INDEX DIGEST The following digest of decisions presents a consolidated summary of the case headnotes arranged alphabetically according to topic headings. The digest is divided into four parts: * Part I, containing decisions under the Securities Act of 1933; Part II, the Securities Exchange Act of 1934; Part III, the Public Utility Holding Company Act of 1935, and Part IV, the Investment Company Act of 1940. The case headnotes have not been carried over verbatim into this digest. To facilitate the grouping together of decisions standing for a similar proposition under a single digest heading, it has been necessary in some cases to delete from the headnotes all matter not pertinent to the general proposition for which the headnote stood, i. e., the names of companies, the principal amounts of security issues, etc. To the same end, certain case headnotes have been entirely redrafted for the digest so as to conform to a uniform statement of the general proposition. In a few instances, case headnotes, which were not considered important for the purposes of this digest, have been omitted from the digest altogether. During the period covered by this volume there were no opinions containing case headnotes under the Trust Indenture Act of 1939, or the Investment Advisers Act of 1940. 27 S. E. C. 1051 PART I SECURITIES ACT OF 1933 STOP-ORDER PROCEEDINGS MISSTATEMENTS AND OMISSIONS WITHDRAWAL OF REGISTRATION STATEMENT BY REGISTRANT Where an effective registration statement covering an offering of a Canadian issuer's securities in the United States contains materially false and misleading statements and omissions in that it failed to state that the very same class of securities was being publicly offered in Canada and at prices substantially lower than the offering price stated in the registration statement and where the fact of registration had been publicized in advertisements in Canadian newspapers in connection with the Canadian distribution, held, not consistent with the public interest to grant a motion to withdraw the registration statement and stop order issued suspending its effectivePage 934. ness . . . The term "Act" as used in Part I of this Digest refers to the Securities Act of 1983. 27 S. E. C. 1052 PART II SECURITIES EXCHANGE ACT* OF 1934 BROKER-DEALER REGISTRATION DENIAL PROCEEDINGS WILLFUL VIOLATIONS OF SECURITIES ACT AND SECURITIES EXCHANGE ACT Where applicant for registration as a broker and dealer had willfully violated provisions of Securities Act and Securities Exchange Act as a result of which his connection with broker-dealer firm of which he had been a member for many years had been terminated pursuant to Commission's order in revocation proceedings against firm, but where applicant has not engaged in securities business following such termination and such non-activity has resulted in financial hardship and where facts indicate that likelihood of repetition of violations which gave rise to previous action is greatly diminished, held, under all the circumstances of the case, not in the public interest to deny registration . . . Page 109. SALE OF UNREGISTERED SECURITIES Where registered broker-dealer offered securities of the same class on the same general terms to the public in two installments in an uninterrupted program of distribution and the total offering price exceeded the offering price limitation for the exemption provided by Section 3 (b) of the Securities Act of 1933 and Regulation A promulgated thereunder, held, the offering constitutes a "single issue," the exemption provided by Section 3 (b) is not available, and the sale and delivery after sale of the securities, without registration are willful violations of Section 5(a) of the Securities Act of 1933... Page 814. WILLFUL VIOLATIONS BY CONTROLLING PERSONS INJUNCTION AGAINST ENGAGING in SecurITIES TRANSACTIONS Where broker-dealer corporation, registered under Section 15 of the Securities Exchange Act of 1934, seeks withdrawal from registration, and successor partnership has applied for registration, and both controlled by persons who had willfully violated anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934, and where the corporation is insolvent and has been enjoined from engaging in securities transactions, held, it is in the public interest to deny request for withdrawal of corporation's registration, to revoke its registration, and to deny application for registration of partnership Page 763. The term "Act" as used in Part II of this Digest refers to the Securities Exchange Act of 1934. FAILURE TO MAKE FULL DISCLOSURE Where registered broker-dealer, who is also a registered investment adviser sells her own securities to clients to whom she purportedly renders impartial investment advice and fails to disclose fully to such clients the nature and extent of her adverse interest, including her cost of the securities and the best price at which the security might be purchased in the open market, held, willful violation of the anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934 ... Page 629. FRAUD ON PURCHASER OF SECURITIES FALSE RECORDS Where partner in registered broker-dealer firm misrepresented to customer, margin requirements of bank by use of which bonds were to be purchased for customer by respondent firm, purchased bonds for his own account with customer's funds, used such account to finance unauthorized securities trading and withdrew funds therefrom for his own use, and obtained from customer additional money for the account by falsely representing that such funds were necessary to meet bank's margin demands with respect to the bonds which customer had ordered; where no confirmations of transactions with customer were sent to him; and where respondent's records were false in material respects, held, respondent willfully violated Section 10 (b), 15 (c) and 17 (a) of Securities Exchange Act and rules thereunder, and it is necessary in the public interest to revoke respondent's registration . . . Page 833. EFFECT OF REGISTRATION AS BROKER-DEALER AND INVESTMENT ADVISER A broker-dealer registered as such under the Securities Exchange Act of 1934 and also registered as an investment adviser under the Investment Advisers Act of 1940 is amenable to regulation under both statutes and may have his broker-dealer registration revoked for willful violations of the antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934 where such violations are based upon broker-dealer's failure to make disclosure required of him in his capacity as a fiduciary. . . Page 629. MISREPRESENTATIONS AND OMISSIONS Where registered broker-dealer made misrepresentations and omitted to state material facts with respect to the financial condition and speculative nature of the business of the issuer whose securities he was selling, held, willful violations of Section 17 (a) of the Securities Act of 1933 and Section 15 (c) (1) of the Securities Exchange Act of 1934 and rule thereunder ... Page 814. SECRET PROFITS Where registered broker-dealer, in the purchase of securities from and sale of securities to customers whose confidence he had gained and for whom he acted as agent, obtained secret profits by selling securities at prices greatly exceeding his cost and current market prices, held, willful violation of Section 17 (a) of the Securities Act of 1933 and Section 15 (c) (1) of the Securities Exchange Act of 1934 and rule thereunder... Page 814. NATIONAL SECURITIES ASSOCIATIONS DENIAL OF MEMBERSHIP SUSPENSION FROM NATIONAL SECURITIES EXCHANGE Where national securities association denies membership to registered broker and dealer by reason of the suspension of the principal officer of applicant from membership on a stock exchange prior to the enactment of the Securities Exchange Act of 1934, held, that such suspension was not from a "national securities exchange" and is therefore not a ground for disqualification from membership in the association under Section 15A (b) (4) of the Act... Page 976. EXTENT OF APPLICANT'S BUSINESS Where national securities association denies membership to registered broker and dealer upon the ground that applicant is not regularly engaged in actually transacting a securities business, and Commission finds that applicant is actually engaged and intends to engage in transacting securities business, held, that the association is required to admit applicant to membership pursuant to Section 15A (h) (3) of the Securities Exchange Act of 1934... Page 976. 27 S. E. C. |