the bill on January 20, 1964. It was referred to the Senate Committee on Banking and Currency on January 22, 1964, and reported to the Senate on January 28, 1964 (S. Rept. 831), by Mr. Long of Missouri. The Senate passed H.R. 9076 on January 29, 1964. The bill was approved by the President on February 11, 1964, becoming Public Law 88-270. DIGEST OF STATUTE Public Law 88-270 directs the Treasury to strike and furnish to the St. Louis Bicentennial Corp. national medals to commemorate the 200th anniversary of the founding of St. Louis. The law provides that not more than 100,000 medals shall be struck. The medals would be of such sizes, materials, and designs, and would be inscribed as the corporation may determine with the approval of the Secretary. The medals are to be made and delivered at such times as may be required by the corporation in quantities of not less than 2,000, but the medals authorized by the bill may not be produced after December 31, 1965. The striking of the medals will result in no cost to the United States, and security satisfactory to the Secretary must be furnished before any work may be commenced on the medals. GALVANO FOR GOLDEN ANNIVERSARY OF NAVAL AIR STATION [H.J. Res. 889] [Public Law 88-318, approved June 12, 1964] Commemorating the golden anniversary of the Naval Air Station, Pensacola, Fla., and authorizing the design and manufacture of a galvano in commemoration of this significant event HISTORY OF LEGISLATION House Joint Resolution 889 was introduced by Congressman Sikes on January 13, 1964. The resolution was reported from the House Banking and Currency Committee on May 13, 1964 (H. Rept. 1397), and passed the House on May 18, 1964. It was referred to the Senate Committee on Banking and Currency on May 19, 1964. The Senate Committee on Banking and Currency was discharged from further consideration of the resolution on June 5, 1964. The Senate passed the resolution on June 5, 1964. House Joint Resolution 889 was approved by the President on June 12, 1964, becoming Public Law 88-318. DIGEST OF STATUTE Public Law 88-318 authorizes the Secretary of the Treasury to design, manufacture, and accept payment from private sources for a galvano of appropriate design commemorating the golden anniversary of the Naval Air Station, Pensacola, Fla. The law further provides that the Government shall be paid for the costs of the galvano and that such charges shall be reimbursed to the appropriation of the Bureau of the Mint by the Fiesta of Five Flags and Naval Aviators Homecoming Celebration of Pensacola, Fla. SAVINGS AND LOAN ASSOCIATIONS [H.R. 9609] To broaden the investment powers of Federal savings and loan associations, and for other purposes HISTORY OF LEGISLATION H.R. 9609 was introduced by Congressman Patman on January 13, 1964. The bill was reported to the House on January 20, 1964 (H. Rept. 1100). On February 17, 1964, H.R. 9609 was passed by the House. The bill was referred to the Senate Banking and Currency Committee on February 18, 1964, and on February 24, 1964, was referred to the Subcommittee on Financial Institutions. The subcommittee conducted hearings on March 4 and 10, 1964. Part of the bill later became sections 907, 908, and 909 of the Housing Act of 1964. (See pp. 19-20 for further legislative history.) DIGEST OF STATUTE Section 907 of the Housing Act amends section 5(c) of the 1933 act to permit a federally chartered savings and loan association to invest in general obligations of States and their political subdivisions. This section also permits investments in participations or other instruments of, or fully guaranteed by, FNMA or any agency of the United States. Section 908 amends section 5 (c) of the 1933 act to permit a federally chartered savings and loan association to invest up to 20 percent of its assets (previously 15 percent) in FHA-insured property and home improvement loans, VA-insured and guaranteed loans, and other loans for property, alteration, repair, or improvement. The maximum amount of any such loan which is not insured or guaranteed by FHA or VA is increased from $3,500 to $5,000. Section 909 adds to title IV of the National Housing Act a new section 409, authorizing the investment of public funds of or under the control of the United States, and (subject to otherwise applicable regulatory authority) funds of corporations organized under Federal law, in insured accounts held by savings and loan associations. 49 SECURITIES [Public Law 88-467, approved August 20, 1964] To amend the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, to extend disclosure requirements to the issuers of additional publicly traded securities, to provide for improved qualification and disciplinary procedures for registered brokers and dealers, and for other purposes HISTORY OF LEGISLATION On June 4, 1963, Senator Robertson, by request of the SEC, introduced S. 1642, a bill to extend disclosure requirements to issuers of additional publicly traded securities and to provide for improved qualifications and disciplinary procedures for registered brokers and dealers, and for other purposes. This bill is in part a result of Public Law 87-196 authorizing the SEC to conduct a study of the rules of national exchanges and national securities associations. Hearings were conducted by the Senate Banking and Currency Committee on June 18, 19, 20, 21, 24, and 25, 1963. The committee considered the bill, and on July 24, 1963, Senator Williams of New Jersey reported the bill to the Senate with an amendment (S. Rept. 379). The Senate passed the bill on July 30, 1963. The bill was referred to the House Interstate and Foreign Commerce Committee on July 31, 1963. That committee conducted hearings on S. 1642 and two companion bills, H.R. 6789 and H.R. 6793, on December 3, 4, and 5, 1963; January 21, 22, 23; and February 4, 5, 18, and 19, 1964. H.R. 6793 was reported from the committee, amended, on May 19, 1964 by Mr. Harris (H. Rept. 1418). S. 1642 was passed in lieu thereof by the House, amended, on August 5, 1964. The Senate concurred in the House amendment on August 6, 1964. The bill was approved by the President on August 20, 1964, becoming Public Law 88-467. DIGEST OF STATUTE Public Law 88-467 has two primary objectives. First, it would improve disclosure protection by extending to the larger companies in the over-the-counter market the registration, reporting, proxy solicitation, and insider trading requirements now applicable to companies listed on an exchange. The second major objective of the law is to strengthen the standards of entrance into the securities business, enlarge the scope of selfregulation, and strengthen Commission disciplinary controls over brokers, dealers, and their employees. This digest of the statute is divided into parts A and B. Part A discusses sections 3, 4, 5, 6(c), 6(d), 8, 9, 10, and 11 of the law, which amends sections 12, 13(a), 14, 15(c), 15(d), 16, 20(c), and 32(b) of the Securities Exchange Act of 1934 and section 4 of the Securities Act of 1933, respectively. Part B deals with sections 2, 6(a), 6(b), and 7 of the law, which amends sections 3(a), 15(a), 15(b), and 15A, respectively, of the Securities Exchange Act of 1934. Effective date provisions are contained in section 12 of the law. Many of the provisions of the law would be effective upon enactment, but several would become effective on July 1, 1964. PART A. DISCLOSURE Section 3(a), Amending Section 12(b)(1)(I)—Material Contracts in Applications for Registration Section 3(a) of the law amends subparagraph (I) of section 12(b) (1) expressly to empower the Commission to require that applications for registration of securities on a national securities exchange contain information with respect to material contracts (including material patents and contracts for material patent rights) not made in the ordinary course of business. A paragraph (3) is added to section 12(b) to authorize the Commission to require copies of such contracts to be filed as a part of the application. Subparagraphs (I), (J), and (K) of existing section 12(b)(1) are relettered subparagraphs (J), (K), and (L), respectively. Section 12(a) of the act requires that the issuer of a security file. an application for registration with both the appropriate exchange and the Commission, as a prerequisite to the listing and registration of a security on a national securities exchange. Subsection (b) of section 12 specifies the information and documents that the Commission may require to be contained in an application for registration. These include such relevant information and documents in such detail as the Commission may require as to the issuer's business; its outstanding securities; the identity and the remuneration of officers, directors, and principal shareholders, their interests in the securities of, and their material contracts and interests in transactions with, the issuer; bonus and profit-sharing arrangements; management and service contracts and options which are existing or are to be created in respect of the issuer's securities. An application must also contain balance sheets and profit-and-loss statements, certified by independent public accountants if so required by the Commission's rules or regulations, and such further financial statements as the Commission may deem necessary or appropriate for the protection of investors. This amendment closes a significant gap in the informational requirements of section 12(b). The disclosures to be required are limited to material contracts, not made in the ordinary course of business, which are to be performed in whole or in part at or after the filing of the application or which were made not more than 2 years before such filing. Under new section 12(g) (1) the Commission could require comparable information and documents to be included in a registration statement with respect to over-the-counter securities registered pursuant to this section. The Commission has adequate authority to adopt appropriate rules to insure that these disclosure requirements will not be unduly burdensome to business. Similar disclosures are now required in a registration statement under the Securities Act. Registration forms adopted under that act specify the various types of contracts which are deemed to be material, and the Commission has stated that similar criteria will be developed for applications for registration and registration statements filed under subsection (b) and new subsection (g) of this section. Under section 24 of the act the Commission has authority to grant confidential treatment when necessary for the protection of trade secrets and other information. This amendment would not take effect until the effective date of section 12(g) (1), July 1, 1964. Section 3(b), Amending Section 12(f) Unlisted Trading Privileges Section 3(b) of the law amends, in several respects, section 12(f) of the Exchange Act which specifies the conditions and procedures for the continuation, extension, suspension, and termination of trading privileges on national securities exchanges for unlisted securities. Many of the changes are only technical and necessitated by other substantive amendments. The principal amendments relate to: the preservation of existing trading markets for securities now admitted to unlisted trading on exchanges; the repeal of existing provisions for extension of unlisted trading privileges to securities of issuers subject to disclosure requirements equivalent to those applicable to issuers of listed securities; the clarification of the Commission's authority to extend, suspend, and terminate unlisted trading privileges; and the deletion of unnecessary provisions with respect to quotations of unlisted security transactions by exchanges. Clause (1) of section 12(f) previously provided that any national securities exchange could continue unlisted trading privileges for securities which were admitted to trading on such exchange before March 1, 1934. Clause (2) permits the extension by an exchange of unlisted trading privileges to securities which are listed and registered for trading on another national securities exchange. Clause (3) permits exchanges to extend unlisted trading privileges to any security as to which the disclosure requirements and other duties and obligations of the issuer and its management are substantially equivalent to those applicable to listed securities. Application to, and approval by, the Commission are prerequisites to action by an exchange under these clauses. Other provisions of section 12(f) specify the conditions and procedures for the continuation, extension, suspension, and termination of unlisted trading privileges under these clauses. 1. Changes in clause (1) Section 3(b) of the law amends clause (1) to provide for continuation, without further application to, and approval by, the Commission of unlisted trading privileges for securities admitted on an exchange prior to July 1, 1964, the effective date of the new section 12(g) (1) of the act. This preserves existing trading markets for many securities to which the Commission, since March 1, 1934, has extended unlisted trading privileges under clause (2), and for a few other securities admitted to unlisted trading under clause (3). Unlisted trading privileges for securities originally admitted under clause (2) will continue only so long as such securities are listed and registered for trading on another securities exchange. Since applications to continue unlisted trading privileges will not be filed, the first sentence of the second paragraph of section 12(f) (relating to Commission action on applications under this section) is amended by deleting the reference to such applications for continuation. |