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issued or transferred with the security to which it pertains, shall not be deemed a sale of such other security within the meaning of this definition and such right shall not be construed as affecting the status of the security to which such right pertains with respect to exemption or registration under the provisions of this Act; but the sale of such other security upon the exercise of such right shall be subject to the provisions of this Act.
(d) “Issuer' shall mean and include every person who issues, has issued, or proposes to issue any security. Any person who acts as a promoter for and on behalf of an individual, corporation, trust or unincorporated association or partnership of any kind to be formed shall be deemed to be an issuer.
“Commission” shall mean the Federal Trade Commission.
Mortgage” shall be deemed to include any trust instrument to secure & debt.
(g) “Territory” shall include Alaska, Hawaii, Puerto Rico, the Philippine Islands, the Panama Canal Zone, the Virgin Islands, and the insular possessions of the United States.
(h) “Interstate Commerce” shall mean trade or commerce in securities among the several States or between the District of Columbia, or any Territory of the United States and any State, or other Territory, or between any insular possessions or other places under the jurisdiction of the United States, or between any such possession or place and any State or Territory of the United States or the District of Columbia, or within the District of Columbia or any Territory or any insular possession or other place under the jurisdiction of the United States, or any printed, written, or other graphic communication, or any spoken communication or intercourse relating to or in furtherance of the commerce described in this definition.
(i) “Registration Statement”, hereinafter called "Statement”, shall mean the statement required upon application for registration by section 5 of this Act, together with all documents and other information required therein.
SEC. 3. That, until there shall have been registered with the Commission the statement hereinafter referred to in accordance with the terms and conditions provided by this Act and by the rules and regulations promulgated pursuant thereto, it shall be unlawful for:
(a) Any person to make use of the United States mails or of any means or instruments of transportation or communication to offer in interstate commerce securities, other than those issued by a foreign government or subdivision thereof, for sale or to solicit or accept offers to buy such securities in such commerce;
(b) Or for any person to make such offer to sell to or to solicit or accept an offer to buy in interstate commerce through the use or medium of any book, magazine, newspaper, or similar publication, or by any circular, advertisement, or printed, written, or other graphic communication or document, or by any spoken communication carried or transmitted through or by such mails or means or instruments of transportation or communication, or any of them;
(c) Or to carry or cause to be carried in interstate commerce, by any means or instruments of transportation, for the purpose of sale or for delivery after sale, either directly or through the medium of another, any security not issued by a foreign government or political subdivision thereof;
(d) Or for any person to sell or offer for sale or to accept an offer to buy or to announce or advertise in the United States any security of a foreign government or a political subdivision thereof: Provided, That the provisions of this section do not apply to the securities and transactions exempted by sections 11 and 12 of this Act.
SEC. 4. That all securities heretofore referred to in section 3 of this Act shall be registered with the Commission under the terms and conditions hereinafter provided, by filing a registration statement signed by the issuer or issuers, its or their principal executive officer or officers, the principal financial officer or officers, and the directors, trustees, or managers; if there is no board of directors, by the persons or board having the power of management of the person, corporation, association, or other entity issuing the said securities: Provided, That, when such statement relates to securities issued by a foreign government or political subdivision thereof, it shall be signed by the person or persons, or, if a corporation, association, or other entity, by the principal executive officer, the principal financial officer, and the directors, or, if there is no board of directors, by the persons or board' having the power of management of the person, firm, corporation, association, or other entity negotiating the loan or acting as the selling agent or underwriting such security for sale in the United States as the Commission may require. Signatures of all such persons when printed on the said statements shall be presumed to be so printed by authority of the person whose signature is so affixed, and the burden of proof, in the event such authority shall be denied, shall be upon the party denying same. The affixing of any signature without the authority of the purported signer shall constitute a violation of this Act. Similar statements shall be filed for each subsequent issue of securities, unless otherwise exempted by this Act, not covered by the original and succeeding statements. The aforesaid statement shall be verified by oath in such manner and form as the Commission may prescribe.
SEC. 5. (a) That the said statement, when relating to a security other than a security issued by a foreign government or political subdivision thereof, shall contain the following information concerning the said securities and the person or other entity issuing them:
(1) The name under which the issuer is doing or intends to do business, the name of the State or other sovereign power under which the issuer is organized and the location of the issuer's principal business office.
(2) The names and addresses of the promoters, directors, trustees, and officers, if the issuer be a corporation or association or trust; of all partners, if the issuer be a partnership; and of the issuer, if the issuer be an individual.
(3) The purposes of incorporation, if incorporated, and the general character of the business actually to be transacted by the issuer.
(4) A statement of the capitalization of the issuer, including the authorized and paid-up amounts of its capital stock, the number and classes of shares into which such capital stock is divided, a description of the respective voting rights, preferences, rights to dividends, profits, or capital of each class with respect to each other class, the amount of capital stock of each class issued or included in the shares of stock to be offered, the amount of the funded debt, with a description of the date, maturity, and character of such debt, and the security, if any, therefor; a balance sheet showing a detailed list of its assets and liabilities on a day not more than ninety days prior to the date of filing such balance sheet; a statement of the amount of the issuer's income, expenses, and fixed charges during the preceding fiscal year, or if in actual business for less than one year, then for such time as the issuer has been in actual business.
(5) A detailed statement of the plan upon which the issuer proposes to dispose of the securities offered for registration; the price at which they are offered to the public and the net amount returnable to capital investment; the names of the syndicate, if any, underwriting the securities offered for registration; a copy of the security offered or to be offered and a copy of any circular, prospectus, advertisement, or other description of such securities then prepared by or for such issuer or underwriter or by or for the applicant for registration (if the applicant shall not be the issuer) to be used for distribution or publication to the public.
(6) The purpose for which the securities to be offered are issued or are to be issued, the amount of capital and other securities, commissions, and bonuses, a detailed statement showing the items of cost, property, services, patents, good will, and any other consideration for which such securities, commissions, or bonuses have been or are to be paid or issued, the consideration received or to be received by the issuer, the amount returnable to capital investment, and the amount of all commissions and other considerations paid or to be paid to the issuer and all other persons for or in respect of the issue, sale, or offer of the said securities.
(7) The amount of capital stock which is to be set aside and disposed of for services to promoters, if any, and a statement of all stock issued from time to time for services to promoters.
(8) If the issuer is a corporation, there shall be filed with the statement a certified copy of its articles of incorporation with all amendments and of its existing bylaws. If the issuer is a trustee there shall be filed with the statement a copy of all instruments by which the trust is created or declared and in which it is accepted and acknowledged. If the issuer is a partnership or an unincorporated association, or joint-stock company, or any other form of organization whatsoever, there shall be filed with the statement a copy of its articles of partnership or association and all other papers pertaining to its organization.
(9) All of the statements, exhibits and documents of every kind required by the Commission under subsection (a-1) to (a-9) of this section, except properly certified public documents, shall be verified by oath in such manner and form as may be required by the Commission.
(b) Each statement relating to securities issued by a foreign government or political subdivision thereof shall contain:
(1) Name of borrowing government or subdivision thereof;
(2) Purpose or object of the loan;
(4) Date and terms of the underwriting agreement, the names of the members of the underwriting syndicate, including all bonuses and commissions paid or to be paid by the foreign borrowing government and all payments or charges paid or to be paid for the privilege of underwriting the loan or for any other purpose in connection therewith;
(5) Security pledged or to be pledged for the loan;
(6) General financial condition of the borrowing government or subdivision thereof;
(7) Whether or not the borrower has ever defaulted on the principal or interest of any other security sold in the United States or other foreign country and, if so, the date, amount, and circumstances;
(8) Proposed method of distributing the securities to be issued under the loan;
(9) Proposed price at which security is to be offered to the public in the United States and elsewhere:
(10) Cost thereof to the person, corporation, or association or other entity underwriting or negotiating the loan and the net amount to be returned to the borrowing government or subdivision thereof from the sale of such securities.
(c) The filing of the statement specified in subsections (a) and (b) of this section and the payment of the fee hereinafter provided shall constitute formal registration of the security concerned.
(d) At the time of filing the said statement, as hereinbefore prescribed in subsections (a) and (b) of this section, the applicant shall pay to the Commission a fee of one-hundredth of 1 per centum of the aggregate par value of the securities to be sold and for which the applicant is seeking registration, but in no case shall such fee be less than $50. In case of stock having no par value the price at which such stock is to be offered to the public shall be deemed to be the par value of such stock.
Sec. 6. That the Commission may revoke the registration of any security by entering an order to that effect, if upon examination into the affairs of the issuer of such security, or in the case of securities issued by a foreign government or a political subdivision thereof, into the circumstances relating to the loan or the affairs of the person or persons negotiating or underwriting the issue in the United States, it shall appear that any such issuer or person:
(a) Has violated any of the provisions of this Act, or any authorized order of the Commission of which such person or issuer has notice, but the burden of proof shall be on the person or persons asserting lack of notice; or
(b) Has been or is engaged or is about to engage in fraudulent transactions; or
(c) Is in any other way dishonest or has made any fraudulent representations in any prospectus or in any circular or other literature that has been distributed concerning such issuer or person or securities registered; or
(d) Is not conducting its or their business in accordance with law; or
(f) That the enterprise or business of the issue, or person, or the security is not based upon sound principles, and that the revocation is in the interest of the public welfare.
In making such examination the Commission or other officer or officers designated by it shall have access to and may compel the production of all the books and papers of such issuer, representatives, or underwriters, and may administer oaths to and examine the officers of such issuers, representatives, underwriters, or other entities or other person connected therewith as to its business and affairs and may, in its discretion, require the production of a balance sheet exhibiting the assets and liabilities of any issuer, representative, or underwriter, or his income statement, or both, to be certified to by a public accountant, approved by the Commission.
Whenever the Commission may deem it necessary, it may also require such balance sheet or income statement, or both, to be made more specific in such particulars as the Commission shall point out or to be brought down to the latest practicable date.
If any issuer, representative, underwriter, or other entity shall refuse to permit an examination to be made by the Commission such refusal shall be proper ground for revocation of registration.
If the Commission shall deem it necessary it may enter an order requiring an immediate showing of continuance of the right to sell securities, and upon failure of the person in whom such right has been reposed to make a satisfactory showing, and an order entered to that effect, such right shall be suspended. Notice of the entry of such order shall be given by mail, or personally, or by telephone confirmed in writing, or by telegraph, to the issuer or other applicant.
The issuer or other person or entity applying for registration shall on application to the Commission within thirty days from the entry of such order be entitled to a public hearing and appropriate records shall be kept of all hearings and proceedings before the Commission. If the issuer or other person fails to make such application for a hearing within thirty days after the entry of the Commission's order, such order shall become final.
Sec. 7. That any person aggrieved by an order of the Commission revoking the registration of any security may obtain a review of such order in the Court of Appeals for the District of Columbia by filing in the court, within thirty days after the entry of such order, a written petition praying that the order of the Commission be set aside. A copy of such petition shall be forthwith served upon the Commission, and thereupon the Commission shall certify and file in the court a transcript of the record upon which the order complained of was entered. The findings of the Commission as to the facts, if supported by testimony, shall be conclusive. If either party shall apply to the court for leave to adduce additional evidence, and shall show to the satisfaction of the court that such additional evidence is material and that there were reasonable grounds for failure to adduce such evidence in the hearing before the Commission, the court may order such additional evidence to be taken before the Commission and to be adduced upon the hearing in such manner and upon such terms and conditions as to the court may seem proper. The jurisdiction of the court shall be exclusive and its judgment and decree shall be final.
The commencement of proceedings in the Circuit Court of Appeals, by any person dissatisfied with the order of the Commission revoking registration, praying that such order be set aside, shall not, unless specifically ordered by the court, operate as a stay of the Commission's order.
SEC. 8. That it shall be unlawful to carry, transmit, or cause to be carried or transmitted, in interstate commerce, by use of the United States mails or by any means or instruments of transportation or communication, any written, printed, or other graphic communication or document, or by any spoken communication, announcing, offering, or advertising for sale any securities subject to the provisions of this Act, unless such communication or document contains the following information concerning the security so offered:
(a) The name of the issuer and names of the underwriting syndicate, if any, amount of capitalization authorized and paid up, location of principal place of business, and, if incorporated, place of incorporation.
(b) A brief description of the security offered, including the amount of the issue, a description of its rights with reference to dividends or fixed returns and voting power and relative position with reference to other outstanding securities having prior rights which must be specified as well as the amount of capital stock and other securities, commissions, and bonuses.
(c) The price at which it 'is offered to the public and the net amount to be returned to capital investment, as well as the maximum amount of commission or other form of remuneration to be paid in cash or otherwise, directly or indirectly, for or in connection with the sale or offering for sale of such securities.
(d) The names of the officers, directors, and trustees of the issuer or of the owner of the property constituting the basis of the issue. (e) A statement showing(1) The issuer's assets and liabilities.
(2) Profits and loss during year just preceding the offering. (f) A statement to the effect that additional information may be secured from the Commission at Washington, D.C.: Provided, That any spoken, written, printed, or other graphic communication or document announcing, offering, or advertising for sale any securities offered by a foreign government or political subdivision thereof shall contain such information as the Commission may specify.
The information referred to in this section, when written, printed, or otherwise graphically expressed, shall be placed in a conspicuous part of all communications, documents, or other literature describing or mentioning the securities offered in type as large as the type used elsewhere in aforesaid literature. Copies of all such written or printed or other graphic communications or documents, as well as transcripts of all radio advertising, referring to the sale of securities subject to the provisions of this section shall, within five days after distribution of such communications to prospective purchasers is begun, be filed with the Commission together with a reference to the original registration of the securities so offered.
A statement containing the information required by this section shall also be delivered to each purchaser with the delivery of the security or securities to which it relates.
That the information required under the provisions of this Act contained in all said statements, copies, prospectuses, advertisement, circular letter and communications, and other documents shall be made available to the public under such regulations as the Commission may prescribe.
Sec. 9. That every person acquiring any securities specified in such statements and offered to the public shall be presumed to rely upon the representations set forth in the said statement. In case any such statement shall be false in any material respect, any persons acquiring any securities to which such statement relates, either from the original issuer or from any other person, shall have the right to rescind the transaction and to obtain the return, either at law or in equity, of any and all consideration given or paid for any such securities upon the surrender thereof, either from any vendor knowing
of such falsity or from the persons signing such statement, jointly or severally; Provided, That the amount so recoverable from persons signing the statement shall not exceed the price paid for such securities. Any person acquiring any securities to which such statement relates shall also have the right to obtain damages for
ny and all losses sustained by such person as a consequence of such falsity, from any one or more of the signers of the statement in which such falsity occurs or from any person who authorized the statement to be made. Any condition, stipulation, or provision binding any person acquiring any of the securities offered to the public to waive compliance with any of the provisions of this Act, or of the rules and regulations, or of any requirement of the Commission herein provided for, or purporting to affect such person with notice of any contract, document, or matter not specifically referred to in the statement filed with respect to such securities as herein provided, shall be void. The rights and remedies herein provided for shall be in addition to any and all other rights and remedies that may exist at law or in equity.
Sec. 10. That it shall be unlawful to represent or cause to be represented to any prospective purchaser, either orally or in any written or printed communication, circular, advertisement, or other literature, that registration of securities with the Commission constitutes or is evidence of the Commission's approval or recommendation of such securities.
Sec. 11. That, except as hereinafter otherwise expressly provided, the provisions of this Act shall not apply to any of the following classes of securities:
(a) Any security issued or guaranteed by the United States or any Territory or insular possession thereof, or by the District of Columbia or by any State of the United States or political subdivision or agency thereof.
(b) Any security issued by and representing an interest in or a direct obligation of any common carrier or other public utility subject to regulation or supervision as to the issue of its securities by a commission, board, or officers of the Government of the United States; or any such security issued by any national bank; or by any corporation created and controlled by and acting as an instrumentality of the Government of the United States pursuant to authority granted by the Congress of the United States: Provided, That nothing in this Act shall relieve any of the organizations mentioned in this subsection from submitting to the respective supervisory units of the Government of the United States, in such manner and form as may be required by the respective units, all information, reports, or other documents that are required under the provision of section 5 of this act, and such additional information, reports, and documents as are now or may hereafter be required by other Acts of Congress or by rules and regulations pursuant thereto of the respective units: And provided further, That all such organizations mentioned in this subsection shall nevertheless be required to comply with the provisions of section 8 of this Act.
(c) Any security issued by a corporation organized exclusively for religious, educational, benevolent, fraternal, charitable, or reformatory purposes and not for pecuniary profit, and no part of the net earnings of which inures to the benefit of any person, private stockholder, or individual.
(d) Bonds or notes secured by mortgage upon real estate, improved or about to be improved by a residential structure, when the total encumbrances against any single property so mortgaged, including the mortgage securing the bonds and notes exempted by this paragraph, do not exceed $25,000.
(e) Any security, other than common stock, providing for a fixed return which has been outstanding and in the hands of the public for a period of not less than five years, upon which no default in payment of principal, or failure