Form U-6B-2, notification of exempt security issues (17 CFR 259.206) Form 3431, annual report of bicks that are exempt holding companies (17 (FR 259.403). These forms are the source of most information received pursuant to the Public Utility Holding Company Act of 1935 concerning proprietary wnership subsidiary, parent and other control; officers and directors, and long-term and short-term debts. The information received on the aforementioned applications and reports is discussed below in the same sequence as the information requested in Senefor Metcalf's letter of February 9, 1973 except for the evaluation of the enforcement and effectiveness of the rules and regulations which will be covered in the Comptroller General's formal response to Senator Metcalf 1. Information of Proprietary Notog) Ownership Form 158, require a list of the 20 largest si wkholders, including the beneficial owners, of the securities of the holding company showing for each issue, the owner's name and address, the number of shares owned, and the percent of the issue owned. Form U-13-1, requires a list of all beneficial owners of 10 percent or more of the outstanding capital stock of the applicant. Forn, U13E-1 requires the regis ran, if a corporation, to list the top 20 stockholders of record of the registrants" yoting securities and indicate the amount owned by each. If a partnership, the registrant must list the names of all partners and the extent of their share in the partnership. 2. Information on Subsidiaries, Parent or any Other Company Having Control Over the Subject Organization Forms USA and U5B require the holding company to list all of the subsidiaries in the holding company's system, showing for each its name, organization type (corporation, trust, etc.), state of organization, type of business engaged in, and the remoteness of the relationship to th: holding company. Form U5B also requires a listing of all of the capital stock of the holding company and its subsidiaries showing the name of the issuer; title of issue; amount authorized; amount reserved for options, warrants, etc; amount issued; voluntary and involuntary liquidating value; amount reacquired by issuer, amount pledged by the holding company and each subsidiary and the aggregate amount owned by the holding company and its subsidiaries other than the issuer. Form U5B requires the registrant to list all the seenrities of companies within the registrants' system, as well as those of other companies, which are heid by the registrant. Form U-13 1 requires the registrant to detail the control of the subsidiaries, and the amount of any securities its affiliates hold. Forin U-13-60 requires the company to show the amount of indebtedness to any of its affiliates, the interest rate and amount accrued during the year, and the additions to and reductions in the ir debtedness during the year. Form U-3A3-1 requires the bank to detail its holdings in voting securities of public utility companies or holding companies including the company name and description of securities, amount outstanding, amount owned, controlled or held by the bark, and the nature of holding. 1 See p. 197. The bank must also provide the name(s) of any member of the bank board of directors who acts in a like capacity for any public stuity or holding company in which the bank held young securities. 3. Information on Officers and Directors Form C5B requires the registrant to list the name, address, and dtle sad con pensation of all officers and directors of the registrant and its subsidiaries. Also, it requires the registrant to furnish the names of all officials that are officers or directors of any bank or other financial mstitutions. Form U-13-1 requires a listing of all officers and directors and a statement as to any positions they hold in any affiliated company or other company with which it does business. Form U-15E-1 requires a list of all officers and directors of the registrant and their annual rate of compensation. 4. Information on Long-Term an1 Short-Term Debt Form USB requires a detailed listing of all funded debts of the registrant and of any affiliated companies showing the obligor, title of issue, amount authorized, amount outstanding, amount reacquired and available for resale, amount in sinking fund of obligor, amount pledged by registrant and subsidiaries, aggregate owned by registrant and subsidiaries, and name of trustee. Form U-13 1 requires the registrant to list all debt holders that have beneficial ownership of 10 percent or more of the outstanding debt. Form U-13 60 requires the registrant to list all notes payable, the name of the creditor, the nature of the transaction creating the debt, date of issue, date of maturity, nominal and effective mterest rates, and balance outstanding at the end of the year. Also required is a list of the long-term debt showing the name and date of the obligation, date of maturity, amount authorized. amount held by the company, amount outstanding, interest rate and due date, interest accrued and paid during the year, and face amount of debt retired during the year. Form U-3A3-1 requires the bank to list all loans outstanding to any public utility company or holding company that were in default, and a listing of all loans to any director or officer of any such company in excess of $25,000 showing the name of the company, name and position of borrower, and amount of loans. Form U 6B 2 serves as notification to SEC that a holding company or its subsidiaries had issued, renewed or guaranteed securities exempt from the applicable provision of the Public Utility Holding Company Act of 1935 and SEC regulations. The information to be included in the notification includes the type of security, principal amount interest rate, dates of issue and maturity, name of security holder, collateral given, consideration received and application of proceeds. 5. Enforcement and Effectiveness of Laws, Rules, and Regulations See Comptroller General's letter, p. 197. 6. Availability and Cost of Information to the Public All forms and reports described above are available to the public in the SEC's Public Reference Section. Any individual desiring information may personally make copies of the information at the SEC, at a cost of 10 cents per page. Individuale may also receive copies of any desired information through an SEC contractor. 7. Proposals of New Legislation or Authority See discussion, under this heading in first part of this report, dealing with Securities Act of 1933, p. 223. Trust Indenture Act of 1939 The Trust Indenture Act of 1939 (15 US.C. 77aaa) requires debt securities offered for public sale to be registered with the SEC. The act authorized the SEC to make, amend, or rescind any rules or regulations and to require any documents or other information it deemed necessary for the protection of investors. Pursuant to this authority, SEC regulations (17 CFR 269) prescribe the following forms to be used as registration statements for trust indentures: Form T-1, statement of eligibility and qualifications Forms T-1, T-2, and T-3 are the source of most information received pursuant to the Trust Indenture Act of 1939 concerning proprietary ownership, subsidiary, parent, and other control information; officers and directors; and long-term and short-term debts. The information received on the aforementioned registration statements is discussed below in the same sequence as the information requested in Senator Metcalf's letter of February 9, 1973, except for the evaluation of the enforcement and effectiveness of the rules and regulations which will be covered in the Comptroller General's formal response to Senator Metcalf,' 1. Information og Proprietary (Voting) Ownership Form T3 requires the applicant to list the name, address, clus of voting stork owned, and amount owned and percentage of euch class of voting stock owned for each person owning 10 percent or more of the voting securities of the registrant. No other information on proprietary ownership is contained in registration statements required under the Trust Inderture Act of 1939. 2. Liformation or Subsidiaries, Parents, or any other Company Having Control Over Subject Orya nization Forms T-1 and T-2 require the registrant to report any affiliation between it and (1) the obligor (debt issuer) and (2) any underwriter of the obligor's debt securities. Further these forms require the reporting of the extent of securities held by the trustee, obligor, and underwriters in each other The registrant must also report its security holdings i any person or company that owns 10 percent or more of the obligor's equity securities and/or 50 percent or more of the obligor's voting securities. Forins T1 and T2 require information as to whether the trustee is also a trustee under any other indentures involving securities of the obligor, and if so, a statement must be submitted showing the basis for the claim that no conflicting interest is created. 1 See p 197. Form T-3 requires that the applicant list the underwriters of all outstanding securities and the proposed underwriters of the new securities. 3. Information on Officers and Directors Forms T-1 and T-2 require a statement as to any interlocking directorates and their nature if the trustee or any of its officers or directors is an officer or director of the obligor or any of its underwriters. Form T3 requires the registrant to list the names and positions of its officers and directors. 4. Information on Long-Term and Short-Term Debt The information is discussed in the foregoing sections. 5. Enforcement and Effectiveness of Laws, Rules, and Regulations See Comptroller General's letter, p. 197. 6. Availability and Cost of Information to the Public All registrations received under the Trust Indenture Act of 1939 are available to the public in the SEC's Public Reference Section. Any individual desiring information may make copies of such information at the SEC, at a cost of 10 cents per page. Individuals may also receive copies of the inforniation through an SEC contractor. 7. Proposals of New Legislation or Authority See preceding discussion, under this heading, in first part of this report, dealing with Securities Act of 1933, p. 223. Investment Company Act of 1940 The Investment Company Act of 1940 (15 U.S.C. 808-1) requires the registration of investment companies with the SEC and subjects their activities to regulation by the SEC. The act declared it unlawful for any unregistered investment company to sell its securities or conduct any other business transaction in interstate commerce. The act granted the SEC the authority to prescribe the form and content of registration statements and to require the submission of annual, quarterly, or periodical reports or any other information or documents the SEC deems necessary for the protection of the investor. Pursuant to this authority, the SEC regulations (17 CFR 274) prescribe the following forms to be used by investment companies: Form N 5, registration statement of small business 274.10). Form N-30A-2, annual report of unit investment trusts currently issuing securities? (17 CFR 274.102) Form N-30A-3, annual report of unincorporated Form N-5R, annual report of small business invest- Form 3, initial statement of beneficial ownership of Form 4, statement of changes in beneficial ownership of securities (17 CFR 274.203). These forms are the source of most information received pursuant to the Investment Company Act of 1940 concerning proprietary ownership; subsidiary, parent and other control; officers and directors; and long term and short-term debts. The information received on the aforementioned applications and reports is discussed below in the same sequence as the information requested in Senator Metcalf's letter of February 9, 1973, except for the evaluation of the enforcement and effectiveness of the rules and regulations which will be covered in the Comptroller General's formal response to Senator Metcalf 1. Information on Proprietary (Voting) Ownership Form N-8B-1 requires the registrant to provide a listing of any person who owns 5 percent or more of the Voting securities or inore than 10 percent of any other class of equity security of the registrant. The information to be submitted includes the owners' name and address; class of security owned, whether owned of record, beneficially or both; amount owned, and percentage of each class owned. Form N-8B-2 requires the registrant to furnish for each person owning 5 percent or more of the outstanding Voting securities of the depositor of the trust (1) the details of their ownership of all securities of the depositor and (2) the details of their ownership of all securities of the trust. 2. Information on Subsidiaries, Purent, or Any Other Company Having Control Over Subject Organization On Forin N-8A the registrant must furnishe schedule of (1) every company in which it owns directly 25 percent or more of the voting securities, and (2) companies owned 25 percent or more by companies in which the registrant has a 25 percent interest. The schedule must show the name of the company date of organization, and state in which organized, form of organization, principal business, and the percentage of voting securities owned. Form N 8B-1 requires the registrant to furnish information on investment policies, including the types of securities in which it may invest, the percentage of assets that can be invested in one security, the percentage of voting securities of any one i suer it may acquire, investment for the purpose of exercising control, and portfolio turnover. The registrant must also show for any company in which the registrant owns 5 percent or more of the outstanding voting securities or has invested more than percent of its total assets, the name and address of the company, its principal business, and the percentage of the 'See p.197. 5 assets or voting securities invested in the company at time of registration and at year end. The registrant must furnish a list or diagram of all persons directly or indirectly controlling, controlled by or under cominon control with the registrant and the percentage of voting securities owned or other basis of control by the person immediately controlling it. Form N-8B-2 requires the registrant to furnish a listing of the trust's securities held by its underwriters, directors and officers. Form N-17D-1 requires small business investment companies to report the details of investments in small businesses if investments in the small business have also been made by an affiliated bank. 3. Information on Officers and Directors Form N-8A requires the registrant to furnish a listing of it officers, directors, and members of its advisory board and to state their affiliation with the registrant. Form N-8B-1 requires the registrant to identify each director, each meinber of the advisory board and the three highest paid officers whose remuneration exceeded $30,000. Also, the registrant must furnish information as to any interlocking directorates with regard to the registrant and its underwriters. 4. Information on Long-Term and Short-Term Debt Only Form N-8B-2 requires information as to long-term debt. However, the information required to be submitted does not require the details of the debts or the debt holders. 5. Enforcement and Effectiveness of Laws, Rules and Regulations See Comptroller General's letter, p. 197. 6. Availability and Cost of Information to the Public All forms and reports described above re available to the public in the SEC's Public Referens Section. Any information, at the SEC, at a cost of 10 cents per page. individual desiring information may mak copies of such Individuals may also receive copies of any information through an SEC contractor. 7. Proposals of New Legislation or Authority See preceding discussion, under this heading, in first part of this report, dealing with Securities Act of 1933, p. 223. Investment Advisers Act of 1910 The Investment Advisers Act of 1940 (15 U.S.C. 80b-1), provides for the registration with the SEC of individuals who engage in the business of advising others in their security transactions. The act authorizes the SEC to issue rules prohibiting certain acts and procedures as fraudulent or deceitful and to prescribe the form in which registration information will be submitted to the SEC. The act also authorizes the SEC to require any additional reports it deems necessary to protect investors. Pursuant to this authority, SEC regulations (17 CFR 279.1) require investment advisers to file a registration with the SEC and prescribe the use of Form ADV for this purpose. Form ADV is the source of most information receive pursuant to the act concerning proprietary ownership; subsidiary, parent, and other control informa tion; and officers and directors. The information received on this registration is discussed below in the same sequence as the information requested in Senator Metcalf's letter of February 9, 1973. except for the evaluation of the enforcement and effectiveness of the rules and regulations which will be covered in the Comptroller General's formal response to Senator Metcalf,! 1. Information on Proprietary (Voting) Ownership Form ADV requires the registrant to furnish the SEC a listing of any direct or indirect beneficial owners of 1 percent or more of any class of equity security, including the name of the owner, class of stock owned, and percentage owned. If the registrant is a partnership or other form of business, detailed information is required on the ownership of the organization. 2. Information on Subsidiary, Parent, or Other Company Haring Control Over Subject Organization Form ADV requires the registrant to furnish the SEC with detailed information concerning any person who exercises or has the power to exercise a controlling influence over the policies or management of the investment adviser. Form ADV also requires information as to any controlling influence, whether direct or indirect, the applicant or registrant exercises over any other person or organization involved in the securities or investment advisory business, Senator WILLIAMS. Mr. John M. Niehuss, Assistant Director of Council on International Economic Policy, is our next witness. Do you have your material all gathered, Mr. Niehuss? Mr. NIEHUSs. Yes. Senator WILLIAMS. This is for our information, I trust, not for our record? Mr. NIEHUSS. We are going to have those printed separately. They will be available to the public. Senator WILLIAMS. We are pleased to have you here this morning. Mr. NIEHUSS. Thank you, Mr. Chairman. Mr. Chairman, with your permission, I would like to submit my full statement for the record, and to read today a shortened version of that statement. Senator WILLIAMS. That will be fine. Your full statement will be in the record. [The complete statement is printed at p. 240.] STATEMENT OF JOHN M. NIEHUSS, ASSISTANT DIRECTOR OF COUNCIL ON INTERNATIONAL ECONOMIC POLICY Mr. NIEHUSS. Yesterday you heard Treasury, State, and Commerce Department witnesses outline the administration's current policy toward foreign investment in the United States and the basic reasons why they oppose S. 425. The Council on International Economic Policy is in basic agreement with the position as expressed yesterday and, therefore, I will not repeat testimony that has already been presented to you. Accordingly, our statement this morning will be limited to the question of reporting and disclosure requirements with respect to foreign investment in the United States. In the latter part of 1973, the Executive Committee of the Council on International Economic Policy examined our general policy toward foreign investment in the United States. In connection with this review, the problem of the quality of information available with respect to foreign investment in the United States was considered, and it was concluded that steps should be taken to obtain more comprehensive data. Therefore, the administration strongly supported the approach adopted by Senator Inouye and embodied in the Foreign Investment Study Act of 1974. As you recall, this act requires the Treasury and Commerce Departments to undertake a major study of foreign investment in the United States. As part of this study, the act requires the executive branch to review the adequacy of current data gathering, disclosure, and reporting requirements with respect to foreign investment in the United States. and to make recommendations for keeping our information on such investment current. Because of these requirements, the administration refrained from endorsing the so-called Metzenbaum bill prior to a comprehensive review of our existing reporting procedures. While the need for better information was clearly recognized, it was felt that the approach adopted by that bill represented only one alternative method of improving our information on foreign investment in the United States and prejudged the results of the comprehensive review that was required by the Foreign Investment Study Act. |