the office of the commission and another immediately forwarded by the secretary of the commission by registered mail to the principal office of the issuer against which said process or pleadings are directed.

REVOCATION OF REGISTRATION OF SECURITIES

SEC. 10. The commission may revoke the registration of any security by entering an order to that effect, with its findings in respect thereto, if upon examination into the affairs of the issuer of such security it shall appear that the issuer

(1) Is insolvent; or

(2) Has violated any of the provisions of this act or any order of the commission of which such issuer has notice; or

or

(3) Has been or is engaged or is about to engage in fraudulent transactions;

(4) Is in any other way dishonest or has made any fraudulent representations in any prospectus or in any circular or other literature that has been distributed concerning the issuer or its securities; or

(5) Is of bad business repute; or

(6) Does not conduct its business in accordance with law; or

(7) That its affairs are in an unsound condition; or

(8) That the enterprise or business of the issuer or the security is not based upon sound business principles.

In making such examination the commission shall have access to and may compel the production of all the books and papers of such issuer, and may administer oaths to and examine the officers of such issuer or any other person connected therewith as to its business and affairs and may also require a balance sheet exhibiting the assets and liabilities of any such issuer or his income statement, or both, to be certified to by a public accountant either of the District of Columbia, or of any State where the issuer's business is located, approved by the commission.

Whenever the commission may deem it necessary, it may also require such balance sheet or income statement, or both, to be made more specific in such particulars as the commission shall point out or to be brought down to the latest practicable date.

If any issuer shall refuse to permit an examination to be made by the commission it shall be proper ground for revocation of registration.

If the commission shall deem it necessary it may enter an order suspending the right to sell securities pending any investigation, provided that the order shall state the commission's grounds for taking such action.

Notice of the entry of such order shall be given by mail, or personally, or by telephone, confirmed in writing, or by telegraph, to the issuer and every registered dealer who shall have notified the commission of an intention to sell such security.

Before such order is made final, the issuer or dealer applying for registration shall on application be entitled to a hearing.

REGISTRATION OF DEALERS AND SALESMEN

SEC. 11. No dealer or salesman shall engage in business in the District of Columbia as such dealer or salesman or sell any securities, including securities exempted in section 4 of this act, except in transactions exempt under section 5 of this act, unless he has been registered as a dealer or salesman in the office of the commission pursuant to the provisions of this section.

An application for registration in writing shall be filed in the office of the commission in such form as the commission may prescribe, duly verified by oath, which shall state the principal office of the applicant, wherever situated, and the location of the principal office and all branch offices in the District of Columbia, if any, the name or style of doing business, the names, residence, and business addresses of all persons interested in the business as principals, copartners, officers, and directors, specifying as to each his capacity and title, the general plan and character of business, and the length of time the dealer has been engaged in business. The commission may also require such additional information as to applicant's previous history, record, and association, as it may deem necessary to establish the good repute in business of the applicant..

There shall be filed with such application an irrevocable written consent to the service of process upon the executive secretary of the commission in actions against such dealer in manner and form as hereinabove provided in section 9. If the commission shall find that the applicant is of good repute and has complied with the provisions of this section, including the payment of the fee hereinafter provided, it shall register such applicant as a dealer upon his filing a bond in the sum of $5,000 running in favor of the United States conditioned upon the faithful compliance with the provisions of this act by said dealer and by all salesmen registered by him while acting for him. Such bond shall be executed as surety by a surety company authorized to do business in the District of Columbia.

Upon the written application of a registered dealer and general satisfactory showing as to good character and the payment of the proper fee the commission shall register as salesmen of such dealer such natural persons as the dealer may request. Such registration shall cease upon the determination of the employment of such salesman by such dealer.

The names and addresses of all persons approved for registration as dealers or salesmen and all orders with respect thereto shall be recorded in a register of dealers and salesmen kept in the office of the commission, which shall be open to public inspection. Every registration under this section shall expire on the 31st day of December in each year, but new registrations for the succeeding year shall be issued upon written application and upon payment of the fee as hereinafter provided, without filing of further statements or furnishing any further information unless specifically required by the commission. Applications for renewals must be made not less than 30 nor more than 60 days before the first day of the ensuing year, otherwise they shall be treated as original applications. The fee for such registration and for each annual renewal shall be $25 in the case of dealers and $5 in the case of salesmen.

Changes in registration occasioned by changes in the personnel of a partnership or in the principals, copartners, officers, or directors of any dealer may be made from time to time by written application setting forth the facts with respect to such change.

Every registered dealer who intends to offer any security of any issue, registered or to be registered, shall notify the commission in writing of his intention so to do. The notice shall contain the name of the dealer and shall state the name of the security to be offered for sale, and whenever a dealer shall have prepared such notice and shall have forwarded the same by registered mail, postage prepaid, and properly addressed to the commission, such dealer, as to the contents of such notice and the filing thereof, shall be deemed to have complied with the requirements of this paragraph. Any issuer of a security required to be registered under the provisions of this act selling such securities except in exempt transactions as defined in section 5 hereof, shall be deemed a dealer within the meaning of this section 11 and required to comply with all the provisions hereof.

REVOCATION OF DEALERS' AND SALES MEN'S REGISTRATION

SEC. 12. Registration under section 11 may be refused or any registration granted may be revoked by the commission if after a reasonable notice and a hearing the commission determines that such applicant or registrant so registered:

or

or

(1) Has violated any provision of this act or any regulation made hereunder; (2) Has made a material false statement in the application for registration;

(3) Has been guilty of a fraudulent act in connection with any sale of securities, or has been or is engaged or is about to engage in making fictitious or pretended sales or purchases of any of such securities or has been or is engaged or is about to engage in any practice or sale of securities which is fraudulent or in violation of the law; or

(4) Has demonstrated his unworthiness to transaction the business of dealer or salesman.

In cases of charges against a salesman notice thereof shall also be given the dealer employing such salesman.

Pending the hearing the commission shall have the power to order the suspension of such dealer's or salesman's registration: Provided, That such order shall state the cause for such suspension.

Until the entry of a final order the suspension of such dealer's registration, though binding upon the persons notified thereof, shall be deemed confidential, and shall not be published, unless it shall appear that the order of suspension has been violated after notice.

In the event the commission determines to refuse or revoke a registration as hereinabove provided it shall enter a final order herein with its findings on the register of dealers and salesman; and suspension or revocation of the registration of a dealer shall also suspend or revoke the registration of all his salesmen. It shall be sufficient cause for refusal or cancellation of registration in case of a partnership or corporation or any unincorporated association, if any member of a partnership or any officer or director of the corporation or association has been guilty of any act or omission which would be cause for refusing or revoking the registration of any individaul dealer or salesman.

BURDEN OF PROOF

SEC. 13. It shall not be necessary to negative any of the exemptions in this act provided in any complaint, information, indictment, or any other writ or proceedings laid or brought under this act, and the burden of establishing the right to any such exemption shall be upon the party claiming the benefit of such exemption, and any person claiming the right to register any securities by notification under section 7 of this act shall also have the burden of establishing the right so to register such securities.

ESCROW AGREEMENT

SEC. 14. If the statement containing information as to securities to be registered, as provided for in section 8 of this act, shall disclose that any such securities or any securities senior thereto shall have been or shall be intended to be issued for any patent right, copyright, trade-mark, process, formula, or good will, or for organization or promotion fees or expenses or for good will or going-concern value or other intangible assets, the amount and nature thereof shall be fully set forth and the commission may require that such securities so issued in payment of such patent right, copyright, trade-mark, process, formula, or good will, or for organization or promotion fees or expenses, or for other intangible assets, shall be delivered in escrow to the commission or other depository satisfactory to the commission under an escrow agreement that the owners of such securities shall not be entitled to withdraw such securities from escrow until all other stockholders who have paid for their stock in cash shall have been paid a dividend or dividends aggregating not less than 6 per centum shown to the satisfaction of said commission to have been actually earned on the investment in any common stock so held; and in case of dissolution or insolvency during the time such securities are held in escrow, that the owners of such securities shall not participate in the assets until after the owners of all other securities shall have been paid in full.

INJUNCTIONS

SEC. 15. Whenever it shall appear to the commission, either upon complaint or otherwise, that in the issuance, sale, promotion, negotiation, advertisement, or distribution of any securities in the District of Columbia, including any security exempted under the provisions of section 4, and including any transaction exempted under the provisions of section 5, any person, as defined in this act, shall have employed or employs, or is about to employ any device, scheme, or artifice to defraud or for obtaining money or property by means of any false pretense, representation, or promise, or that any such person shall have made, makes, or attempts to make in the District of Columbia fictitious or pretended purchases or sales of securities or shall have engaged in or engages in, or is about to engage in any practice or transaction or course of business relating to the purchase or sale of securities which is in violation of law or which is fraudulent or which has operated or which would operate as a fraud upon the purchaser, any one or all of which devices, schemes, artifices, fictitious, or pretended purchases or sales of securities,

practices, transactions, and courses of business are hereby declared to be and are hereinafter referred to as fraudulent practices, or that any person is acting as dealer or salesman in the District of Columbia without being duly registered as such dealer or salesman as provided in this act; the commission may investigate, and whenever it shall believe from evidence satisfactory to it that any such person has engaged in, is engaged, or is about to engage in any of the practices or transactions hereinbefore referred to as and declared to be fraudulent practices, or is selling or offering for sale any securities in violation of this act or is acting as a dealer or salesman without being duly registered as provided in this act, the commission may, in addition to any other remedies, bring action in the name and on behalf of the commission against such person and any other person or persons concerned in or in any way participating in or about to participate in such fraudulent practices or acting in violation of this act, to enjoin preliminarily, temporarily, and/or permanently such person and such other person or persons from continuing such frauduent practices or engaging therein or doing any act or acts in futherance thereof or in violation of this act. In any such court proceedings the commission may apply for and on due showing be entitled to have issued the court's subpoena requiring forthwith the appearance of any defendant and his employees, salesmen, or agents, and the production of documents, books, and records as may appear necessary for the hearing of such petition, to testify and give evidence concerning the acts or conduct or things complained of in such application for injunction. In such action the equity courts shall have jurisdiction of the subject matter, and a judgment may be entered awarding such injunction as may be proper.

REMEDIES

SEC. 16. (1) Every sale made in violation of any of the provisions of this act shall be voidable at the election of the purchaser; and the person making such sale and every director, officer, or agent of or for such seller, if such director, officer, or agent shall have personally participated or aided in any way in making such sale shall be jointly and severally liable to such purchaser in an action at law in any court of competent jurisdiction upon tender of the securities sold or of the contract made for the full amount paid by such purchaser, with interest, together with all taxable court costs and reasonable attorney's fees: Provided, That no action shall be brought for the recovery of the purchase price after two years from the date of such sale: And provided further, That no purchaser otherwise entitled shall claim or have the benefit of this section who shall have refused or failed within thirty days from the date thereof to accept an offer in writing of the seller to take back the security in question and to refund the full amount paid by such purchaser, together with interest on such amount for the period from the date of payment by such purchaser down to the date of repayment, such interest to be computed

(a) In case such securities consist of interest-bearing obligations, at the same rate as provided in such obligations; and

(b) In case such securities consist of other than interest-bearing obligations, at the rate of 6 per centum per annum, less, in every case, the amount of any income from said securities that may have been received by such purchaser. (2) Any person having a right of action against a dealer or salesman under this section shall have a right of action under the bond provided in section 11. (3) A registration by notification made in good faith and after the commission, on application, shall have given tentative consent to such registration, shall not, as to sales made prior to revocation of such registration, result in the liabilities prescribed in this section, although the securities may not be entitled to such registration.

PENALTY

SEC. 17. Whoever violates any provision of this act shall be punished by a fine of not more than $10,000 or by imprisonment for not more than five years, or by both such fine and imprisonment.

STATUTORY OR COMMON-LAW REMEDIES

SEC. 18. Nothing in this act shall limit any statutory or common-law right of any person to bring any action in any court for any act involved in the sale of securities, or the right of the United States or District of Columbia to punish any person for any violation of any law.

APPEALS

SEC. 19. An appeal may be taken by any person interested from any final order of the commission to the Supreme Court of the District of Columbia by serving upon the commission within twenty days after notice of the entry of such order a written notice of such appeal stating the grounds upon which a reversal of such final order is sought; a demand in writing for a certified transcript of the record and of all papers on file in its office relating to such order and executing a bond in a penal sum to be fixed by the court to the United States, with sufficient surety, to be approved by the court, conditioned upon the faithful prosecution of such appeal to final judgment, and the payment of all such costs as shall be adjudged against the appellant. Thereupon the commission shall within ten days make, certify, and file with the clerk of said court such a transcript, or in lieu thereof the original papers if the court shall so order; and the appellant shall within five days thereafter file the same and a copy of the notice of appeal with the clerk of said court, which said notice of appeal shall stand as appellant's complaint and thereupon said cause shall be entered on the trial calendar of said court for trial de novo and may be given precedence by the court over other matters pending in said court. The court shall receive and consider evidence, whether oral or documentary, concerning the order of the commission from which the appeal is taken. If the order of the commission shall be reversed, said court shall by its mandate specifically direct said commission as to its further action in the matter, including the making and entering of any order or orders in connection therewith, and the conditions, limitations, or restrictions to be therein contained: Provided, That the commission shall not thereby be barred from thereafter revoking or altering such order for any proper cause which may thereafter accrue or be discovered. If said order shall be affirmed, said appellant shall not be barred after thirty days from filing a new application: Provided, That such application is not otherwise barred or limited. Such appeal shall not in anywise suspend the operation of the order appealed from during the pendency of such appeal unless upon proper order of the court. An appeal may be taken from the judgment of the said court on any such appeal on the same terms and conditions as an appeal is taken in civil actions.

SEC. 20. The directors, officers, or agents referred to in section 16 of this act shall be liable under said section and shall also be liable to prosecution under section 17 for any unlawful act or omission of other persons who were employed by or associated with them, if by the exercise of reasonable care and diligence such directors, officers, or agents might have learned of such acts or omissions and given notice thereof to the commission, or might otherwise have prevented such acts or omissions and failed to do so.

SEC. 21. In all advertising, circulars, and other printed or written matter that may be used in selling securities there shall be specifically and distinctly stated in bold or black faced type not less than 18 point in size the amount and character of any prior or superior lien, mortgage, or incumbrance underlying the security offered.

SEC. 22. No deed of trust or similar instrument covering property in the District of Columbia encumbered or used to give value to security shall be held to be valid as such security by the commission in passing upon applications for registration by qualification or for registration by notification unless at least one of the trustees named in such deed or similar instrument is a resident of the District of Columbia and has been such for at least five years last past or is a corporation organized and existing under the laws of the District of Columbia, neither such person nor corporation to be otherwise associated or connected with other parties thereto.

SEC. 23. In any case where the commission is in doubt as to the substantial correctness of the value of property upon which securities are based, as stated by the applicant for registration by qualification or in the statement for registration by notification, it may select and appoint appraisers for the purpose of determining the value of the property, the expense of such appraisal to be borne by the applicant for registration.

SEC. 24. Where it is sought to secure registration by notification or qualification for a security payment of the principal and dividend or interest of which or payment of any part of the underlying obligation of which is guaranteed or assured by an insurance company, surety company, individual, corporation, partnership, or association, a certified copy of the guaranty, contract, or