the Commission to find that there exists in the vicinity of the applicant exchange sufficient distribution to bring about an active market on the exchange adequate to absorb transactions of normal size... Pages 349, 877.

Applicant exchange held to have established that there exists in the vicinity of such exchange sufficiently widespread public distribution and sufficient public trading activity within its vicinity in the securities for which unlisted trading privileges are sought to render the extension of such privileges thereto appropriate in the public interest and for the protection of investors . . . Pages 349, 599, 805, 877.

It was further held that such extension of unlisted trading privileges would otherwise be appropriate in the public interest and for the protection of investors... Pages 349, 805, 877.

ADEQUACY OF INFORMATION FILED WITH THE COMMISSION

The registration of securities pursuant to the provisions of the Securities Act of 1933 or pursuant to the provisions of Section 12 (f) (3) of the Securities Exchange Act of 1934 together with the current filings required by either of these statutes or the rules and regulations promulgated thereunder provide information substantially equivalent to that available pursuant to the rules or regulations of the Commission in respect of securities duly listed and registration on a national securities exchange . . . Pages 349, 599, 877. DUTIES OF THE ISSUERS, OF THE OFFICERS AND DIRECTORS OF THE ISSUERS, AND OF EVERY BENEFICIAL OWNER OF MORE THAN 10 PERCENT OF THE SECURITIES

Although the Act provides that no application to extend unlisted trading privileges to any security pursuant to clause (3) of Section 12 (f) shall be approved by the Commission except upon such terms and conditions as will subject the issuer thereof, the officers and directors of such issuer, and every beneficial owner of more than 10 percent of such security to duties substantially equivalent to the duties which would arise pursuant to the Act if such security were duly listed and registered on a national securities exchange, the promulgation by the Commission of Rule X-12F-4, pursuant to statutory authority, exempts such issuers, officers, directors, and stockholders from the duties enumerated above. . . Pages 349, 877.

TERMINATION

Proceedings by Commission

Where proceedings have been instituted by the Commission to determine whether unlisted trading privileges should be terminated because the issuer had withdrawn the security from listing on any exchange, and where it has been established to the satisfaction of the Commission that such delisting was not designed to evade the purposes of the Act, held that the proceedings Instituted by the Commission be dismissed... Page 235.

Where proceedings have been instituted by the Commission to determine whether unlisted trading privileges should be terminated because the issuer had withdrawn the security from listing on any exchange, and where it has been established to the satisfaction of the Commission that such delisting was not designed to evade the purposes of the Act, held that it is unnecessary for the Commission to consider whether the continuation of unlisted trading privileges in such security is or is not necessary or appropriate in the public interest or for the protection of investors . . . Page 235.

Where an application filed by an issuer to withdraw its securities from listing on a national securities exchange is found to comply with the rules of the Commission and of the exchange, and where it does not appear to be necessary to impose terms on any order granting withdrawal, held that the application will be granted without the imposition of any terms . . Page 665.

Inadequacy of Notice to Stockholders

Where it appears that the notice which the issuer sent to its stockholders to inform them of a hearing on its application under Section 12 (d) of the Act for withdrawal from listing and registration contained misleading statements which might have deterred the stockholders from presenting their views on delisting to the Commission, and where the application has included such misleading statements, held that the application would be denied without prejudice, however, to the right of the applicant to file a corrected application and to submit to its stockholders a corrected notice setting forth the true facts and advising them of their right to present their views to the Commission either by letter or at a hearing on the corrected application . . . Page 571.

COMPLIANCE WITH RULES OF EXCHANGE

Where consideration of the issuer's application to withdraw its securities from listing was deferred by reason of the misleading character of the notice addressed by the issuer to its stockholders, and where the issuer circulated a corrected notice and filed an amendment to its application, held that the issuer need comply only with the exchange's rules relating to delisting which were in effect at the date of the filing of the original application and need not comply with a rule of the exchange promulgated subsequent to that date .. Page 665. PROCEEDING BY THE COMMISSION

Failure to File Adequate Annual Reports

Where, in violation of Section 13 (a) of the Securities Exchange Act and the Commission's rules thereunder, the issuer of securities listed on a national securities exchange failed to file its annual report for the fiscal year ended December 31, 1940, within the time prescribed by the statute and rules, and failed to file the financial statements required in its annual reports on form 10-K for both the years ended December 31, 1939, and 1940, and where it further appears that the issuer is unable to file the required information, held that it is necessary and appropriate for the protection of investors that the registration and listing of said securities be withdrawn ... Page 971.

9 S. E. C.

PART III

PUBLIC UTILITY HOLDING COMPANY ACT* OF 1935

ACCOUNTING

Provision in a plan for corporate simplification of a holding company subsidiary of a registered holding company for setting up an account entitled "Reserve Available for Revaluation of Investments" which admittedly was not based upon any evaluation of the worth of the investments, found to be inadequate and the Commission required that the investments be stated at a figure— or that a reserve account be created reducing the assets to a net carrying figure which would represent the fair value thereof... Page 686.

ACCOUNTING TREATMENT

Where, under orders of the state commission applicant is required to charge to its earned surplus account all call premiums and all unamortized debt discount and expense and all unamortized capital stock expense relating to its outstanding securities proposed to be retired; thereby creating a serious deficit in the earned surplus account; and where the state commission has authorized applicant to cure such deficit by transferring an amount equal thereto from applicant's stated value for common capital stock; held, that such treatment is in effect a quasi-accounting reorganization, to be justified under the peculiar circumstances here presented but not to constitute a precedent in future cases... Page 499.

Eliminating Investment in Capital Stock of Subsidiary Company, Absorbed by Merger

Where a parent company heretofore carried its investment in the capital stock of its wholly owned subsidiary at $5,165,329, although the book value of said stock was only $503,778, held proper, upon merger of subsidiary into parent company, for acquiring company to eliminate said investment by charging said book value of $503,778 to its investment account and the balance of $4,661,551 to its earned surplus account, even though a deficit of $4,089,804 in its earned surplus account is thereby created . . . Page 111. Intangibles in Merger of Subsidiaries with Parent

In connection with merger of subsidiary utility companies with parent, also an operating utility company, excess carrying value of securities on parent's books over underlying par value of such securities, required to be written off against capital surplus of parent to extent that same represents intrasystem profits, to the extent that such net excess carrying value represents actual cost to parent in arm's length bargaining, reserve for possible adjustment set-up and jurisdiction as to definitive accounting treatment reserved. Jurisdiction likewise reserved as to treatment of intangibles carried forward from books of subsidiaries so merged . . . Page 731.

*The term "Act" as used in Part III of this Digest refers to the Public Utility Holding Company Act of 1935.

9 S. E. C.

Interim Order Allowing Merger Conditioned by Reservation of Jurisdiction Over Accounts Affected

In allowing the merger of a subholding company into its parent as a step in connection with Section 11 (e) plan and preliminary to the consummation of such plan, the Commission reserves jurisdiction over the ultimate allowance to be given to an open account and on convertible obligations running from the subholding company to grandparent of the merged company. Further reservation of jurisdiction is made over the ultimate carrying value to be recorded on the books of the parent company of the assets now being acquired from the subholding company... Page 280.

ACQUISITION BY PARENT OF PHYSICAL PROPERTIES OF WHOLLY OWNED SUBSIDIARIES

Parent holding company, also an operating electric utility company, permitted to acquire electric utility properties of its wholly owned subsidiaries through merger, such properties being interconnected with and serving areas contiguous to those served by the utility facilities of the parent... Page 731.

ACQUISITION OF SECURITIES BY AFFILIATE

APPROVAL WITH CONDITIONS

Where an acquisition of securities for permanent retention will result in a relationship of such a character that the Commission would be forced to find that such acquisition will tend toward interlocking relations or the concentration of control of public utility companies, of a kind or to an extent detrimental to the public interest or the interest of investors or consumers within the meaning of Section 10 (b) (1) held that where the acquisition is incident to applicants accepting their pro rata share of new stock under a plan of corporate simplification, the acquisition should be approved subject to the condition that applicants reduce their holdings to less than 5 percent of the outstanding voting securities of such company before August 31, 1942, in order to enable applicants to have a fair opportunity to dispose of the new securities. . . Page 932.

APPROVAL

ACQUISITION OF SECURITIES BY ISSUER

Call for tenders by holding company of its preferred stocks approved, the Commission finding such transaction not objectionable under Section 12 (c) and Rule U-12C, upon condition, however, that a copy of the findings and opinion of the Commission, quoting from certain independent statistical sources, be enclosed in the letter or communication sent to the stockholders, the Commission deeming this necessary as a matter of full disclosure . . . Page 84.

Acquisition, by a subsidiary of a registered holding company, of its own capital stock for cancelation, being a step in a proposed plan of merger, approved, pursuant to Rule U-12C-1... Page 103.

Acquisition by a subsidiary of a registered holding company of its own capital stock and debt securities for cancelation, being a step in the proposed plan of merger, approved, pursuant to Rule U-12C-1... Page 111.

Declaration having been filed pursuant to Rule U-12C-1 by registered holding company with respect to acquisition on open market of approximately $782,200 principal amount of its outstanding first mortgage and first lien 5% bonds, due 1953, permitted to become effective Page 206.

Acquisition, by a holding company subsidiary of a registered holding company, of its own capital stock for cancelation pursuant to a plan for corporate simplification filed under Section 11 (e) of the Act approved pursuant to Rule U-12C-1 ... Page 686.

Declarations, by a registered holding company in accordance with Rule U42 promulgated under Section 12 (c) of the Act, regarding the application of approximately $5,300,000 derived by declarant from the sale of certain gas properties and securities to the acquisition of a portion of its first mortgage and first lien gold bonds, 52% series, due January 1, 1953, pursuant to tenders at 100 and accrued interest, approved subject to certain conditions, the Commission observing no basis for adverse findings under Section 12 (c) of the Act... Page 721.

RETIREMENT AND REDEMPTION

Declaration by registered holding company regarding acquisition of outstanding first mortgage bonds and notes permitted to become effective pursuant to Rule U-12C-1... Page 292.

ACQUISITION OF SECURITIES BY REGISTERED HOLDING COMPANY OR SUBSIDIARY

Where a registered holding company owns bonds of a subsidiary, which bonde are redeemed partly in cash and partly in common stock of such subsidiary: held, that no adverse findings are necessary under Section 10 (b) and eations 10 (c) (1) and that the transaction involved has the tendency required by Section 10 (c) (2) . Page 1.

...

Application filed by registered holding company to acquire, through merger, all the assets of a subsidiary and to assume all of its liabilities, much a consisting of preferred stocks and bonds of system companies, approus, “re Commission finding that the provisions of Section 10 (c) of the Act are atten and observing no basis for adverse findings under Section 10 (b), the effect o the transaction being the elimination from the system of an MSAJ company... Page 103.

Application filed by registered holding company to acquire by merger all the assets of a wholly owned subsidiary, such assets consisting largely d♬ bada, preferred stocks, and other nonvoting securities of system companies, sporocn with reservation of jurisdiction as to the value of such assets to be arrud on the books of the acquiring company; the Commission finding that the pro visions of Section 10 (c) of the Act are satisfied, and observing no bass for adverse findings under Section 10 (b); the effect of the transaction being to eliminate from the system a company which serves no necessary or will purpose... Page 111.

Application, filed by a registered holding company pursuant to Section 10 of the Act, regarding the acquisition by it of 5% promissory demand teen of certain of its subsidiary companies, approves findings under Sections 10 (b) and 19 fej 12 of notes of its utility subsidiarie

10 (c) (2) ... Page 163.

mission making so adverse finding that the aquisition dency required by Section

Acquisition of common capital story company by registered hold ing company as nominee of an win any which is to be liquidated

approved pursuant to Section 19 of Ba

Acquisition by registered hold company approved pursuant to Seo ket in connection with the

tion by one of its subsidiaries of hai,

and held by such registered holding

9 S. E. C.

Issued by another subex *** Page 178.