and consent of the Senate, for 5-year terms, one term ending each year. The Chairman is designated by the President pursuant to the provisions of section 3 of Reorganization Plan No. 10 of 1950 (3 CFR, 1949–1953 Comp., p. 1006). The Commission is assisted by a staff, which includes lawyers, accountants, engineers, financial security analysts, investigators and examiners, as well as administrative and clerical employees.

and other staff members, except administrative law judges and the Inspector General, shall perform, in addition to the duties herein set forth, such additional duties as the chairman of the Commission may assign from time to time. These officers also serve as liaison with Government and other agencies concerning matters within their respective functional responsibilities.

(15 U.S.C. 77, 78d, 780-1) (37 FR 23828, Nov. 9, 1972, as amended at 59 FR 5943, Feb. 9, 1994; 60 FR 14624, Mar. 20, 1995]

Texas, Utah, Wyoming-Regional Direc-
tor, 1801 California Street, Suite 4800,

Denver, CO 80202.
Fort Worth District-District Adminis-

trator, 801 Cherry Street, 19th Floor,
Fort Worth, TX 76102. Salt Lake Dis-
trict District Administrator, 500 Key
Bank Tower, 50 S. Main Street, suite 500,

Box 79, Salt Lake City, UT 84144. Region 5: Pacific Region. Alaska, Arizona,

California, Guam, Hawaii, Idaho, Montana, Nevada, Oregon, Washington-Regional Director, 5670 Wilshire Boulevard,

11th Floor, Los Angeles, CA 90036. San Francisco District District Adminis

trator, 44 Montgomery Street, Suite 1100,

San Francisco, CA 94104. (c) The following geographic allocation determines where registered brokers, dealers, transfer agents, clearing agents, registered securities associations, investment advisers, and others as designated in this chapter must file reports required to be filed in regional or district offices: Northeast Regional Office: New Jersey, New

York. Boston District Office: Connecticut, Maine,

Massachusetts, New Hampshire, Rhode

Lsland, Vermont. Philadelphia District Office: Delaware,

District of Columbia, Maryland, Pennsyl

vania, Virginia, West Virginia. Southeast Regional Office: Florida, Puerto

Rico, Virgin Islands. Atlanta District Office: Alabama, Georgia,

Louisiana, Mississippi, North Carolina,

South Carolina, Tennessee. Midwest Regional Office: Illinois, Indiana,

Iowa, Kentucky, Ohio, Michigan, Min

nesota, Missouri, Wisconsin. Central Regional Office: Colorado, Nebraska,

New Mexico, North Dakota, South Da

kota, Utah, Wyoming. Fort Worth District Office: Arkansas, Kan

sas, Oklahoma, Texas. Pacific Regional Office: Alaska, Arizona,

California, Guam, Hawaii, Idaho, Mon

tana, Nevada, Oregon, Washington. [27 FR 12712, Dec. 22, 1962, as amended at 28 FR 6970, July 9, 1963; 41 FR 44696, Oct. 12, 1976; 47 FR 26818, June 22, 1982; 49 FR 12684, Mar. 30, 1984; 49 FR 13679, Apr. 6, 1984; 52 FR 2677, Jan. 28, 1987; 59 FR 5943, Feb. 9, 1994; 59 FR 12543, Mar. 17, 1994)

8 200.13 Executive Director.

(a) The Executive Director is responsible for developing and executing the overall management policies of the Commission for all its operating divisions and staff offices. The Executive Director also provides executive direction to, and exercises administrative control over, the Office of Administrative and Personnel Management, the Office of the Comptroller, the Office of Filings and Information Services, the Office of Freedom of Information and Privacy Act Operations, and the Office of Information Technology. In addition, the Executive Director implements the following statutes, regulations, and Executive orders, as well as those that the Chairman may designate:

(1) Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq.).

(2) Small and Disadvantaged Business Utilization Program (15 U.S.C. 631 et seq.).

(3) Government Printing and Binding Regulations, U.S. Congress Joint Committee on Printing (1977).

(4) Occupational Safety and Health Programs for Federal Employees under Executive Order 12196 of February 26, 1980 (29 CFR 1960.1–1960.90).

(5) Federal Managers' Financial Integrity Act of 1982 (31 U.S.C. 3512).

(6) National Security Information under Executive Order 12356 of April 6, 1982.

(7) Government Performance and Results Act of 1993 (31 U.S.C. 1101 et seq.).

(8) Recommendations of the Report of the National Performance Review (September 1993).

8200.12 Functional responsibilities.

This section sets forth the administrative and substantive responsibilities of the Division Directors, Office Heads, Regional Directors and District Administrators, and certain other Commission officers. All Commission officers

« PreviousContinue »