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73d CONGRESS.
[CHAPTER 38.]
May 27, 1033.
[H.R. 5480.]
[Public, No. 22.]

Securities Aet of 933.
Post p. 1026.

SESS. I.

CH. 38.

MAY 27, 1933.

AN ACT

To provide full and fair disclosure of the character of securities sold in interstate
and foreign commerce and through the mails, and to prevent frauds in the
sale thereof, and for other purposes.

Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,

TITLE I
SHORT TITLE
Title cited.

SECTION

1. This title may be cited as the " Securities Acf of 1933 ".
DEFINITIONS

Definitions.
"security.

iPost P. 905.

"Person."

"Trust."

"SaIl," etc.

SEC. 2. When used in this title, unless the context otherwise
requires(1) The term "security" means any note, stock, treasury stock,
bond, debenture, evidence of indebtedness, certificate of interest or

participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share,
investment contract, voting-trust certificate, certificate of interest in
property, tangible or intangible, or, in general, any instrument commonly known as a security, or any certificate of interest or participation in, temporary or interim certificate for, receipt for, or warrant
or right to subscribe to or purchase, any of the foregoing.
(2) The term " person" means an individual, a corporation, a
partnership, an association, a joint-stock company, a trust, any unincorporated organization, or a government or political subdivision
thereof. As used in this paragraph the term "trust" shall include
only a trust where the interest or interests of the beneficiary or beneficiaries are evidenced by a security.
(3) The term " sale ", "sell ", "offer to sell ", or offer for sale
shall include every contract of sale or disposition of, attempt or offer
to dispose of, or solicitation of an offer to buy, a security or interest

reliminaries not in- in a security, for value; except that such terms shall not include

preliminary negotiations or agreements between an issuer and any

Seemity given
with
purchase
considered underwriter.
part of subject.

Issue of security
with right to convert.

When

conversion

right exersed

Any security given or delivered with, or as a bonus
on account of, any purchase of securities or any other thing, shall

be conclusively presumed to constitute a part of the subject of such
purchase and to have been sold for value. The issue or transfer of
a right or privilege, when originally issued or transferred with a
security, giving the holder of such security the right to convert such
security into another security of the same issuer or of another person,
or giving a right to subscribe to another security of the same issuer
or of another person, which right cannot be exercised until some
future date, shall not be deemed to be a sale of such other security;
but the issue or transfer of such other security upon the exercise of

such right of conversion or subscription shall be deemed a sale of such
other security.
"Isser."

(4) The term " issuer " means every person who issues or proposes

to issue any security or who guarantees a security either as to principal or income; except that with respect to certificates of deposit,
voting-trust certificates, or collateral-trust certificates, or with respect
to certificates of interest or shares in an unincorporated investment
trust not having a board of directors (or persons performing similar
functions) or of the fixed, restricted management, or unit type, the

73d CONGRESS.

SESS. I.

CH. 38.

MAY 27, 1933.

term " issuer" means the person or persons performing the acts and
assuming the duties of depositor or manager pursuant to the provisions of the trust or other agreement or instrument under which such

s.quipment-trust

securities are issued; and except that with respect to equipment-trust
certificates or like securities, the term " issuer " means the person by
whom the equipment or property is or is to be used.
(5) The term " Commission

means the Federal Trade Colmmis-

sion.
(6) The term " Territory " means Alaska, Hawaii, Puerto Rico.
the Philippine Islands, Canal Zone, the Virgin Islands, and the
insular possessions of the United States.
(7) The term "interstate commerce"

"''onmisiou."
"Territory."

means trade or commerce m"Interestate

com

in securities or any transportation or communication relating thereto
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 foreign country and any State, Territory, or the District
of Columbia, or within the District of Columbia.
(8) The term " registration statement " means the statement pro-

nRegistration stat.

vided for in section 6, and includes any amendment thereto and any

Post, p- 78

report, document, or memorandum accompanying such statement or
incorporated therein by reference.
(9) The term "write " or " written " shall include printed, litho- terite"
graphed, or any means of graphic communication.
(10) The term " prospectus" means any prospectus, notice, circu-

"writ-

"Prospectus."

lar, advertisement, letter, or communication, written or by radio,
which offers any security for sale; except that (a) a communication

Exceptions.

shall not be deemed a prospectus if it is proved that prior to such
communication a written prospectus meeting the requirements of

81' 95.

section 10 was received, by the person to whom the communication
was made, from the person making such communication or his principal, and (b) a notice, circular, advertisement, letter, or comlnunication in respect of a security shall not be deemed to be a prospectus
if it states from whom a written prospectus meeting the requiremlenlts

of section 10 may be obtained and, in addition, does no more than
identify the security, state the price thereof, and state by whoml
orders will be executed.
(11) Thle term "underwriter" means any person who has purchased froim an issuer with a view to, or sells for an issuer in connection with, the distribution of any security, or participates or has
a direct or indirect participation in any such undertaking, or participates or has a participation in the direct or indirect underwrit-

ing of any such undertaking; but such term shall not include a person
whose interest is limited to a commission from an underwriter or
dealer not in excess of the usual and customary distributors' or
sellers' commission. As used in this paragraph the term "issuer''
shall include, in addition to an issuer, any person directly or indirectly controlling or controlled by the issuer, or any person under
direct or indirect common control with the issuer.
(12)

The term " dealer " means any person who engages either for

nde'"rriter"

Personnotincluded.

"issuer."

"Deal."

all or part of his time, directly or indirectly, as agent, broker, or
principal, in the business of offering, buying, selling, or otherwise
dealing or trading in securities issued by another person.
EXEMPTEID SECURITIES

SEc. 3. (a) Except as hereinafter expressly provided, the provi- tiem od
sions of this title shall not apply to any of the following classes of
securities:

se u

73d CONGRESS.

SESS. I.

CH. 38. MAY 27, 1933.

(1) Any security which, prior to or within sixty days after the
enactment of this title, has been sold. or disposed of by the issuer or
ofl ering e- bona fide offered to the public, but this exemption shall not apply to
any new offering of any such security by an issuer or underwriter

Prior sale.
New

subsequent to such sixty days;
(2) Any security issued or guaranteed by the United States or any
Territory thereof, or by the District of Columbia, or by any State of
the United States, or by any political subdivision of a State or

bSec
itiestarteed
State,
or political sub
division,
etc.
ost, p. 908.

Territory, or by any public instrumentality of one or more States or
Government

rations.

corpo-

National, etc., banks.

Federalreservebank
obligations.

Territories exercising an essential governmental function, or by any
corporation created and controlled or supervised by and acting as an

instrumentality of the Government of the United States pursuant to
authority granted by the Congress of the United States, or by any
national bank, or by any banking institution organized under the laws
of any State or Territory, the business of which is substantially confined to banking and is supervised by the State or territorial banking
commission or similar official; or any security issued by or representing an interest in or a direct obligation of a Federal reserve

Current transactions. bank;

(3) Any note, draft, bill of exchange, or banker's acceptance
which arises out of a current transaction or the proceeds of which
have been or are to be used for current transactions, and which has
a maturity at the time of issuance of not exceeding nine months,
exclusive of days of grace, or any renewal thereof the maturity of
Religious, etc., organ- which is likewise limited;
Short-termpaper.

(4) Any security issued by a corporation organized and operated
exclusively for religious, educational, benevolent, fraternal, chari-

izations.

assiatiinse
le
associations,
etc,adwhere
business substntially

table, 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;
(5) Any security issued by a building and loan association, home-

stead association, savings and loan association, or similar institution,

substantially all the business of which is confined to the making of
loans to members (but the foregoing exemption shall not apply with
respect to any such security where the issuer takes from the total
amount paid or deposited by the purchaser, by way of any fee, cash
value or other device whatsoever, either upon termination of the
investment at maturity or before maturity, an aggregate amount in
tives.armers' cooera- excess of 3 per centum of the face value of such security), or any
Exception.

Vol.47pp,rp.w3,1

security issued by a farmers' cooperative association as defined in

paragraphs (12), (13), and (14) of section 103 of the Revenue Act
of 1932;

cmoncarier.

(6) Any security issued by a common carrier which is subject to

.s.o., p.1lro.
CertEiates in
etcAty
Peos,

the provisions of section 20a of the Interstate Commerce Act, as
amended;
baik-

contrac

p. Om.

() Certificates issued by a receiver or by a trustee in bankruptcy,
rwith
prods
the approval of the court;
, (8) Any insurance or endowment policy or annuity contract or
optional annuity contract, issued by a corporation subject to the
supervision of the insurance commissioner, bank commissioner, or

any agency or officer performing like functions of any State or

Addittionl

Territory of the United States or the District of Columbia.
(b) The Commission may from time to time by its rules and regulations, and subject to such terms and conditions as may be prescribed

therein, add any class of securities to the securities exempted as pro-

vided in this section, if it finds that the enforcement of this title with
respect to such securities is not necessary in the public interest and
for the protection of investors by reason of the small amount

73d CONGRESS.

SESS. I.

CH. 38.

MAY 27, 1933.

involved or the limited character of the public offering; but no issue

Restriction.

of securities shall be exempted under this subsection where the aggregate amount at which such issue is offered to the public exceeds
$100,000.
EXEMPTED TRAN'SACTIONS

SEC. 4. The provisions of section 5 shall not apply to any of the
following transactions:
(1) Transactions by any person other than an issuer, underwriter,
or dealer; transactions by an issuer not with or through an underwriter and not involving any public offering; or transactions by a
dealer (including an underwriter no longer acting as an underwriter
in respect of the security involved in such transaction), except transactions within one year after the last date upon which the security
was bona fide offered to the public by the issuer or by or through an
underwriter (excluding in the computation of such year any time
during which a stop order issued under section 8 is in effect as to
the security), and except transactions as to securities constituting
the whole or a part of an unsold allotment to or subscription by such
dealer as a participant in the distribution of such securities by the
issuer or by or through an underwriter.
(2) Brokers' transactions, executed upon customers' orders on any
exchange or in the open or counter market, but not the solicitation
of such orders.
(3) The issuance of a security of a person exchanged by it with
its existing security holders exclusively, where no commission or
other remuneration is paid or given directly or indirectly in connection with such exchange; or the issuance of securities to the existing
security holders or other existing creditors of a corporation in the
process of a bona fide reorganization of such corporation under the
supervision of any court, either in exchange for the securities of such
security holders or claims of such creditors or partly for cash and
partly in exchange for the securities or claims of such security
holders or creditors.

transac-

Exempted
tions.

By individuals.
Post, p. 906.

Post, p. 79.

Brokers'
tions.

transac-

Issuance of securities
to existing security
holders, creditors, etc.

PROHIIITIONS RELATING TO INTERSTATE COMMERCE AND TIIE MAILS

SEC. 5. (a) Unless a registration statement is in effect as to a
security, it shall be unlawful for any person, directly or indirectly(1) to make use of any means or instruments of transportation or communication in interstate commerce or of the mails

Prohibition relating

and

the mails.

bro
Transmissin ouf
ker's ropectus, etc.

to sell or offer to buy such security through the use or medium
of any prospectus or otherwise; or
(2) to carry or cause to be carried through the mails or in
interstate commerce, by any means or instruments of transporta-

suc
Transporting
for sale or
delivery after sale.
security

tion, any such security for the purpose of sale or for delivery
after sale.

U lawful

(b) It shall be unlawful for any person, directly or indirectly-

(1) to make use of any means or instruments of transportation
or communication in interstate commerce or of the mails to
carry or transmit any prospectus relating to any security registered under this title, unless such prospectus meets the requirements of section 10; or

(2) to carry or to cause to be carried through the mails or in

tn torasrelating
eitered security.

Prospectus
to

p #,
ecrity.

interstate commerce any such security for the purpose of sale or
for delivery after sale, unless accompanied or preceded by a
prospectus that meets the requirements of section 10.
(c) The provisions of this section relating to the use of the mails ,
w,.p.a
shall not apply to the sale of any security where the issue of which

73d CONGRESS.

SESS. I.

CH. 38. MAY 27, 1933.

it is a part is sold only to persons resident within a single State
or Territory, where the issuer of such securities is a person resident
and doing business within, or, if a corporation, incorporated by and
doing business within, such State or Territory.
REGISTRATION OF ,SECURITIES
Registration

ofsecur-

ities and signing of registation stateent.

AND SIGNING OF REGISTRATION

STATEMENT

SE. 6. (a) Any security may be registered with the Commission
under the terms and conditions hereinafter provided, by filing a regis-

tration statement in triplicate, at least one of which shall be signed by
each issuer, its principal executive officer or officers, its principal

financial officer, its comptroller or principal accounting officer, and
the majority of its board of directors or persons performing similar

functions (or, if there is no board of directors or persons performing
similar functions, by the majority of the persons or board having the

Territn power of management of the issuer), and in case the issuer is a

riagO
ers

foreign or Territorial person by its duly authorized representative in
the United States; except that when such registration statement

Security of foreign relates to a security issued by a foreign government, or political subsignatures.

division thereof, it need be signed only by the underwriter of such

security. Signatures of all such persons when written on the said
registration statements shall be presumed to have been so written 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

Unauthorized sign- the party denying the same. The affixing of any signature without

the authority of the purported signer shall constitute a violation of
this title. A registration statement shall be deemed effective only as
iling ee
to the securities specified therein as proposed to be offered.
ling
(b) At the time of filing a registration statement the applicant
shall pay to the Commission a fee of one one-hundredth of 1 per
centum of the maximum aggregate price at which such securities are
proposed to be offered, but in no case shall such fee be less than $25.
Registretion stats
(C) The filing with the Commission of a registration statement, or
etc.
of an amendment to a registration statement, shall be deemed to have
taken place upon the receipt thereof, but the filing of a registration
statement shall not be deemed to have taken place unless it is accompanied by a United States postal money order or a certified bank
check or cash for the amount of the fee required under subsection (b).
ing.

ratoiln bfityatoleis-

(d) The information contained in or filed with any registration
statement shall be made available to the public under such regulations

as the Commission may prescribe, and copies thereof, photostatic or
otherwise, shall be furnished to every applicant at such reasonable
dysto rtive

charge as the Commission may prescribe.
(e) No registration statenient may be filed within the first forty

days following the enactment of this Act.
INFORMIATION REQUIRED IN

quirScheduleo
t .8.

REGISTIATION

STATEMENT

SEC. 7. The registration statement, when relating to a security

other than a security issued by a foreign government, or political

subdivision thereof, shall contain the information, and be accomoreign governmet panied by the documents, specified in Schedule A, and when relating

Pes,.

to a security issued by a foreign government, or political subdivision
thereof, shall contain the infornation, and be accompanied by the

in certain documents, specified in Schedule B; except that the Commission

may by rules or regulations provide that any such information or
document need not be included in respect of any class of issuers
or securities if it finds that the requirement of such information or
document is inapplicable to such class and that disclosure fully
adequate for the protection of investors is otherwise required to be

73d CONGRESS.

SESS. I.

CH. 38.

included within the registration statement.

MAY 27, 1933.
If

any accountant.

79
Professional stateInents.

engineer, or appraiser, or any person whose profession gives
authority to a statement made by him, is named as having prepared
or certified any part of the registration statement, or is named as
having prepared or certified a report or valuation for use in
connection with the registration statement, the written consent of
such person shall be filed with the registration statement. If any such Written consent
person is named as having prepared or certified a report or valuation sereqre
(other than a public official document or statement) which is used
in connection with the registration statement, but is not named as
having prepared or certified such report or valuation for use il
connection with the registration statement, the written consent of
such person shall be filed with the registration statement unless the
Commission dispenses with such filing as impracticable or as involving undue hardship on the person filing the registration statement.
Any such registration statement shall contain such other infor-

Additional informa
tion, etc.

mation, and be accompanied by such other documents, as the
Commission may by rules or regulations require as being necessary
or appropriate in the public interest or for the protection of investors.
TAKING EFFECT OF REGISTRATION STATEMENTS AND AMENDMENTS
THERETO

SEC. 8. (a) The effective date of a registration statement shall be
the twentieth day after the filing thereof, except as hereinafter
provided, and except that in case of securities of any foreign public
authority, which has continued the full service of its obligations in
the United States, the proceeds of which are to be devoted to the
refunding of obligations payable in the United States, the registration statement shall become effective seven days after the filing
thereof. If any amendment to any such statement is filed prior
to the effective date of such statement, the registration statement
shall be deemed to have been filed when such amendment was filed;
except that an amendment filed with the consent of the Commission,
prior to the effective date of the registration statement, or filed
pursuant to an order of the Commission, shall be treated as a part
of the registration statement.
(b) If it appears to the Commission that a registration statement
is on its face incomplete or inaccurate in any material respect, the

Registration statements and amendments thereto.
Effective date.

Foreign securities.

Incomplete or inaec

euratesttemet

Commission may, after notice by personal service or the sending of Opdportunity to
confirmed telegraphic notice not later than ten days after the filingmen
of the registration statement, and opportunity for hearing (at a
time fixed by the Commission) within ten days after such notice by
personal service or the sending of such telegraphic notice, issue an
order prior to the effective date of registration refusing to permit
such statement to become effective until it has been amended in
accordance with such order. When such statement has been

Eftie
Ef

dea

t e of

amended in accordance with such order the Commission shall so
declare and the registration shall become effective at the time
provided in subsection (a) or upon the date of such declaration,
whichever date is the later.
(c) An amendment filed after the effective date of the registration
statement, if such amendment, upon its face, appears to the Commission not to be incomplete or inaccurate in any material respect,
shall become effective on such date as the Commission may deter-

mine, having due regard to the public interest and the protection
of investors.
(d) If it appears to the Commission at any time that the registra-

tion statement includes any untrue statement of a material fact or

Amendment f I e d
after effetive date.

Determination of
date

ifnot deetive.
order

pro

73d CONGRESS.

Notice.

SESS. I. CH. 38.

MAY 27, 1933.

omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, the Commission may, after notice by personal service or the sending of
confirmed telegraphic notice, and after opportunity for hearing (at
a time fixed by the Commission) within fifteen days after such
notice by personal service or the sending of such telegraphic notice,

issue a stop order suspending the effectiveness of the registration
statement. When such statement has been amended in accordance
with such stop order the Commission shall so declare and thereupon
the stop order shall cease to be effective.
Invetigations authorLed.
Powers of Commis-

sion.

(e) The Commission is hereby empowered to make an examination in any case in order to determine whether a stop order should

issue under subsection (d). In making such examination the Commission or any officer or officers designated by it shall have access
to and may demand the production of any books and papers of, and
may administer oaths and affirmations to and examine, the issuer,
underwriter, or any other person, in respect of any matter relevant
to the examination, and may, in its discretion, require the production
of a balance sheet exhibiting the assets and liabilities of the issuer,
or its income statement, or both, to be certified to by a public or

Grotopsforissuanc certified accountant approved by the Commission.

Serice of notice.

If the issuer

or underwriter shall fail to cooperate, or shall obstruct or refuse
to permit the making of an examination, such conduct shall be
proper ground for the issuance of a stop order.
(f) Any notice required under this section shall be sent to or
served on the issuer, or, in case of a foreign government or political
subdivision thereof, to or on the underwriter, or, in the case of a
foreign or Territorial person, to or on its duly authorized representative in the United States named in the registration statement, properly directed in each case of telegraphic notice to the address given
in such statement.

Court review of Commission's orders.

COURT REVIEW OF ORDERS

appropriate circuit
court of appeals, etc.

Sec. 9. (a) Any person aggrieved by an order of the Commission
may obtain a review of such order in the Circuit Court of Appeals

(Copsytereofnto Co
Proceedings and evdernc.
d

of the United States, within any circuit wherein such person resides
or has his principal place of business, or in the Court of Appeals of
the District of Columbia, by filing in such court, within sixty days
after the entry of such order, a written petition praying that the
order of the Conunission be modified or be set aside in whole or in
part. 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. No objection to the order of the Commission shall
be considered by the court unless such objection shall have been urged
before the Commission. The finding of the Commission as to the
facts, if supported by evidence, 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 Commission may modify its findings as to the facts, by reason
of the additional evidence so taken, and it shall file such modified
or new findings, which, if supported by evidence, shall be conclu-

73d CONGRESS.

SESS. I.

CH. 38.

MAY 27, 1933.

sive, and its recommendation, if any, for the modification or setting
aside of the original order.

The jurisdiction of the court shall be

Jurisdiction ofcourt.

exclusive and its judgment and decree, affirming, modifying, or setting aside, in whole or in part, any order of the Commission, shall
be final, subject to review by the Supreme Court of the United premiCourt.

States upon certiorari or certification as provided in sections 239 and
240 of the Judicial Code, as amended (U.S.C., title 28, secs. 346 . s.c..
and 347).

Su-

(b) The commencement of proceedings under subsection (a) shall notsta"d.on

order

not, unless specifically ordered by the court, operate as a stay of the
Commission's order.
INFORMIATION

REQUIRED

PROSPECTUS

SEC. 10. (a) A prospectus(1) when relating to a security other than a security issued
by a foreign government or political subdivision thereof, shall
contain the same statements made in the registration statement,
but it need not include the documents referred to in paragraphs
(28) to (32), inclusive, of Schedule A;
(2) when relating to a security issued by a foreign government or political subdivision thereof shall contain the same
statements made in the registration statement, but it need not
include the documents referred to in paragraphs (13) and (14)
of Schedule B.
(b) Notwithstanding the provisions of subsection (a)(1) when a prospectus is used more than thirteen months after
the effective date of the registration statement, the information
in the statements contained therein shall be as of a date not
more than twelve months prior to such use.
(2) there may be omitted from any prospectus any of the
statements required under such subsection (a) which the Commission may by rules or regulations designate as not being necessary or appropriate in the public interest or for the protection
of investors.
(3) any prospectus shall contain such other information as the
Commission may by rules or regulations require as being necessary or appropriate in the public interest or for the protection
of investors.
(4) in the exercise of its powers under paragraphs (2) and
(3) of this subsection, the Commission shall have authority to
classify prospectuses according to the nature and circumstances
of their use, and, by rules and regulations and subject to such
terms and conditions as it shall specify therein, to prescribe as
to each class the form and contents which it may find appropriate to such use and consistent with the public interest and the
protection of investors.
(c) The statements or information required to be included in a
prospectus by or under authority of subsection (a) or (b), when
written, shall be placed in a conspicuous part of the prospectus in
type as large as that used generally in the body of the prospectus.
(d) In any case where a prospectus consists of a radio broadcast,
copies thereof shall be filed with the Commission under such rules
and regulations as it shall prescribe. The Commission may by
rules and regulations require the filing with it of forms of prospectuses used in connection with the sale of securities registered under
this title.
8637T-843--_

Information required
in prospectus.
Domestic securities.

Post, p. 91.
Foreign government,
etc., securities.
Post, p. 92.

Statement in prospectus used more than
13 months.
Post, p. 906.
Statements that may
be omitted.

Additional informantion required.

Classification of
prospectuses.

Regulations governing form, etc., of classes

Printing requirement.

Radio broadcasts.
Copies to be flied.

73d CONGRESS.

SESS. I. CH. 38.

MAY 27, 1933

CIVIL LIABILITIES ON ACCOUNT OF FALSE REGISTRATION STATEMENT

Ci;il liabilities for
false registration statement.

Post

p 907.

SEC. 11. (a) In case any part of the registration statement, when
such part became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated

therein or necessary to make the statements therein not misleading,
any person acquiring such security (unless it is proved that at the
time of such acquisition he knew of such untruth or omission) may,
either at law or in equity, in any court of competent jurisdiction,
sue-

every person who signed the registration statement;
(2) every person who was a director of (or person performing similar functions) or partner in, the issuer at the time of the
filing of the part of the registration statement with respect to
which his liability is asserted;
(3) every person who, with his consent, is named in the
registration statement as being or about to become a director,
person performing similar functions, or partner;

Responsibility ofsig-

(1)

Director, partner, etc.

Prospective director,
partner. etc.

A'countants,

etc.,

(4) every accountant, engineer, or appraiser, or any person
whose profession gives authority to a statement made by him,

statements.

snderwriter to s ch

Exetmtion, if

bur-

den ofproofsustained.
oresignation,
tc.,before
effective date
of
statement.

who has with his consent been named as having prepared or
certified any part of the registration statement, or as having
prepared or certified any report or valuation which is used in
connection with the registration statement, with respect to the
statement in such registration statement, report, or valuation,
which purports to have been prepared or certified by him;
(5) every underwriter with respect to such security.
(b) Notwithstanding the provisions of subsection (a) no person,
other than the issuer, shall be liable as provided therein who shall

sustain the burden of proof(1) that before the effective date of the part of the registra-

Notiitontcn,taccordingly.

fVistdtcommission

ttiblal notieo, adii^

tlief in probitpy of
stetements, sot expert,
etc.

o m

tte.

strement

fat

made

tion statement with respect to which his liability is asserted (A)

he had resigned from or had taken such steps as are permitted by
law to resign from, or ceased or refused to act in, every office,
capacity, or relationship in which he was described in the registration statement as acting or agreeing to act, and (B) he had
advised the Commission and the issuer in writing that he had
taken such action and that he would not be responsible for such
part of the registration statement; or
(9) that if such part of the registration statement became
effective without his knowledge, upon becoming aware of such
Paet he forthwith acted and advised the Commission, in accordaneewith paragraph (1), andl, in addition, gave reasonable
public notice that such part of the registration statement had
become effective without his knowledge; or
(3) that (A) as regards any part of the registration statement not purporting to be made on the authority of an expert,
and not purporting to be a copy of or extract from a report
or valuation of an expert, and not purporting to be made on
the authority of a public official document or statement, he had,
after reasonable investigation, reasonable ground to believe and
did believe, at the time such part of the registration statement
became effective, that the statements therein were true and that
there was no omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and (B) as regards any part of the registration statement purporting to be made upon his authority as an expert

or purporting to be a copy of or extract from a report or
valuation of himself as an expert, (i) he had, after reasonable

73d CONGRESS.

SESS. I.

CH. 38.

MAY 27, 1933.

investigation, reasonable ground to believe and did believe, at
the time such part of the registration statement became effective,
that the statements therein were true and that there was no
omission to state a material fact required to be stated therein or

necessary to make the statements therein not misleading, or
(ii) such part of the registration statement did not fairly

No omitted nor mleading statements.

represent his statement as an expert or was not a fair copy

egistration
stateent at variance, etc

of or extract from his report or valuation as an expert; and
(C) as regards any part of the registration statement purport-

Statement of expert

ing to be made on the authority of an expert (other than him- (othoerthan
him").

self) or purporting to be a copy of or extract from a report or
valuation of an expert (other than himself), he had reasonable
ground to believe and did believe, at the time such part of
the registration statement became effective, that the statements
therein were true and that there was no omission to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading, and that such part of
the registration statement fairly represented the statement of
the expert or was a fair copy of or extract from the report
or valuation of the expert; and (D) as regards any part of Public officials
the registration statement purporting to be a statement made doetUt9 07 .

by an official person or purporting to be a copy of or extract
from a public official document, he had reasonable ground to
believe and did believe, at the time such part of the registration
statement became effective, that the statements therein were
true, and that there was no omission to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and that such part of the registration
statement fairly represented the statement made by the official
person or was a fair copy of or extract from the public official
document.

Renonahle

section (b) of this section, what constitutes reasonable investiga- "'il,
tion and reasonable ground for belief, the standard of reasonableness shall be that required of a person occupying a fiduciary
relationship.

,,,

invatifor

gr,,win

l,,7).

Boi

i,ider-

(d) If any person becomes an underwriter with respect to the writer after lia''lity
security after the part of the registration statement with respect to "tt"ch's.

which his liability is asserted has become effective, then for the purposes of paragraph (3) of subsection (b) of this section such part
of the registration statement shall be considered as having become
effective with respect to such person as of the time when he became
an underwriter.
(e) The suit authorized under subsection (a) may be either (1)

Suits

authorized

heein.

yment

to recover the consideration paid for such security with interest Po .p..
thereon, less the amount of any income received thereon, upon the
tender of such security, or (2) for damages if the person suing no

Damaes.

longer owns the security.
(f) All or any one or more of the persons specified in subsection seLablity. jont and
(a) shall be jointly and severally liable, and every person who beontribution
comes liable to make any payment under this section may recover
contribution as in cases of contract from any person who, if sued
separately, would have been liable to make the same payment, unless
the person who has become liable was, and the other was not, guilty E"ptio.
of fraudulent misrepresentation.
limit tion
(g) In no case shall the amount recoverable under this section Rco
exceed the price at which the security was offered to the public.

73d CONGRESS.

SESS. I. CH. 38. MAY 27, 1933.

Civil liabilities con- CIVIL LIABILITIES ARISING IN CONNECTION WITH PROSPECTUSES
nected with prospecCOMMUNICIATION S
tuses and communications.
Sales through interSEC. 12. Any person whostate commerce and
(1) sells a security in violation of section 5, or
mails.
Ante, p. 77.

Through false prospectuses, etc.
Ante, p. 75.

Recovery
chaser.

by pur-

AND

(2) sells a security (whether or not exempted by the provisions of section 3, other than paragraph (2) of subsection (a)
thereof), by the use of any means or instruments of transportation or communication in interstate commerce or of the mails,
by means of a prospectus or oral communication, which includes
an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements, in the light of
the circumstances under which they were made, not misleading
(the purchaser not knowing of such untruth or omission), and
who shall not sustain the burden of proof that he did not know,
and in the exercise of reasonable care could not have known, of
such untruth or omission,
shall be liable to the person purchasing such security from him, who
may sue either at law or in equity in any court of competent jurisdiction, to recover the consideration paid for such security with
interest thereon, less the amount of any income received thereon,
upon the tender of such security, or for damages if he no longer
owns the security.
IMITATION OF ACTIONS

Limitation of actions.
Post, p. 908.

SEC. 13. No action shall be maintained to enforce any liability
created under section 11 or section 12 (2) unless brought within two
years after the discovery of the untrue statement or the omission, or
after such discovery should have been made by the exercise of reasonable diligence, or, if the action is to enforce a liability created under
section 12 (1), unless brought within two years after the violation
upon which it is based. In no event shall any such action be brought
to enforce a liability created under section 11 or section 12 (1) more
than ten years after the security was bona fide offered to the public.
CONTRARY

Contrary stipulations
void.

STIPULATIONS

VOID

SEG.14 Any condition, stipulation, or provision binding any person acquiring any security to waive compliance with any provision
of this title or of the rules and regulations of the Commission shall
be void.
mABIImTY OF CONTROLLING PERSONS

iity
pesons
Post, p. 90O

tr"

SEC. 15. Every person who, by or through stock ownership, agency,
or otherwise, or who, pursuant to or in connection with an agreement or understanding with one or more other persons by or through
stock ownership, agency, or otherwise, controls any person liable
under section 11 or 12, shall also be liable jointly and severally with
and to the same extent as such controlled person to any person to
whom such controlled person is liable.
ADDITIONAL REMEDIES

Reition to existing
rights, et.

SEC1.
16The rights and remedies provided by this title shall be in
addition to any and all other rights and remedies that may exist at
law or in equity.
FREAU

tertatudlet

RENT INTERSTATE TRANSACTIONS

sin-ai SEC. 17. (a) It shall be unlawful for any person in the sale of any

securities by the use of any means or instruments of transportation

73d CONGRESS.

SESS. I.

CH. 38.

MAY 27, 1933.

or communication in interstate commerce or by the use of the mails,
directly or indirectly(1) to employ any device, scheme, or artifice to defraud, or
(2) to obtain money or property by means of any untrue
statement of a material fact or any omission to state a material
fact necessary in order to make the statements made, in the light
of the circumstances under which they were made, not misleading, or
(3) to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon
the purchaser.

85
Unlawful

practices,

transactions, etc., in

(b) It shall be unlawful for any person, by the use of any means Unlawful advertiseor instruments of transportation or communication in interstate mentof securities.

commerce or by the use of the mails, to publish, give publicity to,
or circulate any notice, circular, advertisement, newspaper, article,
letter, investment service, or communication which, though not
purporting to offer a security for sale, describes such security for a
consideration received or to be received, directly or indirectly, from
an issuer, underwriter, or dealer, without fully disclosing the receipt,
whether past or prospective, of such consideration and the amount

Receipt

of consider-

bedisclosedmnt

thereof.

SEC. 18. Nothing in this title shall affect the jurisdiction of the

Exempted securities
State control of securities.
Jurisdiction of corn.

ml
securities commission (or any agency or office performing like. ssio
functions) of any State or Territory of the United States, or the
District of Columbia, over any security or any person.
SPECIAL POWERS OF COMMISSION

SEC. 19. (a) The Commission shall have authority flrom time to
time to make, amend, and rescind such rules and regulations as may
be necessary to carry out the provisions of this title, including rules
and regulations governing registration statements and prospectuses

. 7

Ante,

Special powers
Commission.
prescribe
;
to . ,

regull-

Itegis.tration sntaer<l
for various classes of securities and issuers, and defining accounting nt, "" ",p esie.

and trade terms used in this title. Among other things, the Comntmis- t
sion shall have authority, for the purposes of this title, to prescribe

lrrpcribe frms.

statement, and the methods to be followed in the preparation of

Preparation

under authority of such section 20. The rules and regulations of the

Ruleo effective

the form or forms in which required information shall be set forth,
the items or details to be shown in the balance sheet and earning

of ac

et
accounts, in the appraisal or valuation of assets and liabilities, in the otsppsg
differentiation
the
in
depletion,
and
depreciation
of
determination
of recurring and nonrecurring income, in the differentiation of investment and operating income, and in the preparation, where the Commission deems it necessary or desirable, of consolidated balance sheets
or income accounts of any person directly or indirectly controlling
or controlled by the issuer, or any person under direct or indirect
common control with the issuer; but insofar as they relate to any Common carrier.
common carrier subject to the provisions of section 20 of the Inter- Rulesaffecting.
state Commerce Act, as amended, the rules and regulations of the vol. 24,p.386; U.S.C.,
8.
Commission with respect to accounts shall not be inconsistent with P 66
Commission
Commerce
Interstate
the
by
imposed
the requirements

Commission shall be effective upon publication in the manner which
the Commission shall prescribe.
(b) For the purpose of all investigations which, in the opinion of r, t ,pdco
the Commission, are necessary and proper for the enforcement of obookatc.

this title, any member of the Commission or any officer or oficers

73d CONGRESS.

SESS. I.

CH. 38. MAY 27, 1933.

designated by it are empowered to administer oaths and affirmations,
subpena witnesses, take evidence, and require the production of any
books, papers, or other documents which the Commission deems relevant or material to the inquiry. Such attendance of witnesses and
the production of such documentary evidence may be required from
any place in the United States or any Territory at any designated
place of hearing.
njunetions and prosecation of offenses.
Investigations
thorized.

au-

Injunctions.

EvidencetoAttorney

INJUNCTIONS

AND PROSECUTIoN

r OF
OFESSES

SEC. 20. (a) Whenever it shall appear to the Commission, either
upon complaint or otherwise, that the provisions of this title, or of

any rule or regulation prescribed under authority thereof, have been
or are about to be violated, it may, in its discretion, either require or
permit such person to file with it a statement in writing, under oath,
or otherwise, as to all the facts and circumstances concerning the
subject matter which it believes to be in the public interest to
investigate, and may investigate such facts.
(b) Whenever it shall appear to the Commission that any person
is engaged or about to engage in any acts or practices which constitute or will constitute a violation of the provisions of this title, or of
any rule or regulation prescribed under authority thereof, it may in
its discretion, bring an action in any district court of the United
States, United States court of any Territory, or the Supreme Court
of the District of Columbia to enjoin such acts or practices, and
upon a proper showing a permanent or temporary injunction or
restraining order shall be granted without bond. The Commission
may transmit such evidence as may be available concerning such

acts or practices to the Attorney General who may, in his discretion,
institute the necessary criminal proceedings under this title. Any
such criminal proceeding may be brought either in the district
wherein the transmittal of the prospectus or security complained of
begins, or in the district wherein such prospectus or security is

Venue.

received.
trition ofrdis(c ) Upon application of the Commission the district courts of the
writs ofmandamus. United States, the United States courts of any Territory, and the

Supreme Court of the District of Columbia, shall also have jurisdiction to issue writs of mandamus commanding any person to comply with the provisions of this title or any order of the Commission
made in pursuance thereof.
HIEARING3S BY COMlMISSION

earings by

omn-

Sec. 21. All hearings shall be public and may be held before the
C ommission or an officer or officers of the Commission designated by

it, and appropriate records thereof shall be kept.
JURISDICTION OF OFFEN'SES AND SUITS

ufesiation

of 4-

Serviceoprocess.

SEc. 22. (a) The district courts of the United States, the United

States courts of any Territory, and the Supreme Court of the District
of Columbia shall have jurisdiction of offenses and violations under
this title and under the rules and regulations promulgated by the
Commission in respect thereto, and, concurrent with State and Territorial courts, of all suits in equity and actions at law brought to
enforce any liability or duty created by this title. Any such suit or
action may be brought in the district wherein the defendant is found
or is an inhabitant or transacts business, or in the district where the
sale took place, if the defendant participated therein, and process in
such cases may be served in any other district of which the defendant

73d CONGRESS.

SESS. I. CH. 38.

MAY 27, 1933.

is an inhabitant or wherever the defendant may be found. Judgments and decrees so rendered shall be subject to review as provided

87
to
ol. 36, pp. 1133,1157.

Judgment subject

in sections 128 and 240 of the Judicial Code, as amended (U.S.C.,
title 28, secs. 225 and 347). No case arising under this title and
brought in any State court of competent jurisdiction shall be re-

u.s.c., pp. 895, 906

moved to any court of the United States. No costs shall be assessed
for or against the Commission in any proceeding under this title

No courtassessments

brought by or against it in the Supreme Court or such other courts.
(b) In case of contumacy or refusal to obey a subpena issued to

.Pushment

for dis

any person, any of the said United States courts, within the jurisdiction of which said person guilty of contumacy or refusal to obey
is found or resides, upon application by the Commission may issue to
such person an order requiring such person to appear before the Commission, or one of its examiners designated by it, there to produce
documentary evidence if so ordered, or there to give evidence touching the matter in question; and any failure to obey such order of
the court may be punished by said court as a contempt thereof.
(c) No person shall be excused from attending and testifying or No person excused
from producing books, papers, contracts, agreements, and other fromtestifyingetc.
documents before the Commission, or in obedience to the subpena
of the Commission or any member thereof or any officer designated
by it, or in any cause or proceeding instituted by the Commission,
on the ground that the testimony or evidence, documentary or otherwise, required of him, may tend to incriminate him or subject him Personal immunity.
to a penalty or forfeiture; but no individual shall be prosecuted or
subjected to any penalty or forfeiture for or on account of any transaction, matter, or thing concerning which he is compelled, after
having claimed his privilege against self-incrimination, to testify
or produce evidence, documentary or otherwise, except that such

Perjury.

individual so testifying shall not be exempt from prosecution and
punishment for perjury committed in so testifying.
UNLAWFUL

REPRESENTATIONS

SEC. 23. Neither the fact that the registration statement for a

iTfnlaawul representa-

security has been filed or is in effect nor the fact that a stop order is
not in effect with respect thereto shall be deemed a finding by the
Commission that the registration statement is true and accurate
on its face or that it does not contain an untrue statement of fact
or omit to state a material fact, or be held to mean that the Commission has in any way passed upon the merits of, or given approval
to, such security. It shall be unlawful to make, or cause to be made,
to any prospective purchaser any representation contrary to the
foregoing provisions of this section.
PENALTIES

SEC. 24. Any person who willfully violates any of the provisions
of this title, or the rules and regulations promulgated by the Commission under authority thereof, or any person who willfully, in a
registration statement filed under this title, makes any untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein
not misleading, shall upon conviction be fined not more than $5,000
or imprisoned not more than five years, or both.

Penalties.

JURISDICION OF OTHER GOVERNENT AGENCIES OVER SECURITIES

ot a
SE. 25. Nothing in this title shall relieve any person from sub- Jmod
mitting to the respective supervisory units of the Government of Iotiisrd-

73d CONGRESS.

SESS. I.

CH. 38. MAY 27, 1933.

the United States information, reports, or other documents that
are now or may hereafter be required by any provision of law.
SEPARABILITY OF PBOVISIONS
Separability of

pro-

visin.

Schedule A.
Information to
included.
Name of issuer.

SEC. 26. If any provision of this Act, or the application of such
provision to any person or circumstance, shall be held invalid, the
remainder of this Act, or the application of such provision to persons
or circumstances other than those as to which it is held invalid, shall
not be affected thereby.
SCHEDULE A

(1) The name under which the issuer is doing or intends to do
business;
business;
State, etc.
(2) the name of the State or other sovereign power under which
the issuer is organized;
Location of issuer's
(3) the location of the issuer's principal business office, and if the
business office.
.
, i ,
nitedstates agen-. .issuer .is a foreign
or territorial
person, the name and address
cy, if foreign issuer.
of its agent in the United States authorized to receive notice;
Names and addresses
partners, etc.

ofcorporationdirectors, .

Underwriters.
stockholders.

Schedule of seenri-

Character

of busi.

.
Capitalization, etc.

Outstandingoptions.

Capitalstoc-.
d debt et.

tteent
f suti
tution pmitd.

(4) the names and addresses of the directors or persons perform-

..
.
ing similar
functions,
and the chief executive, financial and accounting officers, chosen or to be chosen if the issuer be a corporation,
association, trust, or other entity; of all partners, if the issuer be a
partnership; and of the issuer, if the issuer be an individual; and of
the promoters in the case of a business to be formed, or formed
within two years prior to the filing of the registration statement;

(5) the names and addresses of the underwriters;
6) the names and addresses of all persons, if any, owning of

record or beneficially, if known, more than 10 per centum of any
class of stock of the issuer, or more than 10 per centum in the aggregate of the outstanding stock of the issuer as of a date within twenty
days prior to the filing of the registration statement;
(7) the amount of securities of the issuer held by any person
specified in paragraphs (4), (5), and (6) of this schedule, as of a
date within twenty days prior to the filing of the registration statement, and, if possible, as of one year prior thereto, and the amount
of the securities, for which the registration statement is filed, to
which such persons have indicated their intention to subscribe;
(8) the general character of the business actually transacted or
to be transacted by the issuer;
(9) a statement of the capitalization of the issuer, including the

authorized and outstanding amounts of its capital stock and the
proportion thereof paid up, the number and classes of shares in
which such capital stock is divided, par value thereof, or if it has
no par value, the stated or assigned value thereof, a description of
the respective voting rights, preferences, conversion and exchange
rights, rights to dividends, profits, or capital of each class, with
respect to each other class, including the retirement and liquidation
rights or values thereof;
(10) a statement of the securities, if any, covered by options outstanding or to be created in connection with the security to be offered,
together with the names and addresses of all persons, if any, to be
allotted more than 10 per centum in the aggregate of such options;
(11) the amount of capital stock of each class issued or included
in the shares of stock to be offered;

(12) the amount of the funded debt outstanding and to be created
by the security to be offered, with a brief description of the date,
maturity, and character of such debt, rate of interest, character of
amortization provisions, and the security, if any, therefor. If substitution of any security is permissible, a summarized statement of

73d CONGRESS.

SESS. I.

CH. 38.

MAY 27, 1933.

the conditions under which such substitution is permitted. If substitution is permissible without notice, a specific statement to that
effect;
(13) the specific purposes in detail and the approximate amounts

amounts

Detailed

to be devoted to such purposes, so far as determinable, for which

the security to be offered is to supply funds, and if the funds are
to be raised in part from other sources, the amounts thereof and the
sources thereof, shall be stated;
(14) the remuneration, paid or estimated to be paid, by the issuer
or its predecessor, directly or indirectly, during the past year and

Remuneration paid
directors, officers, etc.

ensuing year to (a) the directors or persons performing similar functions, and (b) its officers and other persons, naming them wherever
such remuneration exceeded $25,000 during any such year;

Estimated net

(15) the estimated net proceeds to be derived from the security ceeds.
to be offered;

(16) the price at which it is proposed that the security shall be toPruicescu

ic".

offered to the public or the method by which such price is computed
and any variation therefrom at which any portion of such security
is proposed to be offered to any persons or classes of persons, other
than the underwriters, naming them or specifying the class.

Variation to be re-

variation in price may be proposed prior to the date of the public
offering of the security, but the Commission shall immediately be
notified of such variation;
(17) all commissions or discounts paid or to be paid, directly co isionss,
or indirectly, by the issuer to the underwriters in respect of the sale
of the security to be offered. Commissions shall include all cash,
securities, contracts, or anything else of value, paid, to be set aside,
disposed of, or understandings with or for the benefit of any other
persons in which any underwriter is interested, made, in connection with the sale of such security. A commission paid or to be
paid in connection with the sale of such security by a person in which
the issuer has an interest or which is controlled or directed by, or
under common control with, the issuer shall be deemed to have been
paid by the issuer. Where any such commission is paid the amount
of such commission paid to each underwriter shall be stated;
(18) the amount or estimated amounts, itemized in reasonable Oheexpese
detail, of expenses, other than commissions specified in paragraph
(17) of this schedule, incurred or borne by or for the account of
the issuer in connection with the sale of the security to be offered
or properly chargeable thereto, including legal, engineering, certification, authentication, and other charges;
(19) the net proceeds derived from any security sold by the issuer

during the two years preceding the filing of the registration statement, the price at which such security was offered to the public,
and the names of the principal underwriters of such security;
(20) any amount paid within two years preceding the filing of
the registration statement or intended to be paid to any promoter
and the consideration for any such payment;

proceeds

from

pro-

mPtrment

,
ad(21) the names and addresses of the vendors and the purchase dreVses
price
purchase
dresses, purch

price of any property, or good will, acquired or to be acquired, not of property, etc.
in the ordinary course of business, which is to be defrayed in whole
or in part from the proceeds of the security to be offered, the amount
of any commission payable to any person in connection with such
ostofnanng.
acquisition, and the name or names of such person or persons, together with any expense incurred or to be incurred in connection
with such acquisition, including the cost of borrowing money to
finance such acquisition;

73d CONGRESS.
T
Isteret of every
stockholder holding
more than 10 per cent

of anyclass.

SESS. I. CH. 38. MAY 27, 1933.

(22)
full particulars of the nature and extent of the interest, if
''
any, of every director, principal executive officer, and of every stock-

holder holding more than 10 per centum of any class of stock or

more than 10 per centum in the aggregate of the stock of the issuer,
in any property acquired, not in the ordinary course of business
of the issuer, within two years preceding the filing of the registration statement or proposed to be acquired at such date;
Names, etc., of coun(23) the names and addresses of counsel who have passed on the
se

legality of the issue;

Material

contracts,

not made In ordinary
business.

tracfn

(24) dates of and parties to, and the general effect concisely

stated of every material contract made, not in the ordinary course
of business, which contract is to be executed in whole or in part at
or after the filing of the registration statement or which contract
has been made not more than two years before such filing. Any

aecialtbonses management contract or contract providing for special bonuses or

r pfit
sharings eta profit-sharing
deemed material con- ,
..

arrangements,
and every; material patent . or contract
.
for a material patenti right,
and every contract by or with
a public
utility company or an affiliate thereof, providing for the giving or
receiving of technical or financial advice or service (if such contract

tract.

may involve a charge to any party thereto at a rate in excess of
$2,500 per year in cash or securities or anything else of value), shall
be deemed a material contract;

(25) a balance sheet as of a date not more than ninety days prior
to the date of the filing of the registration statement showing all of
the assets of the issuer, the nature and cost thereof, whenever deter-

sBaance sheets.

minable, in such detail and in such form as the Commission shall

prescribe (with intangible items segregated), including any loan in
excess of $20,000 to any officer, director, stockholder or person
directly or indirectly controlling or controlled by the issuer, or
person under direct or indirect common control with the issuer. All
the liabilities of the issuer in such detail and such form as the Cornm
mission shall prescribe, including surplus of the issuer showing how
and from what sources such surplus was created, all as of a date not
aconat

Proflt and

more than ninety days prior to the filing of the registration stateIf such statement be not certified by an independent public

of public ment.

loss

or certified accountant, in addition to the balance sheet required to
be submitted under this schedule, a similar detailed balance sheet
of the assets and liabilities of the issuer, certified by an independent
public or certified accountant, of a date not more than one year prior
to the filing of the registration statement, shall be submitted;

state-

(20) a profit and loss statement of the issuer showing earnings

and income, the nature and source thereof, and the expenses and
fixed charges in such detail and such form as the Commission shall
prescribe for the latest fiscal year for which such statement is available and for the two preceding fiscal years, year by year, or, if such
issuer has been in actual business for less than three years, then for
such time as the issuer has been in actual business, year by year. If
the date of the filing of the registration statement is more than six
months after the close of the last fiscal year, a statement from such
closing date to the latest practicable date. Such statement shall show
what the practice of the issuer has been during the three years or
lesser period as to the character of the charges, dividends or other
distributions made against its various surplus accounts, and as to
depreciation, depletion, and maintenance charges, in such detail and
form as the Commission shall prescribe, and if stock dividends or
avails from the sale of rights have been credited to income, they
shall be shown separately with a statement of the basis upon which
the credit is computed. Such statement shall also differentiate

73d CONGRESS.

SESS. I.

CH. 38.

MAY 27, 1933.

between any recurring and nonrecurring income and between any
investment and operating income.

Such statement shall be certified

by an independent public or certified accountant;
(27) if the proceeds, or any part of the proceeds, of the security

certificate of

coun

public

If proceeds are

to be

to be issued is to be applied directly or indirectly to the purchase aplie topcshaste of
of such business
of any business, a profit and loss statement of such business certified ment
to issue.

by an independent public or certified accountant, meeting the requirements of paragraph (26) of this schedule, for the three preceding fiscal years, together with a balance sheet, similarly certified,
of such business, meeting the requirements of paragraph (25) of
this schedule of a date not more than ninety days prior to the filing
of the registration statement or at the date such business was
acquired by the issuer if the business was acquired by the issuer
more than ninety days prior to the filing of the registration
statement;
(28)

a copy of any agreement or agreements (or, if identic agree-

Agreementswith any

ments are used, the forms thereof) made with any underwriter, including all contracts and agreements referred to in paragraph (17)
of this schedule;
(29) a copy of the opinion or opinions of counsel in respect to the

ofiio

tCousealit

legality of the issue, with a translation of such opinion, when necessary, into the English language;
(30) a copy of all material contracts referred to in paragraph cop

ots;fmstrrial

(24) of this schedule, but no disclosure shall be required of any
portion of any such contract if the Commission determines that
disclosure of such portion would impair the value of the contract
and would not be necessary for the protection of the investors;

pof
(31) unless previously filed and registered under the provisions icopy

of this title, and brought up to date, (a) a copy of its articles of
incorporation, with all amendments thereof and of its existing bylaws or instruments corresponding thereto, whatever the name, if
the issuer be a corporation; (b) copy of all instruments by which
the trust is created or declared, if the issuer is a trust; (c) a copy
of its articles of partnership or association and all other papers
pertaining to its organization, if the issuer is a partnership, unincorporated association, joint-stock company, or any other form of
organization; and
(32)

a copy of the underlying agreements or indentures affecting

any stock, bonds, or debentures offered or to be offered.
In case of certificates of deposit, voting trust certificates, collateral

article

'oply of undrlying
affecting
indentures
stock, etc.
ules and regults-

trust certificates, certificates of interest or shares in unincorporated
investment trusts, equipment trust certificates, interim or other receipts for certificates, and like securities, the Commission shall
establish rules and regulations requiring the submission of information of a like character applicable to such cases, together with such
other information as it may deem appropriate and necessary regarding the character, financial or otherwise, of the actual issuer of
the securities and/or the person performing the acts and assuming
the duties of depositor or manager.
SCIHEDULE B

(1) Name of borrowing government or subdivision thereof;
(2) specific purposes in detail and the approximate amounts to
be devoted to such purposes, so far as determinable, for which the

Schedule B.
ame of borrowing
ec.°
egonent.,
Purposes and
offered s to
eity

security to be offered is to supply funds, and if the funds are to be supply hLd
raised in part from other sources, the amounts thereof and the
sources thereof, shall be stated;

73d CONGRESS.
Funded and floating
e

.Substitution

condi-

tions.

Whether issuer has
defaulted, etc.
Intergovernmental
debts excluded.
1
pe`ceiptsdtai nd ex-

Narresetc, of underwriters.
United States agent.

ceedsttromd sees r
United States.
Price.

ommissions paid.

Other exnses.

mes, ete., ofoareeJntnd as
wCritry agreement
writerb
to United States sales.
to ounsels
leg,'ality ofoplnion
issua.

CH. 38.

MAY 27, 1933.

(3) the amount of the funded debt and the estimated amount of

the floating debt outstanding and to be created by the security to be
offered, excluding intergovernmental debt, and a brief description
of the date, maturity, character of such debt, rate of interest, character of amortization provisions, and the security, if any, therefor.
If substitution of any security is permissible, a statement of the conditions under which such substitution is permitted. If substitution
is permissible without notice, a specific statement to that effect;
(4) whether or not the issuer or its predecessor has, within a
period of twenty years prior to the filing of the registration statement, defaulted on the principal or interest of any external security,
excluding intergovernmental debt, and, if so, the date, amount, and

circumstances of such default, and the terms of the succeeding
arrangement, if any;

(5) the receipts, classified by source, and the expenditures, classified by purpose, in such detail and form as the Commission shall
prescribe for the latest fiscal year for which such information is
available and the two preceding fiscal years, year by year;
(6) the names and addresses of the underwriters;
(7) the name and address of its authorized agent, if any, in the
United States;
(8) the estimated net proceeds to be derived from the sale in
the United States of the security to be offered;

(9) the price at which it is proposed that the security shall be
offered in the United States to the public or the method by which
such price is computed. A variation in price may be proposed prior
to the date of the public offering of the security, but the Commission
shall immediately be notified of such variation;
(10) all commissions paid or to be paid, directly or indirectly, by
the issuer to the underwriters in respect of the sale of the security
to be offered. Commissions shall include all cash, securities, contracts, or anything else of value, paid, to be set aside, disposed of,
or understandings with or for the benefit of any other persons in
which the underwriter is interested, made, in connection with the
sale of such security. Where any such commission is paid, the
amount of such commission paid to each underwriter shall be stated;
(11) the amount or estimated amounts, itemized in reasonable
detail, of expenses, other than the commissions specified in paragraph (10) of this schedule, incurred or borne by or for the account
of the issuer in connection with the sale of the security to be offered
or properly chargeable thereto, including legal, engineering, certification, and other charges;
(12) the names and addresses of counsel who have passed upon
the legality of the issue;
of any agreement or agreements made with any
(18)
underwriter governing the sale of the security within the United
States; and

.
as

'orporation of Foreign Bondholders, 1933.
"Corporation of For-

eign SecurStyoilders"
created.

SESS. I.

(14) an agreement of the issuer to furnish a copy of the opinion
or opinions of counsel in respect to the legality of the issue, with a
translation, where necessary, into the English language. Such opinion shall set out in full all laws, decrees, ordinances, or other acts
of Government under which the issue of such security has been
authorized.
T E
TITLE

SEIzON 201. For the purpose of protecting, conserving,

and

advancing the interests of the holders of foreign securities in default
there is hereby created a body corporate with the name " Corporation

73d CONGRESS.

SESS. I.

CH. 38.

MAY 27, 1933.

of Foreign Security Holders" (herein called the "Corporation ").

Principaloffice,

agen-

The principal office of the Corporation shall be located in the District
of Columbia, but there may be established agencies or branch offices
in any city or cities of the United States under rules and regulations
prescribed by the board of directors.
SEC. 202. The control and management of the Corporation shall
be vested in a board of six directors, who shall be appointed and

hold office in the following manner: As soon as practicable after the

bContirovested

Federal

directors, designate s
etc.

date this Act takes effect the Federal Trade Commission (herein- chairman
P

after in this title called " Commission ") shall appoint six directors,
and shall designate a chairman and a vice chairman from among
their number. After the directors designated as chairman and vice
chairman cease to be directors, their successors as chairman and vice
chairman shall be elected by the board of directors itself. Of the
directors first appointed, two shall continue in office for a term of two
years, two for a term of four years, and two for a term of six years,
from the date this Act takes effect, the term of each to be designated
by the Commission at the time of appointment. Their successors
shall be appointed by the Commission, each for a term of six years
from the date of the expiration of the term for which his predecessor was appointed, except that any person appointed to fill a
vacancy occurring prior to the expiration of the term for which his
predecessor was appointed shall be appointed only for the unexpired term of such predecessor. No person shall be eligible to serve
as a director who within the five years preceding has had any interest, direct or indirect, in any corporation, company, partnership,
bank or association which has sold, or offered for sale any foreign
securities. The office of a director shall be vacated if the board of
directors shall at a meeting specially convened for that purpose by

resolution passed by a majority of at least two thirds of the board
of directors, remove such member from office, provided that the
member whom it is proposed to remove shall have seven days' notice
sent to him of such meeting and that he may be heard.

SEC. 203. The Corporation shall have power to adopt, alter, and

in
Trade Com-

oet, r

90.

Appointment of sucTenure of office

Vacancies

emoval-

C"rop,,Orte" pwer'.

use a corporate seal; to make contracts; to lease such real estate as
may be necessary for the transaction of its business; to sue and
be sued, to complain and to defend, in any court of competent juris-

.
to relativ
requiree toInform,
diction, State or Federal; to require from trustees, financial agents,
foreJVTn
tionI
r,
etc.
holders,
securities
original
the
or dealers in foreign securities information relative to

or present holders of foreign securities and such other information
as may be required and to issue subpenas therefor; to take over the
functions of any fiscal and paying agents of any foreign securities in

To take overfune
falted foreign securiBorrow and pledge

default; to borrow money for the purposes of this title, and to
pledge as collateral for such loans any securities deposited with for suclloans.
theCorporation pursuant to this title; by and with the consent and
employee.
approval of the Commission to select, employ, and fix the compen- off,
sation of officers, directors, members of committees, employees, attor- etc.
neys, and agents of the Corporation, without regard to the provisions of other laws applicable to the employment and compensation
of officers or employees of the United States; to define their authority
and duties, require bonds of them and fix the penalties thereof,
and to dismiss at pleasure such officers, employees, attorneys, and Prscrb, tc. rus

agents; and to prescribe, amend, and repeal, by its board of direc- forconduct obuess.

tors, bylaws, rules, and regulations governing the manner in which
fs general business may be conducted and the powers granted to it
by law may be exercised and enjoyed, together with provisions for
such committees and the functions thereof as the board of directors

73d CONGRESS.

SESS. I.

CH. 38. MAY 27, 1933.

may deem necessary for facilitating its business under this title.
Determine manner
obligations
incurred
and^e:penseE anloed.
Authority of board
over foreign securities.
C(allmeetings ofholdAction on defaulted
securitiesties

toProsnt
to represent committees
such holders.

meltyo fr
payments.

reramige

Coler tinrogtc.fudres
seeuritiers.

The board of directors of the Corporation shall determine and pre-

scribe the manner in which its obligations shall be incurred and its
expenses allowed and paid.
SEC. 204. The board of directors may(1) Convene meetings of holders of foreign securities.
(2) Invite the deposit and undertake the custody of foreign securiwhich have defaulted in the payment either of principal or
interest, and issue receipts or certificates in the place of securities so
deposited.
(3) Appoint committees from the directors of the Corporation

and/or all other persons to represent holders of any class or classes
of foreign securities which have defaulted in the payment either of
principal or interest and determine and regulate the functions of such
committees. The chairman and vice chairman of the board of directors shall be ex officio chairman and vice chairman of each committee.
(4) Negotiate and carry out, or assist in negotiating and carrying
out, arrangements for the resumption of payments due or in arrears
in respect of any foreign securities in default or for rearranging the
terms on which such securities may in future be held or for converting and exchanging the same for new securities or for any other
object in relation thereto; and under this paragraph any plan or
agreement made with respect to such securities shall be binding upon
depositors, providing that the consent of holders resident in the
United States of 60 per centum of the securities deposited with the
Corporation shall be obtained.
(5) Undertake, superintend, or take part in the collection and
application of funds derived from foreign securities which come into

the possession of or under the control or management of the
Corporation.
Collet, ete., infornia(6) Collect, preserve, publish, circulate, and render available in
seurities.

readily accessible form, when deemed essential or necessary, docu-

ments, statistics, reports, and information of all kinds in respect of
foreign securities, including particularly records of foreign external
securities in default and records of the progress made toward the
payment of past-due obligations.
SfSecring Simple

(7) Take such steps as it may deem expedient with the view of

securing the adoption of clear and simple forms of foreign securities
and just and sound principles in the conditions and terms thereof.
fctdas represe'a'tiv

(8) Generally, act in the name and on behalf of the holders of

foreign securities the care or representation of whose interests may
be entrusted to the Corporation; conserve and protect the rights and
interests of holders of foreign securities issued, sold, or owned in the
United States; adopt measures for the protection, vindication, and
preservation or reervation
o ore
f the rights and interests of holders of
foreign securities either on any default in or on breach or contem-

plated breach of the conditions on which such foreign securities may

To keep and publish

an audited general a0count and balance

bhet.

have been issued, or otherwise; obtain for such holders such legal
and other assistance and advice as the board of directors may deem
expedient; and do all such other things as are incident or conducive
to the attainment of the above objects.
SlEC. 205. The board of directors shall cause accounts to be ke t of
all matters relating to or connected with the transactions and busi-

ness of the Corporation, and cause a general account and balance
sheet of the Corporation to be made out in each year, and cause all

73d CONGRESS.

SESS. I.

CH. 38.

MAY 27, 1933.

accounts to be audited by one or more auditors who shall examine
the same and report thereon to the board of directors.
SEC. 206. The Corporation shall make, print, and make public an
annual report of its operations during each year, send a copy thereof,

Annual

report

together with a copy of the account and balance sheet and auditor's
report, to the Commission and to both Houses of Congress, and provide one copy of such report but not more than one on the application
of any person and on receipt of a sum not exceeding $1: Provided,

Fre distribution.

That the board of directors in its discretion may distribute copies
gratuitously.
SEC. 207. The Corporation may in its discretion levy charges,

Pro ratalevy on hold-

assessed on a pro rata basis, on the holders of foreign securities
deposited with it: Provided, That any charge levied at the time of

depositing securities with the Corporation shall not exceed one fifth
of 1 per centum of the face value of such securities: Provided further, That any additional charges shall bear a close relationship to
the cost of operations and negotiations including those enumerated
in sections 203 and 204 and shall not exceed 1 per centum of the face
value of such securities.

cPrseimitation.
Additional charges.

SEC. 208. The Corporation may receive subscriptions from any
person, foundation with a public purpose, or agency of the United

foundation, etc.

SEC. 209. The Reconstruction Finance Corporation is hereby
authorized to loan out of its funds not to exceed $75,000 for the use of

advance funds for
poration use.

States Government, and such subscriptions may, in the discretion of
the board of directors, be treated as loans repayable when and as the
board of directors shall determine.
the Corporation.

SEC. 210. Notwithstanding the foregoing provisions of this title,

Subscription may

Reconstration t
Cor-

Unlawfulacts.

it shall be unlawful for, and nothing in this title shall be taken or
construed as permitting or authorizing, the Corporation in this title
created, or any committee of said Corporation, or any person or
persons acting for or representing or purporting to represent it-

(a) to claim or assert or pretend to be acting for or to repre- CairiingtoreSpreten
sent the Department of State or the United States Government; Department.
(b) to make any statements or representations of any kind to thit ellet to ftreign
any foreign government or its officials or the officials of any (-)oernnt.le

political subdivision of any foreign government that said Corporation or any committee thereof or any individual or individuals connected therewith were speaking or acting for the

said Department of State or the United States Government; or Interference. etc..
Government p.l(c) to do any act directly or indirectly which would interfere with
cics

with or obstruct or hinder or which might be calculated to i
obstruct, hinder or interfere with the policy or policies of the
said Department of State or the Government of the United
States or any pending or contemplated diplomatic negotiations,
arrangements, business or exchanges between the Government
of the United States or said Department of State and any foreign government or any political subdivision thereof.
tle
SEC. 211. This title shall not take effect until the President finds Ti
that its taking effect is in the public interest and by proclamation
so declares.

SEC. 212. This title may be cited as the " Corporation of Foreign
Bondholders Act, 1933."
Approved, May 27, 1933.

defetiso

declares.

Citatonotitle

Full text of Securities Act of 1933

FRASER