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RESTRICTIONS OF MEMBERS' BORROWING Sec, 7. It shall be unlawful for any member of a national securities exchange or any broker or dealer who trausacts a business in securities through the medium of any such member, directly or indirectly

(a) To borrow in the course of business as a broker or dealer on any security (other than an exempted security) registered on a national securities exchange except (1) from or through a member bank of the Federal Reserve System, or (2) in accordance with such rules and regulations as the Federal Reserve Board may prescribe to permit limited loans between members and/or brokers or dealers who transact a business in securities through the medium of a member, or to permit loans from or through others than member banks in localities where there are no member banks, or to meet emergency needs.

(b) To permit in the ordinary course of business as a broker his aggregate indebtedness to all other persons, including customers' credit balances (but excluding indebtedness on exempted securities) to exceed such percentage of the net capital (exclusive of fixed assets and value of exchange membership) employed in the business, not exceeding 1,000 per centum, as the Commission may by rules and regulations prescribe as necessary or appropriate in the public interest or for the protection of investors.

(c) To hypothecate or arrange for the hypothecation of securities carried for customers' accounts except free and clear from the liens of other creditors or to commingle any of such securities with those of any person other than a bona-fide customer,

(d) To hypothecate or arrange for the hypothecation of any securities carried for the account of a customer under circumstances that will permit the commingling of the securities of one customer with those of any other person, without the written consent of such customer.

(e) To lend or arrange for the lending of securities pledged by or carried for the account of any customer without the consent of such customer.

PROHIBITION AGAINST MANIPULATION OF SECURITY PRICES

SEC. 8. (a) It shall be unlawful for any person, directly or indirectly, by the use of the mails or any means or instrumentality of interstate commerce, or of any facility of any national securities exchange, or for any member of a national securities exchange

(1) To effect any fictitious transaction in any security registered on a national securities exchange or in any security not so registered, or any transaction which purports to be a sale of any such security but involves no change in the beneficial ownership thereof.

(2) To effect for his own or another's account transactions for both the purchase and sale of any security registered on a national securities exchange or of any security not so registered at substantially the same time at substantially the same price, whether such transactions of purchase and sale be with the same or with different parties, for the purpose of creating a false or misleading appearance of active trading in such security or securities, or a false or misleading appearance in respect of the market for such security or securities.

(3) To effect, either alone or in concert with one or more other persons, any transaction for the purchase and sale of any security or securities registered on any national securities exchange or of any security or securities not so registered for the purpose of raising or depressing the price of such security or securities.

(4) If a dealer or broker, to circulate or disseminate in the ordinary course of business information to the effect that the price of any security or securities registered on a national securities exchange or any security or securities not so registered will or is likely to rise or fall partly or wholly because of the market activity of any one or more persons, if the person circulating or disseminating such information has reason to believe that the circulation or dissemination of such information on his part may induce the purchase or sale of any such security in the expectation of such market activity.

(5) If a dealer or broker or other person selling or offering for sale or purchasing or offering to purchase the security, to make, regarding any security registered on a national securities exchange or any security not so registered, for the purpose of inducing the purchase or sale of such security, any statement which is, in the light of the circumstances under which it was made, false or

misleading in respect of any matter sufficiently important to influence the judgment of an average investor.

(6) To circulate or disseminate for a consideration any information to the effect that the price of any security or securities registered on a national securities exchange or any security or securities not so registered will or is likely to rise or fall partly or wholly because of the market activity of any one or more persons, or to pay or receive any consideration for circulating and disseminating such information.

(7) To circulate or disseminate for a consideration received, directly or indirectly, from any dealer or broker or other person selling or offering for sale or purchasing or offering to purchase the security any information regarding any security registered on a national securities exchange or any security not so registered, unless such information is published as an advertisement; or to pay or receive any consideration for circulating or disseminating such information,

(8) To engage in any series of transactions for the purchase and sale of any security registered on a national securities exchange or any security not so registered which has the purpose of pegging, fixing, or stabilizing the price of such security in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors or without having prior thereto reported to the exchange authorities and to the Commission such information regarding the purpose and nature of such transactions or operations, the details thereof and the person or persons interested therein as the Commission by rules and regulations may prescribe as appropriate or necessary in the public interest or for the protection of investors.

(9) To effect by use of any facility of a national securities exchange, in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors

(i) any transaction in connection with any security whereby any party to such transaction acquires any put, call, straddle, or other option or privilege of buying a security from or selling a security to another party to the transaction without being bound to do so; or

(ii) any transaction in connection with any security with relation to which he has, directly or indirectly, any interest in such put, call, straddle, option, or privilege; or

(iii) any transaction in any security for account of any person who, he has reason to believe, has, directly or indirectly, any interest in any such put, call, straddle, option, or privilege with relation to such security; or if a meinber, directly or indirectly, to endorse or guarantee the performance of any put, call, straddle, option, or privilege in relation to any security registered on a national securities exchange. The terms “put", "call", "straddle","option", or "privilege” as used in this paragraph shall not include any registered warrant, right, or convertible security.

(b) Any person who willfully participates in any act or transaction, which act or transaction is in violation of subsection (a) of this section, shall be liable to any person who shall purchase or sell any security the price of which may have been affected by such act or transaction, and the person so injured may sue in law or in equity in any court of competent jurisdiction to recover the damages sustained as a result of any such act or transaction. In case of a civil suit based on a violation of subclause (5) of subsection (a) of this section 8 the defendant shall not be liable if he shall sustain the burden of proving that he acted in good faith and did not believe that the statement was false or misleading: Provided, That a statement limited to facts set forth in any application, report, or document filed with the Commission shall not be deemed false or misleading, unless the person making the statement beliered that it was false or misleading.

(c) Every person who becomes 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 of fraudulent misrepresentation.

(d) No action shall be maintained to enforce any liability created under this section unless brought within two years after the cause of action accrued.

(e) The provisions of this section shall not apply to an exempted security,

REGULATION OF THE USE OF MANIPULATIVE DEVICES

SEC. 9. It shall be unlawful for any person, directly or indirectly, by use of any means or instrumentality of interstate commerce or of the mails or of any facility of any national securities exchange

(a) To effect a short sale of any security registered on a national securities exchange, except in accordance with such rules and regulations as the Commission may prescribe as appropriate or necessary in the public interest or for the protection of investors;

(b) To use or employ any stop-loss order in connection with the purchase or sale of any security registered on a national securities exchange, except in accordance with such rules and regulations as the Commission shall prescribe as appropriate or necessary in the public interest or for the protection of investors; or

(c) To use or employ in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered any manipulative device or contrivance which the Commission may by its rules and regulations find detrimental to the public interest or to the proper protection of investors. SEGREGATION AND LIMITATION OF THE FUNCTIONS OF BROKER, SPECIALIST, AND DEALER

SEC. 10. (a) Membership of a national securities exchange shall be limited to brokers, except as hereinafter provided. It shall be unlawful for any member of a national securities exchange to act as a dealer except as hereinafter provided

(b) Subject to such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors to insure compliance with the provisions of this subsection, the rules of a national securities exchange may permit a member to be registered as an odd-lot dealer and as such to buy and sell for his own account so far as may be reasonably necessary to carry on such odd-lot transactions. It shall be unlawful for an odd-lot dealer to act as a broker.

(c) Subject to such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors, to insure compliance with the provisions of this subsection, the rules of a national securities exchange may provide for the registration of members with the privilege of acting as dealers, and any member so registered shall have the privilege of acting as a dealer and as a broker within the limitations of this subsection. It shall be unlawful for any member with or without the privilege of acting as a dealer (except an odd-lot dealer, or a specialist dealer provided for in subsection (e) hereof), while on the trading premises of such exchange to effect any transaction on such exchange for his own account or while on the trading premises of such exchange as a broker to give an order to another member to be executed for his own account. But where, because of the limited volume of transactions effected on an exchange, it is, in the judgment of the Commission impracticable and not in the public interest to deny access to the trading premises of an exchange to a member with the privilege of acting as a dealer for the purpose of effecting or clearing any transaction on the exchange for his own account, the Commission shall have the power, on application of such exchange and on a showing that the rules of the exchange prevent excessive trading by members, to permit the members of such exchange to effect transactions thereon for their own account, subject to such terms and conditions as the Commission may prescribe as necessary or appropriate for the protection of investors.

(d) It shall be unlawful for a member with the privilege of acting as a dealer who also acts as a broker to effect any transaction in a security by use of any facility of a national securities exchange or otherwise, or for any person who both as a broker and a dealer transacts a business in securities through the medium of a member or through the use of the mails or any means or instrumentality of interstate commerce to effect any transaction in a security by use of any facility of a national securities exchange or otherwise, (1) if in connection with any such transaction be directly or indirectly extends or maintains or arranges for the extension or maintenance of credit for a customer on any security (other than an exempted security) which was a part of a new

issue offered to the public by him as a dealer or distributor within six months prior to such transaction or (2) unless, if the transaction is with a customer, he discloses to such customer in writing any interest he may have in conneetion with the security which is the subject matter of transaction and offers the customer a reasonable time not exceeding ten days to refuse the transaction after the disclosure if the disclosure is not made at the time of the taking of the order and confirmed in writing substantially simultaneously therewith,

(e) Subject to such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors to insure compliance with the provisions of this subsection, the rules of a national securities exchange may permit the registration of a specialist, as a dealer or broker, but it shall be unlawful fo ra specialist registered as a dealer to act as a broker or for a specialist registered as a broker to act as a dealer. It shall be unlawful for any specialist registered as a broker (1) to effect on the exchange any transaction on a discretionary order, or (2) to disclose to any person other than an official of the exchange, a representative of the Commission, or a specialist registered as a broker who may be acting for him, information in regard to orders placed with him which is not available to all members of the exchange, but nothing herein shall be construed to prevent the rules of an exchange requiring the disclosure to all members of all orders placed with a specialist. An exchange may provide that officers or employees of the exchange mạy perform the functions of specialists as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.

(f) The Commission is directed to make a study of the feisibility and desirability of the complete divorcement of the functions of dealer and broker and to report the results of its study and its recommendations to Congress on or before January 1, 1936.

REGISTRATION REQUIREMENTS FOR SECURITIES

SEC. 11. (a) It shall be unlawful for any person to effect any transaction in any security other than an exempted security on a national securities erchange unless a registration is effective as to such security in accordance with the provisions of this Act and the rules and regulations thereunder, and unless such security has been issued.

(b) A security may be registered with a national securities exchange upon application by the issuer, by filing with such exchange and with the Commission

(I) An undertaking by the issuer to comply, and so far as is within its power to enforce compliance by its officers, directors, and stockholders, with the provisions of this Act and any amendents thereto and with the rules and regulations made or to be made thereunder and not to lend any funds, except upon exempted securities, at the money post of any exchange or to any member thereof or to any broker or dealer who transacts a business in securities through the medium of any such member except in accordance with such rules and regulations as the Federal Reserve Board may prescribe: Provided, That the provisions of this paragraph in regard to lending shall not apply to a member bank of the Federal Reserve System;

(II) Such information as to the issuer and affiliates as the Commission may by rules and regulations require, as necessary or appropriate in the public interest or for the protection of investors, in respect of

(1) the organization, financial structure, nature, and operations of the business ;

(2) the terms, position, rights, and privileges of the different classes of securities outstanding ;

(3) terms on which securities have been or are to be offered to the public;

(4) the directors, officers, and principal security holders and underwriters, their remuneration and their interests in the securities of and material contracts with the issuer and affiliates;

(5) remuneration to others than directors and officers exceeding $20,000 per annum;

(6) bonus and profit-sharing arrangements;
(7) management and service contracts;
(8) options in respect of securities existing or to be created;

(9) material contracts not made in the ordinary course of business, and material patents;

(10) balance sheets for preceding years, certified by independent public accountants or otherwise, as the Commission may prescribe;

(11) profit and loss statements for preceding years, certified by independent public accountants or otherwise, as the Commission may prescribe; and

(12) any similar matters, information regarding which the Commission deems necessary to insure the proper protection of investors and fair dealing in the security.

(III) Copies of articles of incorporation, bylaws, trust indentures, or corresponding documents, whatever the names, underwriting arrangements, and other documents of the issuer and affiliates which the Commission by rules and regulations may require as necessary or appropriate to insure the proper protection of investors and fair dealing in the security.

(c) If in the judgment of the Commission any report or reports required under subsection (b) are inapplicable to any specified class or classes of issuers, the Commission shall require in lieu thereof the submission of such reports, if any, as it may deem applicable to such class of issuers.

(d) If the exchange authorities certify to the Commission that the security has been approved by the exchange for listing and registration, the registration shall become effective thirty days after the filing of such certification with the Commission or within such shorter period of time as the Commission may determine. A security registered with a national securities exchange may be withdrawn or stricken from listing and registration in accordance with the rules of the exchange and upon such terms as the Commission may impose for the protection of investors upon application by the issuer or the exchange to the Commission.

(e) Notwithstanding the foregoing provisions of this section, the Commission may by such rules and regulations as it deems necessary or appropriate in the public interest or for the protection of investors permit securities listed on any exchange at the time the registration of such exchange as a national securities exchange becomes effective, to be registered provisionally for a period ending not later than April 1, 1935, without complying with the provisions of this section.

(f) The Commission is directed to make a study of trading in unlisted securities upon exchanges and to report the results of its study and its recommendations to Congress on or before January 3, 1935. If the Commission deems such action necessary or appropriate for the protection of investors, it may by rules and regulations prescribe terms and conditions under which, upon the application of any national securities exchange, such exchange may continue until March 1, 1935, or until such earlier date as may be prescribed by law, unlisted trading privileges to which a security had been admitted on such exchange prior to March 1, 1934, and for such purpose exempt such security from the provisions of this section 11 and section 12. A security for which unlisted trading privileges are so continued shall be considered a “security registered on a national securities exchange within the meaning of all other sections of this Act. The rules and regulations of the Commission relating to such unlisted trading privileges for securities shall require that quotations of transactions upon any national securities exchange shall clearly indicate the difference between fully listed securities and securities admitted to unlisted trading privileges only.

PERIODICAL AND OTHER REPORTS

Sec. 12. (a) The Commission may require every issuer of a security registered on a national securities exchange to file with the exchange and with the Commission in accordance with, and in such form and detail and at such times as may be prescribed by, such rules and regulations of the Commission may prescribe as necessary or appropriate to insure the proper protection of investors and fair dealing in the security.

(1) Such information and documents as the Commission may require to keep reasonably current the information and documents filed pursuant to section 11;

(2) Such annual, quarterly, monthly, and/or other reports, the annual reports to be certified by an independent public accountant or otherwise, as the Commission may prescribe,

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