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HISTORY AND BUSINESS-Continued
Remuneration of Directors
Amounts paid for legal services to a firm of attorneys of which a director is & member should be disclosed . . . Page 982. PENDING LITIGATION
In a "statement of all litigation, if any, that may affect the value of the security" held misleading to omit a description of a decree affecting the properties of the registrant which remains unsatisfied and in full force and effect : . . Page 982.
MATERIAL CONTRACTS SUMMARIZATION
Required summary of material contracts not made in ordinary course of issuer's business held deficient for failure to disclose provision in underwriting agreement for alternative compensation to underwriter in event of breach of agreement by which underwriter agreed to have securities registered . . Page 60.
PROCEEDS OF ISSUE
STATEMENT OF PURPOSES FOR WHICH USED
Statement that a portion of the proceeds will go “to the registrant as additional working capital and reimbursement of organization and registration expenses” held materially deficient for failure to set forth in detail the amount of organization and registration expenses . . . Page 543.
PROMOTERS WHAT CONSTITUTES
Persons who were not engaged by principal promoter to perform any particular task, but who joined with him in planning and financing enterprise, and who were recompensed by payments in stock and became members of registrant's original board of directors held promoters whose names should have been disclosed under item calling for names of promoters ... Page 60.
STOP ORDER PROCEEDINGS
AMENDMENT TO REGISTRATION STATEMENT
Where proposed post-effective amendment appeared incomplete and inaccurate on its face, statute held to require denial of registrant's motion to declare such amendment effective and to dismiss stop order proceeding ... Pages 60, 287.
Where (1) post-effective amendments to a challenged registration statement appeared not to be incomplete or inaccurate in any material respect and disclosed information pertinent to the alleged deficiencies in such statement, (2) it did not appear that registrant had intentionally omitted the required information, and (3) registrant had by letter apprised the security purchasers of all facts which Inight have been brought to their attention by stop order held to permit declaration of effectiveness of such amendments and dismissal of stop order proceedings ... Page 400.
SECURITIES EXCHANGE ACT* OF 1934
ASSOCIATIONS OF BROKERS AND DEALERS
An association of brokers or dealers having applied for registration as a national securities association and having filed a registration statement, pursuant to Rule X-15AA-1, and the Commission having found that the data and the rules of the association contained in such registration statement comply with the requirements of Section 15A (b), ordered that the application for registration as a national securities association be granted . . . Page 627.
GROUNDS FOR REVOCATION, SUSPENSION AND DENIAL
Where principal officer of registrant was convicted of felony involving the sale of securities, held revocation of registration is in the public interest ... Page 271 Untrue or Misleading Statements or omissions in Applications
Where registrant willfully made false statements in its application for registration that none of its officers or directors was permanently enjoined by any court from engaging in any conduct or practice in connection with the purchase or sale of a security and that registrant's predecessor had sold securities for specified issuers, held, revocation of registration is in the public interest ... Page 574 Violation of Securities Act or Securities Exchange Act
Where registrant and its president willfully violated the fraud provisions or the Securities Act of 1933, held revocation of registration is in the public interest ... Page 271.
Where a registered broker-dealer has, in the ordinary course of busintas as a broker, incurred an excessive aggregate indebtedness in violation of Section Sib of the Act, and where registrant's statement in its application for registrstion that it purchases securities for customers on margin through members of national securities exchanges "in exceptional and isolated cases" was willfalls false and misleading, revocation of registration held to be in the public interest ... Page 572. PROCEEDINGS Lack of Personal Service
Where notice of a hearing to be held in a broker-dealer revocation proceeding was sent by registered mail and returned unopened, and where further notiæ was then given by publication in the Federal Register, and where it appeared tist
*The term "Act" as used in Part II of this Digest refers to the Securities Exchange Act of 1934, se
5 S. E. C.
the registrant had willfully failed to report his change of address to the Commission, held, pending final determination on revocation, it is necessary and appropriate in the public interest and for the protection of investors that the broker-dealer's right to use the mails and in ents of interstate commerce in se es tran actions be suspended ... Pages 570, 615, 617, 634, 636, 638.
DEFINITIONS "SERVICE CONTRACT"
Where the issuer has joined with other subsidiaries of the parent company “in a cooperative effort to obtain services needed by all of them and to that end have created various departments for their common use," and where the expenses are, in the first instance defrayed by the parent company and periodically apportioned among the subsidiaries held such agreement constitutes a service contract and information relating thereto must be submitted in response to appropriate items of Form 10-K ... Page 449.
PRACTICE AND PROCEDURE
DETERMINATION OF JURISDICTIONAL AND CONSTITUTIONAL QUESTIONS
The Commission will assume the constitutionality of statutes administered by it, in considering a motion to quash and dismiss an order for hearing on constitutional grounds . . . Page 112. HOTION FOR BILL OF PARTICULARS
A motion for a bill of particulars concerning the matters to be considered in a hearing ordered by the Commission, which seeks to have the Commission plead its evidence, will be denied . . . Page 109. POWER TO INSTITUTE PROCEEDINGS
The provision of Section 27 of the Securities Exchange Act of 1934 that “The district courts . . . shall have exclusive jurisdiction of violations of this title ... and of all suits in equity and actions at law brought to enforce any liability or duty created by this title ..." does not deprive the Commission of jurisdiction to conduct the proceedings provided for by Sections 15 (b) and 19 (a) (3) of the Act, or other administrative proceedings provided for by the Act . Page 112. SUFFICIENCY OF ORDER FOR HEARING
An order for hearing is sufficient if it gives to the persons concerned reasonable notice of the matters to be considered ... Page 109.
UNLISTED TRADING PRIVILEGES
ADEQUACY OF DISTRIBUTION AND TRADING ACTIVITY IN APPLICANT'S
VICINITY Applicant held to have established sufficient public distribution and public trading activity in its vicinity (as previously determined) with regard to securities for which unlisted trading privileges were sought to render the extension of such privileges thereto appropriate in the public interest and for protection of investors . . . Pages 32, 36, 42, 248, 266, 389, 943.
Application for extension of unlisted trading denied where it appeared that there was insufficient public distribution and trading activity . . . Pages 32, 36, 42, 389, 943.
UNLISTED TRADING PRIVILEGES-Continued
Where applicant has not introduced satisfactory proof of sufficiently widespread distribution of, and sufficient public trading activity in, 11 securities, held that applications for extension of unlisted trading privileges should be held in abeyance pending the submission of additional data . . . Page 943. ADEQUACY OF DISTRIBUTION AND TRADING ACTIVITY WITHIN APPLI.
CANT'S VICINITY Applicant held to have established sufficient public distribution and publie trading activity within its vicinity (as previously determined) in securities for which unlisted trading privileges in round lots were sought to render the extension of such privileges thereto appropriate in the public interest and for the protection of investors . . . Pages 389, 949.
Applications for extension of unlisted trading in round lots denied as to one security due to insufficient public distribution and trading activity . , . Pages 889, 949. ADEQUACY OF OPERATING MECHANICS OF THE EXCHANGE
Increase in number of odd-lot dealers to compete with each other, closing applicant exchange 15 minutes later than New York Stock Exchange to equalise prices and requiring the members to check both primary and local markets and to place any order in the market appearing to afford the better execution of the order, held to accomplish objectives of the Commission . . . Page 32.
Upon adoption of designated rules, the operating mechanics of applicant eschange held to be such as to render it appropriate in the public interest to gact unlisted trading privileges thereto, provided the statutory requisites of public distribution and trading activity are satisfied . . . Page 266. 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 would normally insure that information will be supplied which would be substas tially equivalent to that available pursuant to rules and regulations of the Commission in respect of similar bonds duly listed and registered on a national securities exchange within the meaning of the requirement of clause (3) of Section 12 (f) of the latter Act ... Page 248. ADEQUACY OF ROUND-LOT TRADING PROCEDURE TO ESTABLISH EXCHANGE
AS AN INDEPENDENT SECONDARY MARKET Present operating mechanics of Boston Stock Exchange as to round-lot trading tend to establish it as an independent secondary market ... Page 389. NECESSITY OR APPROPRIATENESS OF EXTENSION OF ODD-LOT AND
ROUND-LOT TRADING Where unlisted trading privileges in certain securities were granted to an appo cant exchange only with respect to odd-lot trading and not to round-lot trading because of its exchange's practice of gearing round-lot trading to the trading on the primary exchange, and subsequently new rules have been adopted and made effective by the applicant exchange which appear to supply facilities for an independent market for unlisted trading in round lots held that it is appropriate in the public interest and for the protection of investors to extend to such exchange the privileges of unlisted trading in both round lots and odd lots to securities which otherwise satisfy the requirements of the statute .. Page 949.
UNLISTED TRADING PRIVILEGES--Continued
SUFFICIENCY OF PROOF OF DISTRIBUTION
Sufficient public distribution cannot be inferred from the sole circumstances that the security is actively traded in the vicinity of the exchange but must be independently established ... Page 943. SUFFICIENCY OF PROOF OF TRADING ACTIVITY
Evidence of the number of transactions in a security by members of the exchange without a showing of the area in which the transactions originated held insufficient proof of trading activity in the vicinity of the exchange . . . Page 943. VICINITY OF EXCHANGE Definition of Vicinity of Various Exchanges
Page Boston Stock Exchange.
389 Detroit Stock Exchange
943 New York Curb Exchange..
248 Philadelphia Stock Exchange.
36, 949 Pittsburgh Stock Exchange
42 Wheeling Stock Exchange.
266 Vicinity of Exchange
A claim to a larger area as the "vicinity" of the applicant exchange will be disregarded if the public distribution and trading activity within the larger area are insufficient to satisfy the statutory standards Page 32.
WITHDRAWAL FROM REGISTRATION AND STRIKING FROM LISTING
APPLICATION BY ISSUER OR EXCHANGE
Where registrant's application to withdraw its common stock from listing and registration on a national securities exchange (1) indicated that only a small number of stockholders use the facilities of that exchange without benefit commensurate to the expense involved, and a free and open market was available on another exchange, (2) disclosed adequately the material facts with respect to volume of trading and the comparative costs of transfers, and (3) conformed to the Commission's rules and the rules of the exchange, held to require the granting of the application and a denial of a motion by the exchange to strike such application ... Page 397.
Where a national securities exchange, in its application to strike from listing a security listed thereon, complies with its own rules and with the rules and regulations of the Commission, held the Commission's authority does not extend beyond the imposition of conditions for the protection of investors in the granting of the application ... Pages 433, 435, 938, 979. Suspending Decision on Application
Where notice sent by registrant pursuant to Rule X-12D2-1 contained misleading statements of fact which might have deterred some of registrant's stockholders from presenting to the Commission facts relating to the terms which should be imposed for the protection of investors, held decision upon the application should be suspended until the registrant has sent a corrected notice to its stockholders and until such stockholders have had an opportunity to express their views ... Page 721.