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, BROKER-DEALER REGISTRATION-Continued 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. PUBLIC INTEREST 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 APPLICANT'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. 6 S. E. C. ... UNLISTED TRADING PRIVILEGES-Continued Where no public record of trading activity in subject security exists, but where proceeds of distribution of subject security were used to redeem an issue of substantially similar securities, held Commission may consider record of trading in such predecessor securities which were admitted to unlisted trading privileges on applicant exchange . . . Page 901. In determining "vicinity", thoroughness with which area was covered by offices of members of exchange held important factor... Page 901. WITHDRAWAL FROM REGISTRATION AND STRIKING FROM LISTING APPLICATION BY ISSUER OR EXCHANGE Where an application under Section 12 (d) of the Act to strike securities from listing and registration is made by an issuer in accordance with the rules of the exchanges upon which it is listed and the Commission's regulations, and where its motives were not attacked, held, the Commission cannot refuse to grant the application and is limited to consideration of imposition of terms and conditions for the protection of investors. . . Page 329. Where an application under Section 12 (d) of the Act to strike securities from listing and registration is made by an exchange in accordance with its rules and the Commission's regulations, held, the Commission cannot refuse to grant the application and is limited to a consideration of the imposition of terms and conditions for the protection of investors. . . Pages 344, 636, 1059. Where exchange seeks to block withdrawal of listing by an issuer on the ground that an alleged "settled practice" has not been met held where alleged "settled practice" was "adopted" by the committee on stock list less than 2 years previously, and has never before been raised as bar to withdrawal, it is not a "settled practice having the force of a rule"... Page 995. Where exchange seeks to block withdrawal of listing by an issuer on the ground that its "rules" have not been complied with, held where governing committee of exchange alone has power to adopt rules and regulations, alleged "settled practice" of stock committee governing delisting does not have the force of a rule... Page 995. Where issuer applies for withdrawal from registration and listing on a national securities exchange, it is incumbent upon it to furnish information as to the purposes that prompted it to apply for delisting so that the Commission may determine what terms are required for the protection of investors... Page 995. 6 S. E. C. WITHDRAWAL FROM REGISTRATION AND STRIKING FROM LISTING-Continued Scope of Commission's Power Since Commission must determine what, if any, terms or conditions are appropriate for protection of investors, where applicant fails to furnish sufficient information as to the motives for its application, held, decision upon the application will be suspended until the applicant has submitted the necessary information... Page 995. Where it appears that the application for delisting was made because the president of the applicant felt that he could dispose of his holdings more profitably in the over-the-counter market, but where this fact was not disclosed either to the Commission or to the security holders, held, consideration of the application would be deferred until the applicant had submitted a full statement of the facts to the security holders, and such security holders should have an opportunity to present their views as to the imposition of terms and conditions on the withdrawal... Page 995. Where registrant's application to withdraw its no par value preferred stock and no par value common stock from listing and registration on an exchange (1) disclosed adequately the material facts with respect to volume of trading and the annual expenses incident to registration and listing, (2) indicated that the trading in securities could be handled adequately in over-the-counter market, and (3) conformed to the Commission's rules and the rules of the exchange, held that the Commission cannot refuse to grant the application, and that no terms for the protection of investors are required, other than a condition that the delisting be not effective until 10 days after the date of the Commission's order... Page 1014. Where the registrant's application to withdraw its common stock from listing and registration on two exchanges (1) disclosed adequately the material facts with respect to sales and expected volume of trading, and also the annual expenses incident to registration and listing; and (2) conformed to the Commission's rules and the rules of the two exchanges, neither of which objected to the withdrawal from listing, held that the Commission cannot refuse to grant the application, and that no terms for the protection of investors are required, other than a condition that the delisting be not effective until 10 days after the date of the Commission's order . . . Page 1017. PROCEEDINGS BY COMMISSION Failure to File Adequate Annual Report Where the annual report of the company on Form 10-K for a certain fiscal year failed to include the accountants' certificate, held necessary and appropriate for the protection of investors to withdraw the registration of the company's securities pursuant to Section 19 (a) (2) . . . Page 1020. Failure to File Annual Report Where registrant failed to file annual report as required by Section 13 of the Act and rules and regulations promulgated thereunder, held necessary and appropriate for the protection of investors to withdraw the registration of the company's securities pursuant to Section 19 (a) (2) . . . Pages 125, 829, 1020. False and Misleading Statements in Reports Where issuer admits that answers to items in its reports filed in conformance with Sections 12 and 13 of the Act contain false and misleading statements held grounds for delisting security Page 209. |