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REMUNERATION FOR SERVICES
Wbere the registration statement calls for information concerning the remuneration from all sources for services paid or to be paid by the issuer, directly or indirectly during the issuer's past official year, held disclosure of payments actually made within the past fiscal year as well as any liability for services accruing during that year must be made, regardless of when the services were rendered . . . Page 1028.
STOP ORDER PROCEEDINGS
AMENDMENT OF REGISTRATION STATEMENT
Where amended registration statement cured only part of alleged deficiencies and did not cure certain other deficiencies held motion to dismiss stop order proceedings cannot be considered ... Page 1062. DISCRETION OF COMMISSION TO CONSIDER AMENDMENTS FILED DURING
STOP ORDER PROCEEDINGS Where the record is persuasive that only a stop order will bring adequate notice of a defective registration statement to purchasers of registrant's stock, held to be Commission's policy to refuse to consider amendments filed during stop order proceedings until after issuance of the stop order . . . Page 882. DISCRETION OF COMMISSION TO CONSIDER AMENDMENTS FILED SUB.
SEQUENT TO ORDER FOR HEARING Where deficiencies in a registration statement were such as to require disclosure in the public interest held stop order proceeding will not be dismissed in the face of a motion therefor rested on assurances of amendment ... Page 1062. PRACTICE AND PROCEDURE Withdrawal of Registration Statement by Registrant
Where registrant, when apprised of the manner in which its affairs had been handled, retained an accounting firm to make a complete investigation of its affairs, made results of investigation public, and purchased all of the bonds outstanding in the hands of the public at their principal amount and accrued interest, withdrawal of registration statement held consistent with public interest and protection of investors . . . Page 850.
Registrant does not have an absolute right to withdraw its registration statement after it has become effective and, where present statement compounds deficiencies found in earlier withdrawn statement held refusal of withdrawal and issuance of stop order is in the public interest and for the protection of investors . . Page 926.
6 S. E. C.
SECURITIES EXCHANGE AOT* OF 1934
BROKER-DEALER REGISTRATION CONTROL
Where power exists to direct management and policies of corporation, heid "control” within meaning of Section 2 (11) of the Act exists even though persons who possess that power do not own majority of company's voting stock .. Page 1111.
GROUNDS FOR REVOCATION, SUSPENSION, AND DENIAL
Where president of registrant was convicted of larceny as a result of conduct arising out of the business of broker and dealer in securities, and where registrant failed to inform the Commission of the conviction, held grounds for revocation of registration . . . Page 13. Failure to Report Prosecution by State Court for Misdemeanor Arising out of
Purchase or Sale of Securities Where a dealer was prosecuted on charge of selling securities in state without a license and pleaded guilty to the charge held failure to report prosecution constituted grounds for revocation of registration ... Page 336. Failure to Report Revocation of License by State Securities Commission
Where a broker-dealer has failed to inform the Commission of the cancelation of his license to sell securities by a state body, held that his registration should be revoked ... Page 384. Failure to Report Suspension from Membership on an Exchange
Where dealer failed to report suspension from membership on an exchange for nonpayment of dues, held grounds for revocation of registration ... Page 325. Violation of Securities Act or Securities Exchange Act
Where broker-dealer represented that corporation would deposit specified amount of proceeds from each sale in special account to be used "exclusively" for drilling and equipping wells, when he knew that this money was being disipated for other purposes, held a willful misrepresentation ... Page 97.
Willful violation of Section 5 (a) of the Securities Act of 1933 in the sale of fractional undivided interests in oil, gas and other mineral rights held grounds for refusal of broker-dealer registration ... Page 97.
Where dealer charges his customers a price which bears no relation to the prevailing market price, held the inherent misrepresentation as to the value of the security is a fraud on the purchaser, and revocation of such dealer's registration is in the public interest ... Page 386.
*The term "Act" as used in Part II of this Digest refers to the Securities Exchange Act of 1934, s amended.
6 S. E. C.
BROKER-DEALER REGISTRATION- Continued
Where applicant gained the confidence of various customers by acting as their broker, and then without their knowledge, sold them securities from its own account at a profit far in excess of its ordinary commission and at a price greatly in excess of the market value thereof, held application for registration should be denied ... Page 391.
Where applicant pledged the securities of its customers for its own indebtedness and while it was admittedly insolvent, without the customers' knowledge or consent, held application for registration should be denied . . . Page 391.
Willful violation of Section 5 (b) of the Securities Act of 1933 held grounds for revocation of a broker-dealer registration ... Page 631.
Where broker-dealer purchased securities from group in control of issuer, for resale to the public, held he became an underwriter, and securities should have been registered before resale to public . , . Page 1111. MISREPRESENTATION AND FRAUD
Where broker-dealer made representation that dividends would be forthcoming on issuer's stock at definite dates, whereas issuer would not start business unless and until $10,000 had been raised, held willful misrepresentation of a material fact ... Page 631.
Where broker-dealer made representation that purchasers could withdraw their money at any time, but prospectus provided for return of only 80 percent of amount invested and such return was contingent upon issuer's failure to raise $40,000 within 6 months, held willful misrepresentation of a material fact ... Page 631.
Where broker-dealer represented that the amounts received for issuer's stock would become capital assets of issuer, whereas he was withholding large amounts for his business and personal use, held scheme operated as a fraud on purchasers ... Page 631.
Where broker-dealer represented that securities were being sold "at the market" without disclosing that the supply on the market was being artificially restrained by “stand-off” agreements, held violation of fraud provision of Securities Act of 1933 . . . Page 1111. REVOCATION PROCEEDINGS Lack of Personal Service
Where notice of a hearing to be held in a broker-dealer suspension proceeding was sent by registered mail and returned unopened, and where further notice was then given by publication in the Federal Register, and where it appeared that the registrant had willfully failed to report his change of address, held pending final determination on revocation, it is necessary and appropriate in the public interest and for the protection of investors that the dealer's right to use the mails and instruments of interstate commerce in securities transactions be suspended
. . Pages 325, 327. WILLFULLNESS
Where applicant was advised by counsel for the Commission that in their opinion the interests applicant was offering were securities within meaning of Act, and where steps were thereafter taken to bring issue within terms of exemption from registration but before complying with provisions of exemption applicant sold the securities to the public, held sale in violation of Act was willful .. Page 97.
Where materially false statements are made, with knowledge of their falsity, held willful violation even though the factors rendering the statements false are beyond the control of the party making the statements ... Page 97.
Where activities in contravention of statutory provisions were allegedly undertaken on advice of counsel that they were legal, held registrant will be construed to have “willfully” violated Act but reliance on advice of counsel will be considered as mitigating factor in determining whether revocation is in public interest ... Page 1111.
PRACTICE AND PROCEDURE
Nonenforcement of an administrative rule or regulation does not deprive it of force and effect. Inaction of an administrative agency does not spell approval of any matter it fails specifically to reject ... Page 268. MOTION FOR BILL OF PARTICULARS
Where Commission ordered proceedings to determine whether certain of registrant's representations were false and constituted grounds for revocation, registrant's motion requesting information as to whether representations were oral or written denied because either type of representation comes within purview of statute and nature of charge is the same . . . Page 152.
Where Commission ordered proceedings to determine whether certain of registrant's representations were false and constituted grounds for revocation, registrant's motion requesting names of party or parties making representations denied on ground that representations with which respondent is charged are clearly alleged . . . Page 152.
Where Commission ordered proceedings to determine whether certain of registrant's representations were false and constituted grounds for revocation, registrant's motion requesting persons to whom representations were made and dates thereof granted as to approximate dates, with addition of information regarding place at which each representation was made, denied as to actual names of persons to whom representations were made . . . Page 152.
A failure to satisfy accounting requirements under the Act does not necessitate suspension or withdrawal of the registration of securities on a national securities exchange unless it is necessary or appropriate for the protection of investors ... Page 268.
SCOPE OF COMMISSION'S POWER
Section 13 (b) of the Act does not prevent the Commission from examining reports filed by carriers to determine the substantive truth of their contents or whether they satisfy the Interstate Commerce Commission requirements; nor does it prevent the Commission from finding such reports deficient where, on conceded facts, they fail to comply with unambiguous provisions of the Interstate Commerce Commission classification of accounts . . . Page 268.
6 S. E. C.
UNLISTED TRADING PRIVILEGES
ADEQUACY OF DISTRIBUTION AND TRADING ACTIVITY WITHIN APPLI
CANT'S VICINITY Applicant held to have established sufficient public distribution and public trading activity within its vicinity (as previously determined) in securities for which unlisted trading privileges were sought to render the extension of such privileges thereto in the public interest and for the protection of investors . .. Pages 296, 310, 901.
Where securities for which unlisted trading privileges are sought are local issues held lower standards of trading activity may be consistent with the public interest, particularly if there is substantial local distribution . . . Page 296. ADEQUACY OF REPORTS FILED UNDER SECURITIES ACT OF 1933 TO SATISFY
SECTION 12 (f) (3) OF THE SECURITIES EXCHANGE ACT OF 1934 The registration of bonds under the Securities Act of 1933, coupled with the "undertaking' required by Section 15 (d) of the Securities Exchange Act of 1934 will normally insure that information will be supplied substantially equivalent to that available for similar bonds duly listed and registered on a national securities exchange . . . Page 901. ADEQUACY OF TRADING PROCEDURE TO ESTABLISH EXCHANGE AS AN
INDEPENDENT SECONDARY MARKET The operating mechanics of an exchange held to establish that it maintains an independent secondary market . .. Page 661.
METHOD OF DETERMINING DISTRIBUTION
Where a security is traded on both the San Francisco and Los Angeles Exchanges held that only 50 percent of the figures for distribution of such securities within the State of California will be held to be within the vicinity of the applicant exchange ... Page 310.
Where exchange asserts that cost to issuer or its transfer agent of obtaining statistical information relative to public distribution would be so high as to make it impractical, held the Commission may accept the number of shares registered in "street names" and credited to accounts carried by or for the exchange members since shares held in vicinity may be proved to be substantially in excess of this "floating supply" ... Page 310. SUFFICIENCY OF PROOF OF PUBLIC DISTRIBUTION
Requirement of a "sufficiently widespread distribution" cannot be satisfied by a mere showing of trading activity ... Page 661.
Policy of Commission to deny applications for unlisted trading privileges to bond issues whose outstanding amount was less than $10,000,000 held not to apply where distribution of such an issue was concentrated within vicinity of applicant exchange . . . Page 901. SUFFICIENCY OF PROOF OF TRADING ACTIVITY
The standards of sufficiency for local trading activity may be relaxed in situations where the subject security is issued by a local corporation, particularly where a substantial local distribution therein has been established . . . Page 661.
68. E. C.