88th Congress, S. 1642 An Act 78 STAT. 565. To amend the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, to extend disclosure requirements to the issuers of additional publicly traded securities, to provide for improved qualification and disciplinary procedures for registered brokers and dealers, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may Securities Acts be cited as the "Securities Acts Amendments of 1964". Amendments of 1964 1964. Definitions. 15 USC 780. SEC. 2. Section 3(a) of the Securities Exchange Act of 1934 is amended by adding at the end thereof the following four paragraphs: 48 Stat. 882. "(18) The term 'person associated with a broker or dealer' means any partner, officer, director, or branch manager of such broker or dealer (or any person occupying a similar status or performing similar functions), or any person directly or indirectly controlling or controlled by such broker or dealer, including any employee of such broker or dealer, except that for the purposes of section 15 (b) of this title Post, p. 570. (other than paragraph (7) thereof), persons associated with a broker or dealer whose functions are clerical or ministerial shall not be included in the meaning of such term. The Commission may by rules and regulations classify, for the purpose of any portion or portions of this title, persons, including employees, controlled by a broker or a dealer. "(19) The terms 'investment company', 'affiliated person', and 'insurance company' have the same meanings as in the Investment Company Act of 1940. 54 Stat. 789. "(20) The terms 'investment adviser' and 'underwriter' have the 15 USC 80a-51. same meanings as in the Investment Advisers Act of 1940. "(21) The term 'person associated with a member' means a person who is registered with a registered securities association pursuant to its rules or who is associated with a broker or dealer which is a member of such association." SEC. 3. (a) Section 12(b) of the Securities Exchange Act of 1934 is amended as follows: (1) Subparagraphs (I) through (K) of paragraph (1) are redesignated as (J) through (L), respectively. (2) A new subparagraph (I) is added after subparagraph (H) to read as follows: "(I) material contracts, not made in the ordinary course of business, which are to be executed in whole or in part at or after the filing of the application or which were made not more than two years before such filing, and every material patent or contract for a material patent right shall be deemed a material contract;" (3) A new paragraph (3) is added at the end of subsection (b) to read as follows: "(3) Such copies of material contracts, referred to in paragraph (1) (I) above, as the Commission may require as necessary or appropriate for the proper protection of investors and to insure fair dealing in the security." (b) Section 12(f) of said Act is amended to read as follows: "(f) (1) Notwithstanding the foregoing provisions of this section, any national securities exchange, subject to the terms and conditions hereinafter set forth "(A) may continue unlisted trading privileges to which a security had been admitted on such exchange prior to the effective date of subsection (g) (1) of section 12 of this title. (309) 15 USC 80b-20. Registration requirements. 48 Stat. 892. 15 USC 781. Unlisted trad ing privileges. 59 Stat. 1375. 15 USC 781. Post, p. 566. 48 Stat. 898. 15 USC 78s. 78 STAT 566, "(B) upon application to and approval of such application by the Commission, may extend unlisted trading privileges to any security duly listed and registered on any other national securities exchange. If an extension of unlisted trading privileges to a security was originally based upon its listing and registration on another national securities exchange, such privileges shall continue in effect only so long as such security shall remain listed and registered on any other national securities exchange. "(2) No application pursuant to this subsection shall be approved unless the Commission finds, after appropriate notice and opportunity for hearing, that the extension of unlisted trading privileges pursuant to such application is necessary or appropriate in the public interest or for the protection of investors. "(3) The Commission shall by rules and regulations suspend unlisted trading privileges in whole or in part for any or all classes of securities for a period not exceeding twelve months, if it deems such suspension necessary or appropriate in the public interest or for the protection of investors or to prevent evasion of the purposes of this title. "(4) On the application of the issuer of any security for which unlisted trading privileges on any exchange have been continued or extended pursuant to this subsection, or of any broker or dealer who makes or creates a market for such security, or of any other person having a bona fide interest in the question of termination or suspension of such unlisted trading privileges, or on its own motion, the Commission shall by order terminate, or suspend for a period not exceeding twelve months, such unlisted trading privileges for such security if the Commission finds, after appropriate notice and opportunity for hearing, that such termination or suspension is necessary or appropriate in the public interest or for the protection of investors. "(5) In any proceeding under this subsection in which appropriate notice and opportunity for hearing are required, notice of not less than ten days to the applicant in such proceeding, to the issuer of the security involved, to the exchange which is seeking to continue or extend or has continued or extended unlisted trading privileges for such security, and to the exchange, if any, on which such security is listed and registered, shall be deemed adequate notice, and any broker or dealer who makes or creates a market for such security, and any other person having a bona fide interest in such proceeding, shall upon application be entitled to be heard. "(6) Any security for which unlisted trading privileges are continued or extended pursuant to this subsection shall be deemed to be registered on a national securities exchange within the meaning of this title. The powers and duties of the Commission under section 19(b) of this title shall be applicable to the rules of an exchange in respect of any such security. The Commission may, by such rules and regulations as it deems necessary or appropriate in the public interest or for the protection of investors, either unconditionally or upon specified terms and conditions, or for stated periods, exempt such Post, pp.569,570. securities from the operation of any provision of section 13, 14, or p. 579. 16 of this title." Fast, Issuers engaged in interstate commerce. Ante, p. 565. 15 USC 781. (c) Section 12 of said Act is further amended by adding thereto the following new subsection: "(g) (1) Every issuer which is engaged in interstate commerce, or in a business affecting interstate commerce, or whose securities are traded by use of the mails or any means or instrumentality of interstate commerce shall "(A) within one hundred and twenty days after the last day of its first fiscal year ended after the effective date of this sub 78 STAT. 567. section on which the issuer has total assets exceeding $1,000,000 and a class of equity security (other than an exempted security) held of record by seven hundred and fifty or more persons; and "(B) within one hundred and twenty days after the last day of its first fiscal year ended after two years from the effective date of this subsection on which the issuer has total assets exceeding $1,000,000 and a class of equity security (other than an exempted security) held of record by five hundred or more but less than seven hundred and fifty persons, register such security by filing with the Commission a registration statement (and such copies thereof as the Commission may require) with respect to such security containing such information and documents as the Commission may specify comparable to that which is required in an application to register a security pursuant to subsection (b) of this section. Each such registration statement shall become effective sixty days after filing with the Commission or within such shorter period as the Commission may direct. Until such registration statement becomes effective it shall not be deemed filed for the purposes of section 18 of this title. Any issuer may register any class 48 Stat. 897. of equity security not required to be registered by filing a registration 15 USC 78r. statement pursuant to the provisions of this paragraph. The Commission is authorized to extend the date upon which any issuer or class of issuers is required to register a security pursuant to the provisions of this paragraph. "(2) The provisions of this subsection shall not apply in respect Nonapplicaof “(A) any security listed and registered on a national securities exchange. "(B) any security issued by an investment company registered pursuant to section 8 of the Investment Company Act of 1940. "(C) any security, other than permanent stock, guaranty stock, permanent reserve stock, or any similar certificate evidencing nonwithdrawable capital, issued by a savings and loan association, building and loan association, cooperative bank, homestead association, or similar institution, which is supervised and examined by State or Federal authority having supervision over any such institution. "(D) any security of an issuer organized and operated 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 private shareholder or individual. "(E) any security of an issuer which is a 'cooperative association' as defined in the Agricultural Marketing Act, approved bility. 54 Stat. 803. 15 USC 80a-8. June 15, 1929, as amended, or a federation of such cooperative 46 Stat. 11. associations, if such federation possesses no greater powers or pur- 12 USC 1141poses than cooperative associations so defined. "(F) any security issued by a mutual or cooperative organization which supplies a commodity or service primarily for the benefit of its members and operates not for pecuniary profit, but only if the security is part of a class issuable only to persons who purchase commodities or services from the issuer, the security is transferable only to a successor in interest or occupancy of premises serviced or to be served by the issuer, and no dividends are payable to the holder of the security. (G) any security issued by an insurance company if all of the following conditions are met: “(i) Such insurance company is required to and does file an annual statement with the Commissioner of Insurance (or 1141j. 78 STAT. 568. Post, p. 579. Termination of registration. Definition. Ante, p. 566. 15 USC 781. Post, pp. 569, 570, 574, 579. other officer or agency performing a similar function) of its domiciliary State, and such annual statement conforms to that prescribed by the National Association of Insurance Commissioners or in the determination of such State commissioner, officer or agency substantially conforms to that so prescribed. "(ii) Such insurance company is subject to regulation by its domiciliary State of proxies, consents, or authorizations in respect of securities issued by such company and such regulation conforms to that prescribed by the National Association of Insurance Commissioners. "(iii) After July 1, 1966, the purchase and sales of securities issued by such insurance company by beneficial owners, directors, or officers of such company are subject to regulation (including reporting) by its domiciliary State substantially in the manner provided in section 16 of this title. (3) The Commission may by rules or regulations or, on its own motion, after notice and opportunity for hearing, by order, exempt from this subsection any security of a foreign issuer, including any certificate of deposit for such a security, if the Commission finds that such exemption is in the public interest and is consistent with the protection of investors. "(4) Registration of any class of security pursuant to this subsection shall be terminated ninety days, or such shorter period as the Commission may determine, after the issuer files a certification with the Commission that the number of holders of record of such class of security is reduced to less than three hundred persons. The Commission shall after notice and opportunity for hearing deny termination of registration if it finds that the certification is untrue. Termination of registration shall be deferred pending final determination on the question of denial. "(5) For the purposes of this subsection the term 'class' shall include all securities of an issuer which are of substantially similar character and the holders of which enjoy substantially similar rights and privileges. The Commission may for the purpose of this subsection define by rules and regulations the terms 'total assets' and 'held of record' as it deems necessary or appropriate in the public interest or for the protection of investors in order to prevent circumvention of the provisions of this subsection." (d) Section 12 of said Act is further amended by adding thereto the following new subsection: "(h) The Commission may by rules and regulations, or upon application of an interested person, by order, after notice and opportunity for hearing, exempt in whole or in part any issuer or class of issuers from the provisions of subsection (g) of this section or from section 13, 14, or 15(d) or may exempt from section 16 any officer, director, or beneficial owner of securities of any issuer, any security of which is required to be registered pursuant to subsection (g) hereof, upon such terms and conditions and for such period as it deems necessary or appropriate, if the Commission finds, by reason of the number of public investors, amount of trading interest in the securities, the nature and extent of the activities of the issuer, income or assets of the issuer, or otherwise, that such action is not inconsistent with the public interest or the protection of investors. The Commission may, for the purposes of any of the above-mentioned sections or subsections of this title, classify issuers and prescribe requirements appropriate for each such class. (e) Section 12 of said Act is further amended by adding thereto the following new subsection: 78 STAT. 569, "(i) In respect of any securities issued by banks the deposits of which are insured in accordance with the Federal Deposit Insurance Act, the powers, functions, and duties vested in the Commission under 64 Stat. 873. this title to administer and enforce sections 12, 13, 14(a), 14(c), and 12 USC 1811 note. 16 (1) with respect to national banks and banks operating under the Ante, pp. 565Code of Law for the District of Columbia are vested in the Comptroller 568; infra; post, of the Currency, (2) with respect to all other member banks of the pp. 570, 579. Federal Reserve System are vested in the Board of Governors of the Federal Reserve System, and (3) with respect to all other insured banks are vested in the Federal Deposit Insurance Corporation. The Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation shall have power to make such rules and regulations as may be necessary for the execution of the functions vested in them as provided in this subsection and none of the rules, regulations, forms or orders issued or adopted by the Commission pursuant to this title shall be in any way binding upon such officers and agencies in the performance of such functions, or upon any such banks in connection with the performance of such functions." SEC. 4. Section 13(a) of the Securities Exchange Act of 1934 is Reports. amended to read as follows: 48 Stat. 894. "SEC. 13. (a) Every issuer of a security registered pursuant to sec- 15 USC 78m. tion 12 of this title shall file with the Commission, in accordance with such rules and regulations as the Commission may prescribe as necessary or appropriate for the proper protection of investors and to insure fair dealing in the security— "(1) such information and documents (and such copies thereof) as the Commission shall require to keep reasonably current the information and documents required to be included in or filed with an application or registration statement filed pursuant to section 12, except that the Commission may not require the filing of any material contract wholly executed before July 1, 1962. "(2) such annual reports (and such copies thereof), certified if required by the rules and regulations of the Commission by independent public accountants, and such quarterly reports (and such copies thereof), as the Commission may prescribe. Every issuer of a security registered on a national securities exchange shall also file a duplicate original of such information, documents, and reports with the exchange." SEC. 5. (a) Section 14 (a) of the Securities Exchange Act of 1934 Proxies. is amended to read as follows: "SEC. 14. (a) It shall be unlawful for any person, by the use of the mails or by any means or instrumentality of interstate commerce or of any facility of a national securities exchange or otherwise, in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors, to solicit or to permit the use of his name to solicit any proxy or consent or authorization in respect of any security (other than an exempted security) registered pursuant to section 12 of this title." (b) Section 14(b) of said Act is amended to read as follows: "(b) It shall be unlawful for any member of a national securities exchange, or any broker or dealer registered under this title, in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors, to give, or to refrain from giving a proxy, consent, or authorization in respect of any security registered pursuant to section 12 of this title and carried for the account of a customer." 15 USC 78n. 87-521 O 73 - 22 |