INDEX-DIGEST The following digest of decisions presents a consolidated summary of • During the period covered by this volume there were no opinions containing case headnotes 15 S. E. C. 699455°-49-68 1059 PART I SECURITIES ACT* OF 1933 ACCOUNTING PRACTICE AND PROCEDURE. Permanent Disqualification of Accountant from Practice Before Commission. In a proceeding under Rule II (e) of Commission's Rules of Practice, where the evidence shows that the respondent, a certified public accountant, had falsely certified financial statements forming part of a registration statement filed under the Securities Act of 1933, had made no audit of registrant's affairs and had not examined its books but had accepted without question the financial statements prepared by registrant's own employee, with whom he had a practice of splitting fees in other matters and certifying other statements likewise without audit or examination; and where respondent is wholly unfamiliar with the Commission's rules concerning financial statements and the certification thereof and, after 20 years' practice, shows lack of familiarity with and has violated rules of State Board of Accountancy and standards of professional conduct adopted by American Institute of Accountants; held that respondent does not possess the requisite qualifications to represent others, has engaged in unethical and improper professional conduct, and should be disqualified from and permanently denied the privilege of appearing and practicing before the Commission... Page 400. • The term "Act" as used in Part I of this Digest refers to the Securities Act of 1933. 15 S. E. C. 1061 PART II SECURITIES EXCHANGE ACT OF 1934 BROKER-DEALER REGISTRATION Expuision from National Securities Association. Where respondent broker-dealer sold securities to its customers in riskle rasas at prices substantially in excess of and bearing no reasona adia to the current market, without disclosing information regarding en market prices, held that such broker-dealer has willfully violated Sectio of the Securities Act and Section 15 (c) (1) of the Securities Exchange Page 79 Future Keep Required Books and Records. 3.sondent's failure to keep proper books and records held to be a violatin zi Section 27 (a) of the Securities Exchange Act of 1934 and Rules X-17A-↓ and X-273 4 thereunder... Page 349. Fare Send Confirmations of Transactions. Failure to supply customers with confirmations in conformity with Be X-2501-4 tend to violate Section 15 (c) (1) of the Securities Exchange As 104... Page 349. se and I sieading Statements. Sales of al royalties made on the basis of untrue statements of and omis scens to state material facts, held violations of Section 17 (a) of the Securite Act of 1933 and Section 15 (c) (1) of the Securities Exchange Act of 199 as jedned in Rule X-15C1-2 thereunder... Page 349. Grounds for Revocation. Sale at Unregistered Securities. Sale of oil royalties as to which no registration statement was in effet, under conditions making inapplicable the exemptive provisions of Regulatio B. did a violation of Section 5 (a) of the Securities Act of 1933... Page M Revocation Proceedings-Public Interest. Though employee of registered broker-dealer was shown to have vi provisions of Securities Act of 1933 and Securities Exchange Act of 1984, ka under circumstances of the case, revocation of respondent's broker-deale registration would not be in the public interest... Page 584. • The term "Act" as used in Part II of this Digest refers to the Securities Exchange & of 1934. 15 S. E. C. Sales of Oil Royalty Interests at Prices Bearing No Reasonable Relationship to Wholesale Price. Sales of oil royalties at excessive mark-ups over contemporaneous wholesale price without disclosure of that fact to customers, held to operate as a fraud on customers, violating Section 17 (a) of the Securities Act of 1933 and the provisions of Section 15 (c) (1) of the Securities Exchange Act of 1934 as defined in Rule X-15C1-2 thereunder... Page 349. NATIONAL SECURITIES ASSOCIATION REVIEW OF DISCIPLINARY PROCEEDINGS. Extent of Penalty. Where a national securities association disciplined a member by imposing upon him the penalty of severe censure and fine of $250 based on three claimed violations of the association's rules, and where the Commission, upon review of the proceedings before the association, finds the association in error on one count, finds the violation on another count to be merely technical and sustains the finding of a violation on the third count involving unfair prices in sales of securities to customers, held remand not necessary where penalty appears not excessive for violation found. Where a national securities association ordered the expulsion of a member because of his failure to reply to a generally circulated questionnaire in contravention of the rules of the association, held, in view of certain mitigating circumstances, the penalty of expulsion is oppressive and excessive . . . Page 639. Conduct of Disciplinary Proceedings before National Securities Association. Where, notwithstanding the claim that a local business conduct committee of a national securities association was prejudiced against a member disciplined by the association, the Commission independently finds that the member committed the violation charged, held the action of the association need not be set aside although the procedure followed be subject to criticism . . . Page 639. SUSPENSION OR EXPULSION OF MEMBERS OF NATIONAL SECURITIES ASSOCIATION. Grounds for Suspension. Taking of Secret Profits by Broker-dealer Obligated to Act as Agent for Customer. Where, upon all the evidence, it is found that a salesman employed by respondent broker-dealer in a series of securities transactions acted as agent in acquiring bonds for a principal, but repeatedly took secret profits in excess of the agreed compensation, held a violation of Section 17 (a) of the Securities Act and Section 15 (c) (1) of the Securities Exchange Act... Page 584. False Representation Inducing Sale of Securities. Where a salesman employed by respondent broker-dealer, in inducing a bondholder to sell his bonds, represented that their retention would entail a loss when he had reasonable grounds to believe such representation was false, held a violation of Section 15 (c) (1) of the Securities Exchange Act . . . Page 589. Improper Confirmations. Where a salesman employed by respondent broker-dealer solicited various |