« ForrigeFortsett »
lected, in the interest of directors, officers, investment (1) "Advisory board" means a board, whether advisers, depositors, or other affiliated persons there- elected or appointed, which is distinct from the board of, in the interest of underwriters, brokers, or dealers, of directors or board of trustees, of an investment in the interest of special classes of their security company, and which is composed solely of persons holders, or in the interest of other investment com- who do not serve such company in any other capanies or persons engaged in other lines of business, pacity, whether or not the functions of such board rather than in the interest of all classes of such com are such as to render its members "directors" within panies' security holders;
the definition of that term, which board has advisory (3) when investment companies issue securities functions as to investments but has no power to decontaining inequitable or discriminatory provisions, termine that any security or other investment shall or fail to protect the preferences and privileges of the be purchased or sold by such company. holders of their outstanding securities;
(2) "Affiliated company" means a company which (4) when the control of investment companies is is an affiliated person. unduly concentrated through pyramiding or inequi- (3) "Affiliated person" of another person means table methods of control, or is inequitably distrib-1 (A) any person directly or indirectly owning, conuted, or when investment companies are managed trolling, or holding with power to vote, 5 per centum by irresponsible persons;
or more of the outstanding voting securities of such (5) when investment companies, in keeping their other person; (B) any person 5 per centum or more accounts, in maintaining reserves, and in computing
of whose outstanding voting securities are directly their earnings and the asset value of their outstand- or indirectly owned, controlled, or held with power ing securities, employ unsound or misleading meth
to vote, by such other person; (C) any person diods, or are not subjected to adequate independent
rectly or indirectly controlling, controlled by, or scrutiny;
under common control with, such other person; (D) (6) when investment companies are reorganized,
any officer, director, partner, copartner, or employee become inactive, or change the character of their
of such other person; (E) if such other person is an business, or when the control or management thereof
investment company, any investment adviser thereof is transferred, without the consent of their security
or any member of an advisory board thereof; and holders;
(F) if such other person is an unincorporated in(7) when investment companies by excessive bor
vestment company not having a board of directors, rowing and the issuance of excessive amounts of
the depositor thereof. senior securities increase unduly the speculative
(4) “Assignment" includes any direct or indirect character of their junior securities; or
transfer or hypothecation of a contract or chose in (8) when investment companies operate without action by the assignor, or of a controlling block of the adequate assets or reserves.
assignor's outstanding voting securities by a security It is declared that the policy and purposes of this
holder of the assignor; but does not include an assubchapter and sections 72 (a) and 107 (f) of Title signment of partnership interests incidental to the 11, in accordance with which the provisions of this death or withdrawal of a minority of the members of subchapter and sections 72 (a) and 107 (f) of Title
the partnership having only a minority interest in 11 shall be interpreted, are to mitigate and, so far
the partnership business or to the admission to the as is feasible, to eliminate the conditions enumer
partnership of one or more members who, after such ated in this section which adversely affect the na admission, shall be only a minority of the members tional public interest and the interest of investors. and shall have only a minority interest in the (Aug. 22, 1940, ch. 686, title I, § 1, 54 Stat. 789.) business.
(5) "Bank” means (A) a banking institution orTRANSFER OF FUNCTIONS
ganized under the laws of the United States, (B) a All executive and administrative functions of the Securities and Exchange Commission were, with certain excep
member bank of the Federal Reserve System, (C) tions, transferred to the Chairman of such Commission,
any other banking institution or trust company, with authority vested in him to authorize their performance by any officer, employee, or administrative unit under
whether incorporated or not, doing business under his jurisdiction, by 1950 Reorg. Plan No. 10, $$ 1, 2, eff. the laws of any State or of the United States, a subMay 24, 1950, 15 F. R. 3175, 64 Stat. 1265, set out in note stantial portion of the business of which consists of under section 78d of this title.
receiving deposits or exercising fiduciary powers CROSS REFERENCES
similar to those permitted to national banks under Findings under Investment Advisers Act of 1940, see
section 248 (k) of Title 12, and which is supersection 80b-1 of this title. Necessity for control of holding companies, see section
vised and examined by State or Federal authority 79a of this title.
having supervision over banks, and which is not Necessity for regulation under
operated for the purpose of evading the provisions of Securities Exchange Act of 1934, see section 78b of this title.
this subchapter and sections 72 (a) and 107 (f) of Trust Indenture Act of 1939, see section 77bbb of Title 11, and (D) a receiver, conservator, or other this title.
liquidating agent of any institution or firm included 8 80a-2. Definitions.
in clauses (A), (B), or (C) of this paragraph, (a) When used in this subchapter and sections (6) “Broker” means any person engaged in the 72 (a) and 107 (f) of Title 11, unless the context business of effecting transactions in securities for the otherwise requires
account of others, but does not include a bank or
any person solely by reason of the fact that such person is an underwriter for one or more investment companies.
(7) "Commission” means the Securities and Exchange Commission.
(8) "Company” means a corporation, a partnership, an association, a joint-stock company, a trust, a fund, or any organized group of persons whether incorporated or not; or any receiver, trustee in bankruptcy or similar official or any liquidating agent for any of the foregoing, in his capacity as such.
(9) "Control” means the power to exercise a controlling influence over the management or policies of a company, unless such power is solely the result of an official position with such company.
Any person who owns beneficially, either directly or through one or more controlled companies, more than 25 per centum of the voting securities of a company shall be presumed to control such company. Any person who does not so own more than 25 per centum of the voting securities of any company shall be presumed not to control such company. A natural person shall be presumed not to be a controlled person within the meaning of this subchapter and sections 72 (a) and 107 (f) of Title 11. Any such presumption may be rebutted by evidence, but except as hereinafter provided, shall continue until a determination to the contrary made by the Commission by order either on its own motion or on application by an interested person. If an application filed hereunder is not granted or denied by the Commission within sixty days after filing thereof, the determination sought by the application shall be deemed to have been temporarily granted pending final determination of the Commission thereon. The Commission, upon its own motion or upon application, may by order revoke or modify any order issued under this paragraph whenever it shall find that the determination embraced in such original order is no longer consistent with the facts.
(10) "Convicted” includes a verdict, judgment, or plea of guilty, or a finding of guilt on a plea of nolo contendere, if such verdict, judgment, plea, or finding has not been reversed, set aside, or withdrawn, whether or not sentence has been imposed.
(11) "Dealer" means any person regularly engaged in the business of buying and selling securities for his own account, through a broker or otherwise, but does not include a bank, insurance company, or in vestment company, or any person insofar as he is engaged in investing, reinvesting, or trading in securities, or in owning or holding securities, for his own account, either individually or in some fiduciary capacity, but not as a part of a regular business.
(12) "Director” means any director of a corpora tion or any person performing similar functions with respect to any organization, whether incorporated or unincorporated, including any natural person who is a member of a board of trustees of a management company created as a common-law trust.
(13) "Employees' securities company" means any investment company or similar issuer all of the outstanding securities of which (other than short-term paper) are beneficially owned (A) by the employees or persons on retainer of a single employer or of two
or more employers each of which is an affiliated company of the other, (B) by former employees of such employer or employers, (C) by members of the immediate family of such employees, persons on retainer, or former employees, (D) by any two or more of the foregoing classes of persons, or (E) by such employer or employers together with any one or more of the foregoing classes of persons.
(14) "Exchange" means any organization, association, or group of persons, whether incorporated or unincorporated, which constitutes, maintains, or provides a market place or facilities for bringing together purchasers and sellers of securities or for otherwise performing with respect to securities the functions commonly performed by a stock exchange as that term is generally understood, and includes the market place and the market facilities maintained by such exchange.
(15) "Face-amount certificate" means any certificate, investment contract, or other security which represents an obligation on the part of its issuer to pay a stated or determinable sum or sums at a fixed or determinable date or dates more than twenty-four months after the date of issuance, in consideration of the payment of periodic installments of a stated or determinable amount (which security shall be known as a face-amount certificate of the "installment type”); or any security which represents a similar obligation on the part of a face-amount certificate company, the consideration for which is the payment of a single lump sum (which security shall be known as a “fully paid" face-amount certificate).
(16) “Government security" means any security issued or guaranteed as to principal or interest by the United States, or by a person 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 any certificate of deposit for any of the foregoing.
(17) "Insurance company” means a company which is organized as an insurance company, whose primary and predominant business activity is the writing of insurance or the reinsuring of risks underwritten by insurance companies, and which is subject to supervision by the insurance commissioner or a similar official or agency of a State; or any receiver or similar official or any liquidating agent for such a company, in his capacity as such.
(18) "Interstate commerce" means trade, commerce, transportation, or communication among the several States, or between any foreign country and any State, or between any State and any place or ship outside thereof.
(19) "Investment adviser" of an investment company means (A) any person (other than a bona fide officer, director, trustee, member of an advisory board, or employee of such company, as such) who pursuant to contract with such company regularly furnishes advice to such company with respect to the desirability of investing in, purchasing or selling securities or other property, or is empowered to determine what securities or other property shall be purchased or sold by such company, and (B) any other person who pursuant to contract with a per
son described in clause (A) of this paragraph regu- such company, or pursuant to contract has the right larly performs substantially all of the duties under- (whether absolute or conditional) from time to time taken by such person described in said clause (A); to purchase from such company, any such security but does not include (i) a person whose advice is for distribution, or who as agent for such company furnished solely through uniform publications dis- sells or has the right to sell any such security to a tributed to subscribers thereto, (ii) a person who dealer or to the public or both, but does not include furnishes only statistical and other factual informa- a dealer who purchases from such company through tion, advice regarding economic factors and trends, a principal underwriter acting as agent for such or advice as to occasional transactions in specific company. “Principal underwriter” of or for a securities, but without generally furnishing advice closed-end company or any issuer which is not an or making recommendations regarding the purchase investment company, or of any security issued by or sale of securities, (iii) a company furnishing such such a company or issuer, means any underwriter services at cost to one or more investment companies, who, in connection with a primary distribution of insurance companies, or other financial institutions, securities, (A) is in privity of contract with the issuer (iv) any person the character and amount of whose or an affiliated person of the issuer; (B) acting alone compensation for such services must be approved by or in concert with one or more other persons, initia court, or (v) such other persons as the Commis ates or directs the formation of an underwriting sion may by rules and regulations or order determine syndicate; or (C) is allowed a rate of gross comnot to be within the intent of this definition,
mission, spread, or other profit greater than the (20) “Investment banker" means any person en
rate allowed another underwriter participating in gaged in the business of underwriting securities
the distribution. issued by other persons, but does not include an
(29) “Promoter" of a company or a proposed cominvestment company, any person who acts as an pany means a person who, acting alone or in conunderwriter in isolated transactions but not as a cert with other persons, is initiating or directing, or part of a regular business, or any person solely by has within one year initiated or directed, the organireason of the fact that such person is an underwriterzation of such company. for one or more investment companies.
(30) "Prospectus”, as used in section 80a-22 of (21) "Issuer” means every person who issues or this title, means a written prospectus intended to proposes to issue any security, or has outstanding meet the requirements of section 77e (b) of this title any security which it has issued.
and currently in use. As used elsewhere, “prospec(22) "Lend" includes a purchase coupled with an
tus" means a prospectus as defined in the Securities agreement by the vendor to repurchase; "borrow" includes a sale coupled with a similar agreement.
(31) “Redeemable security” means any security, (23) “Majority-owned subsidiary of a person other than short-term paper, under the terms of means a company 50 per centum or more of the out- which the holder, upon its presentation to the issuer standing voting securities of which are owned by or to a person designated by the issuer, is entitled such person, or by a company which, within the (whether absolutely or only out of surplus) to remeaning of this paragraph, is a majority-owned sub ceive approximately his proportionate share of the sidiary of such person.
issuer's current net assets, or the cash equivalent (24) "Means or instrumentality of interstate com thereof. merce” includes any facility of a national securities
(32) "Reorganization" means (A) a reorganization exchange.
under the supervision of a court of competent juris(25) “National securities exchange" means an ex diction; (B) a merger or consolidation; (C) a sale change registered under section 78f of this title. of 75 per centum or more in value of the assets of a
(26) “Periodic payment plan certificate" means company; (D) a restatement of the capital of a com(A) any certificate, investment contract, or other pany, or an exchange of securities issued by a comsecurity providing for a series of periodic payments pany for any of its own outstanding securities; by the holder, and representing an undivided interest (E) a voluntary dissolution or liquidation of a comin certain specified securities or in a unit or fund of pany; (F) a recapitalization or other procedure or securities purchased wholly or partly with the pro- transaction which has for its purpose the alteration, ceeds of such payments, and (B) any security the modification, or elimination of any of the rights, issuer of which is also issuing securities of the char- preferences, or privileges of any class of securities acter described in clause (A) of this paragraph and issued by a company, as provided in its charter or the holder of which has substantially the same rights other instrument creating or defining such rights, and privileges as those which holders of securities of preferences, and privileges; (G) an exchange of sethe character described in said clause (A) have upon curities issued by a company for outstanding securicompleting the periodic payments for which such ties issued by another company or companies, securities provide.
preliminary to and for the purpose of effecting or (27) "Person" means a natural person or a com consummating any of the foregoing; or (H) any pany.
exchange of securities by a company which is not (28) "Principal underwriter” of or for any invest an investment company for securities issued by a ment company other than a closed-end company, or registered investment company. of any security issued by such a company, means (33) "Sale", "sell", "offer to sell", or "offer for any underwriter who as principal purchases from sale" includes every contract of sale or disposition of,
attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security, for value. 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.
(34) "Sales load" means the difference between the price of a security to the public and that portion of the proceeds from its sale which is received and invested or held for investment by the issuer (or in the case of a unit investment trust, by the depositor or trustee), less any portion of such difference deducted for trustee's or custodian's fees, in surance premiums, issue taxes, or administrative expenses or fees which are not properly chargeable to sales or promotional activities. In the case of a periodic payment plan certificate, “sales load" in cludes the sales load on any investment company securities in which the payments made on such certificate are invested, as well as the sales load on the certificate itself.
(35) "Security” means any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profitsharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undi vided interest in oil, gas, or other mineral rights, or in general, any interest or instrument commonly known as a "security", or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing.
(36) "Short-term paper" means any note, draft, bill of exchange, or banker's acceptance payable on demand or having a maturity at the time of issuance of not exceeding nine months, exclusive of days of grace, or any renewal thereof payable on demand or having a maturity likewise limited; and such other classes of securities, of a commercial rather than an investment character, as the Commission may designate by rules and regulations.
(37) "State" means any State of the United States, the District of Columbia, Alaska, Hawaii, Puerto Rico, the Canal Zone, the Virgin Islands, or any other possession of the United States.
(38) “Underwriter” means any person who has purchased from 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 underwriting 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 distributor's or seller's 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. When the distribution of the securities in
respect of which any person is an underwriter is completed such person shall cease to be an under. writer in respect of such securities or the issuer thereof.
(39) "Value", with respect to assets of registered investment companies, except as provided in subsection (b) of section 80a-28 of this title means
(A) as used in sections 802-3, 80a-5, and 80a-12 of this title, (1) with respect to securities owned at the end of the last preceding fiscal quarter for which market quotations are readily available, the market value at the end of such quarter; (ii) with respect to other securities and assets owned at the end of the last preceding fiscal quarter, fair value at the end of such quarter, as determined in good faith by the board of directors; and (iii) with respect to securities and other assets acquired after the end of the last preceding fiscal quarter, the cost thereof; and
(B) as used elsewhere in this subchapter and sections 72 (a) and 107 (f) of Title 11, (i) with respect to securities for which market quotations are readily available, the market value of such securities; and (ii) with respect to other securities and assets, fair value as determined in good faith by the board of directors; in each case as of such time or times as determined pursuant to this subchapter and sections 72 (a) and 107 (f) of Title 11. and the rules and regulations issued by the Commission thereunder. Notwithstanding the fact that market quotations for securities issued by controlled companies are available, the board of directors may in good faith determine the value of such securities: Provided. That the value so determined is not in excess of the higher of market value or asset value of such securities in the case of majority-owned subsidiaries, and is not in excess of market value in the case of other controlled companies,
For purposes of the valuation of those assets of a registered diversified company which are not subject to the limitations provided for in section 80a-5 (b) (1) of this title, the Commission may, by rules and regulations or orders, permit any security to be carried at cost, if it shall determine that such procedure is consistent with the general intent and purposes of this subchapter and sections 72 (a) and 107 (f) of Title 11. For purposes of sections 80a-5 and 80a-12 of this title in lieu of values determined as provided in clause (A) above, the Commission shall by rules and regulations permit valuation of securities at cost or other basis in cases where it may be more convenient for such company to make its computations on such basis by reason of the necessity or desirability of complying with the provisions of any United States revenue laws or rules and regulations issued thereunder, or the laws or the rules and regulations issued thereunder of any state in which the securities of such company may be qualified for sale,
The foregoing definition shall not derogate from the authority of the Commission with respect to the reports, information, and documents to be filed with the Commission by any registered company, or with
respect to the accounting policies and principles to be followed by any such company, as provided in sections 80a-8, 804-29, and 80a-30.
(40) "Voting security" means any security presently entitling the owner or holder thereof to vote for the election of directors of a company. A specified percentage of the outstanding voting securities of a company means such amount of its outstanding voting securities as entitles the holder or holders thereof to cast said specified percentage of the aggregate votes which the holders of all the outstanding voting securities of such company are entitled to cast. The vote of a majority of the outstanding voting securities of a company means the vote, at the annual or a special meeting of the security holders of such company duly called, (A) of 67 per centum or more of the voting securities present at such meeting, if the holders of more than 50 per centum of the outstanding voting securities of such company are present or represented by proxy; or (B) of more than 50 per centum of the outstanding voting securities of such company, whichever is the
(41) “Wholly-owned subsidiary” of a person means a company 95 per centum or more of the outstanding voting securities of which are owned by such person, or by a company which, within the meaning of this paragraph, is a wholly-owned subsidiary of such person.
(42) "Securities Act of 1933", "Securities Exchange Act of 1934", "Public Utility Holding Company Act of 1935”, and “Trust Indenture Act of 1939" mean those acts, respectively, as heretofore or hereafter amended.
(b) No provision in this subchapter and sections 72 (a) and 107 (f) of Title 11 shall apply to, or be deemed to include, the United States, a State, or any political subdivision of a State, or any agency, authority, or instrumentality of any one or more of the foregoing, or any corporation which is wholly owned directly or indirectly by any one or more of the foregoing, or any officer, agent, or employee of any of the foregoing acting as such in the course of his official duty, unless such provision makes specific reference thereto. (Aug. 22, 1940, ch. 686, title I, § 2, 54 Stat. 790; 1946 Proc. No. 2695, eff. July 4. 1946. 11 F. R. 7517. 60 Stat. 1352.)
REFERENCES IN TEXT The Securities Act of 1933, referred to in subsection (a) (30, 42), is classified to section 77a et seq. of this title.
The Securities Exchange Act of 1934, referred to in subsection (a) (42), is classified to section 78a et seq. of this title and to sections 775—770, 773, 77k, 77m, 770, and 778 of this title.
The Public Utility Holding Company Act of 1935, referred to in subsection (a) (42), is classified to section 79 et seq. of this title.
The Trust Indenture Act of 1939, referred to in subsection (a) (42), is classified to section 77aaa et seq. of this title.
CODIFICATION Words "Philippine Islands" were deleted from definition of term "state" under authority of Proc. No. 2695, which granted independence to the Philippine Islands. Said Proc. No. 2695 was issued pursuant to section 1394 of Title 22, Foreign Relations and Intercourse, and is set out as a note under that section.
TRANSFER OF FUNCTIONS All executive and administrative functions of the Secu. rities and Exchange Commission were, with certain exceptions, transferred to the Chairman of such Commission, with authority vested in him to authorize their performance by any officer, employee, or administrative unit under his jurisdiction, by 1950 Reorg. Plan No. 10, $$ 1, 2, eff. May 24, 1950, 15 F. R. 3175, 64 Stat. 1265, set out in note under section 78d of this title.
CROSS REFERENCES Applicability to United States, States, or their governmental agencies of
Investment Advisers Act of 1940, see section 806-2 (b) of this title.
Public Utility Holding Company Act of 1935, see section 79b (c) of this title.
Securities Exchange Act of 1934, see section 780 (c) of this title. Definition of the terms
Affiliate of specified person, company, director, person, sale, sell, security, and voting security under Public Utility Holding Company Act of 1935, see section 79b of this title.
Affiliated person, assignment, bank, broker, company, control, convicted, dealer, director, exchange, insurance company, investment adviser, national securities exchange, person, securities, and underwriter under Investment Advisers Act of 1940, see section 80b-2 of this title.
Bank, broker, dealer, director, exchange, issuer, person, sale, sell, and security, see section 78c of this title.
Control not applicable to holding company affiliate, see section 80a-3 of this title.
Dealer, issuer, person, prospectus, sale, sell, security, and underwriter, see section 77b of this title.
Director, prospectus, sale, sell, underwriter, and voting security under Trust Indenture Act of 1939,
see section 77ccc of this title. 880a-3. Same; investment company.
(a) When used in this subchapter and sections 72 (a) and 107 (f) of Title 11, “investment company" means any issuer which
(1) is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, or trading in securities:
(2) is engaged or proposes to engage in the business of issuing face-amount certificates of the installment type, or has been engaged in such business and has any such certificate outstanding; or
(3) is engaged or proposes to engage in the business of investing, reinvesting, owning, holding, or trading in securities, and owns or proposes to acquire investment securities having a value exceeding 40 per centum of the value of such issuer's total assets (exclusive of Government securities and cash items) on an unconsolidated basis. As used in this section, “investment securities” includes all securities except (A) Government securities, (B) securities issued by employees' securities companies, and (C) securities issued by majorityowned subsidiaries of the owner which are not investment companies.
(b) Notwithstanding paragraph (3) of subsection (a) of this section, none of the following persons is an investment company within the meaning of this subchapter and sections 72 (a) and 107 (f) of Title 11:
(1) Any issuer primarily engaged, directly or through a wholly-owned subsidiary or subsidiaries, in