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merce or of the mails, or of any facility of any national securities exchange

(1) Pay or offer or agree to pay, directly or indirectly, to any person any compensation for soliciting another to purchase any security of the same issuer on a national securities exchange, or for purchasing any security of the same issuer on any such exchange for any account other than the account of the person who pays or is to pay such compensation; or

(2) Sell, offer to sell or induce an offer to buy such security, or deliver such security after sale, if, in connection with such distribution, such person has paid, or has offered or agreed to pay, directly or indirectly, to any person, any compensation for soliciting another to purchase any security of the same issuer on any national securities exchange, or for purchasing any security of the same issuer on any such exchange for any account other than the account of the person who has paid or is to pay such compensation.

(6) No person, participating or otherwise financially interested in the primary or secondary distribution of any security of any issuer, shall cause a purchase or sale of any security of the same issuer on a national securities exchange by paying or offering or agreeing to pay, directly or indirectly, to any person any compensation for soliciting another to purchase such security on any such exchange, or for purchasing such security on any such exchange for any account other than the account of the person who pays or is to pay such compensation.

(c) The provisions of this rule shall not apply in respect to any salary paid by a broker or dealer to any person regularly employed by him whose ordinary duties include the solicitation or execution of brokerage orders on a national securities exchange, if such salary represents only ordinary compensation for the discharge by such person of such duties in the regular course of his employment, and is not paid, in whole or in part, directly or indirectly, for the inducement by such person of the purchase or sale on a national securities exchange of any security of the issuer of the security in the primary or secondary distribution of which such broker or dealer is participating or otherwise financially interested.

(d) (1) The provisions of this rule shall not apply to any transaction involving the payment of compensation pursuant to the terms of an effective plan authorizing the payment of such compensation in connection with a distribution of securities, which plan has been filed with the Commission by a national securities exchange, provided that the person paying such compensation does not know or have

THE UNIVERSITY OF MICHIGAN CIBRARIES

reasonable grounds to believe, at the time he pays or offers or agrees to pay such compensation, that transactions connected with such distribution are being carried out in violation of such plan. This exemption shall be available only in respect of securities listed and registered on a national securities exchange, or of securities admitted to unlisted trading privileges on any such exchange where the issuer (i) has any security listed and registered on any such exchange and has filed the annual and other periodic reports required pursuant to the Securities Exchange Act of 1934, or (ii) has any security registered under the Securities Act of 1933 and has filed the annual and other periodic reports required pursuant to section 15 (d) of the Securities Exchange Act of 1934, or (iii) is a holding company registered under the Public Utility Holding Company Act of 1935 and has filed the annual and other periodic reports required pursuant to such Act, or a subsidiary of any such company, or (iv) is registered under the Investment Company Act of 1940 and has filed the annual and other periodic reports required to such Act.

(2) For the purposes of this rule a plan filed with the Commission by a national securities exchange shall not become effective unless the Commission, having due regard for the public interest and for the protection of investors, declares the plan to be effective. The Commission in its declaration may impose such terms and conditions relating to the provisions of the plan and the period of its effectiveness as it deems necessary or appropriate in the public interest or for the protection of investors. Rule X-10B-3. Employment of Manipulative and Deceptive

Devices. It shall be unlawful for any broker or dealer, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails, or of any facility of any national securities exchange, to use or employ, in connection with the purchase or sale of any security otherwise than on a national securities exchange, any act, practice, or course of business defined by the Commission to be included within the term “manipulative, deceptive, or other fraudulent device or contrivance," as such term is used in section 15 (c) (1) of the Act.

Rule X-10B-5. Employment of Manipulative and Deceptive

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

(1) to employ any device, scheme, or artifice to defraud,

(2) to make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or

(3) to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.

324214°-55—3

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EXEMPTION OF CERTAIN SECURITIES FROM SECTION

11 (d) (1) Rule X-1101-1. Exemption of Certain Securities From Section

11 (d) (1). A security shall be exempt from the provisions of section 11 (d) (1) with respect to any transaction by a broker and dealer who, directly or indirectly, extends or maintains or arranges for the extension or maintenance of credit on the security to or for a customer if

(a) The broker and dealer has not sold the security to the customer or bought the security for the customer's account; or

(6) The security is acquired by the customer in exchange with the issuer thereof for an outstanding security of the same issuer on which credit was lawfully maintained for the customer at the time of the exchange; or

(c) The customer is a broker or dealer or bank; or

(d) The security is acquired by the customer through the exercise of a right evidenced by a warrant or certificate expiring.within 90 days after issuance, provided such right was originally issued to the customer as a stockholder of the corporation issuing the security upon which credit is to be extended, or as a stockholder of a company distributing such security in order to effectuate the provisions of Section 11 of the Public Utility Holding Company Act of 1935. The right shall be deemed to be issued to the customer as a stockholder if he actually owned the stock giving rise to the right when such right accrued, even though such stock was not registered in his name; and in determining such fact the broker and dealer may rely upon a signed statement of the customer which the broker and dealer accepts in good faith; or

(e) Such broker and dealer would otherwise be subject to the prohibition of Section 11 (d) (1) with respect to 50% or less of all the securities of the same class which are outstanding or currently being distributed, and such broker and dealer sold the security to the customer or bought the security for the customer's account on a day when he was not participating in the distribution of any new issue of such security. A broker-dealer shall be deemed to be participating in a distribution of a new issue if (1) he owns, directly or indirectly, any undistributed security of such issue, or (2) he is engaged in any stabilizing activities to facilitate a distribution of such issue, or (3) he is a party to any syndicate agreement under which such stabilizing activities are being or may be undertaken, or (4) he is a party to an executory agreement to purchase or distribute such issue.

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SECURITIES EXEMPTED FROM REGISTRATION FROM Rule X-12A-1. Temporary Exemption From Section 12 (a) of

Certain Securities of Banks. ties

(a) The following securities of banks shall be exempt from the operation of Section 12 (a) to and including the one hundred and of x twentieth day after the adoption of a form specifically prescribed a for such securities : (1) securities as to which temporary registration goes for expired on June 30, 1935; (2) securities of the same issuer heretofore ac or hereafter issued in exchange for, or resulting from a modification

of, any securities exempted from the operation of Section 12 (a) of the Act by this rule; and (3) additional shares of common stock, here

tofore or hereafter issued, if common stock of the same issuer and of chare the same class is exempted from the operation of Section 12 (a) by por this rule.

When a national securities exchange absorbs another such exchange on which a security is traded pursuant to the exemption provided by this rule, the exemption shall continue in effect with respect to such

security on the surviving exchange, provided that the surviving exthe change promptly certifies to the Commission that it has approved the mis security for trading upon the application or consent of the issuer led to thereof.

(6) Rules X-7C2–1 and X-10B-1 shall be applicable to all securities exempted from the operation of Section 12 (a) by this rule. Rule X-12A-2. Temporary Exemption From Section 12 (a) of

Certain Securities Secured by Property Which, or a Leasehold Interest in Which, Is Owned by a Person Not the Original Issuer of Such Security-Prohibition of Use of Manipulative

or Deceptive Devices or Contrivances With Respect Thereto. (a) Any security which is secured by property which, or a leasehold interest in which, is now owned by a person who was not the original issuer of such security, shall be exempt from the operation of section 12 (a) to and including the respective dates indicated below, and for such longer period, if any, as would have been applicable under rule X-12A-1 or rule X-12A-3, if such security had been a security of such owner or lessee:

(A) If temporary registration of such security expired on June 30, 1935, such exemption shall continue to and including November 5, 1935, unless either of the following conditions is satisfied, in which event such exemption shall continue to and including April 30, 1936:

(1) An application for the registration of such security has been filed by the original issuer or by such owner or lessee.

(2) Such owner or lessee has filed with the exchange and with the Commission a statement conforming to the

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