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of the liability or transaction giving rise to the debt, the 2. Information on Subsidiaries, Parents or Any Other Comdate of maturity and rate of interest.

pany or Firm Having Control Over Subject Corporation A schedule on notes and accounts payable to related companies shows the name of the creditor, the nature of

Annual Report Form F-a requires forwarders to provide the transaction giving rise to the debt, date of issue, rate (1)

a list of companies under common control with the forof interest and due date. A schedule on non-current pay-controlled by the forwarder, either directly or indirectly.

warder; (2) a list of companies and their subsidiaries ables to related companies requires identical information. A schedule entitled long-term debt shows the name of the For each parent company and subsidiary in the chain the creditor, the nature of the debt, date of issue, date of ma- forwarder must state the percentage of voting power owned turity and rate of interest.

by the company having immediate control; and (3) a Other schedules submitted with the annual reports of complete list of the companies controlling the forwarder, water carriers contain debt information; however, the beginning with the company in the chain that is most name of the creditor and other details of the debt are remote and showing for each company the percentage of not shown. In addition, special applications also contain the voting power owned by the immediately controlling information on debt; however, this information is merely company. When any company listed is immediately contotals used in balance sheets and the details of the debts trolled by or through two or more companies jointly, the are not given.

respondent is to list all such companies and list the con

trolled company under each of them. 5. Enforcement and Effectiveness of Laws, Rules and

Annual Report Form F-b requires forwarders to disRegulations

close any affiliation or connection with any rail, motor, or

water carrier, or with any shipper that commonly uses See Comptroller General's letter, p. 197.

the services of a freight forwarder.

Section 410 of the act (49 U.S.C. 1010) states that no 6. Availability and Cost of Information to the Public person shall engage in service subject to Part IV of the The availability and cost of duplicating information on act, unless such person holds a permit, issued by the

Commission, authorizing such service. water carriers is the same as for railroads. (See p. 217.)

Pursuant to this authority, ICC's regulations (49 CFR 7. Proposals for New Legislation and Authority

1003.3) require an application for a freight forwarder

permit to be filed with ICC. This application must show Proposals for new legislation are discussed on page 217. (1) any interest that the forwarder, including its officers

and directors, has in the affairs of any other carrier; Information Received From Freight Forwarders (2) any interest which any other carrier, including its

officers and directors or any person authorized to control Section 412 of the Interstate Commerce Act, as amended a carrier, has in the affairs of the forwarder; (3) whether annual, periodical, or special reports from freight for- the forwarder and who also has an interest in another warders and associations; to prescribe the manner and carrier, and if so, the applicant must describe the interest form in which such reports shall be made, and to require such person has in the forwarder and in the other carrier; answers to all questions upon which ICC may deem (4) whether the forwarder is engaged principally, in the information to be necessary.

business of manufacturing and selling and/or buying and Pursuant to this authority, ICC regulations (49 CFR selling articles and commodities; or controls, is controlled 1251) state that the following annual reports shall be filed by, or is under the common control with any such person. by forwarders subject to regulation under Part IV of the If so, the forwarder must identify such person or persons Interstate Commerce Act:

1003.3) require an application for a freight forwarder (1) Annual Report Form F-a prescribed for Class A

and disclose the extent such persons use the services of freight forwarders. (49 CFR 1251.1)

freight forwarders. (2) Annual Report Form F-b

prescribed for Class B 3. Information on Officers and Directors freight forwarders. (49 CFR 1251.2)

Annual Report Form F-a requires the forwarders to The information received on the aforementioned reports provide a list of all directors' names, addresses and the and in special applications is discussed below in the same expiration dates of their terms of office. The forwarder sequence as the information requested in Senator Metcalf's must also provide a list of the names and titles of its prinletter of February 9, 1973, except for the evaluation of the cipal general officers. enforcement and effectiveness of the rules and regulations which will be covered in the Comptroller General's formal provide the names and titles of its principal general

Annual Report Form F-b requires the forwarder to response to Senator Metcalf.'

officers. 1. Information on Proprietary (Voting) Ownership

4. Information on Long-Term and Short-Term Debt Annual Report Form F-a requires the forwarders to The financial information requested on the annual provide the name, address, number of votes to which report forms and application forms used by freight forentitled, and the classification of stock, or the forwarders' warders includes summary balance sheet data on long10 largest stockholders. If any stockholders held the stock term and short-term debt at the beginning and end of the in trust, the particulars of the trust are required to be year. However, details such as the name of the cre or provided.

are not provided. Annual Report Form F-b requires the forwarders to provide the name, address and number of votes to which 5. Enforcement and Effectiveness of Laws, Rules and entitled, of the forwarders, five largest stockholders.

Regulations See p. 197.

See Comptroller General's letter, p. 197.

p. 217.

6. Availability and Cost of Duplicating Information

Form S-5, registration statement for securities of The availability and cost of duplicating information on

open-end management investment companies freight forwarders is the same as for railroads, p. 217.

registered as management investment companies

on Form N-8B-1 (17 CFR 239.15). 7. Proposals for New Legislation and Authority

Form S-8, registration statement for securities to be

offered to employees pursuant to certain plans Proposals for new legislation were previously discussed (17 CFR 239.16b). under same heading, in first (railroad) part of this report, Form S-10, registration statement for oil or gas in

terests or rights (17 CFR 239.17). Form S-11, registration statement for securities of

certain real estate companies (17 CFR 239.18). SECURITIES AND EXCHANGE COMMISSION

Form S-12, registration statement for American

Depositary Receipts issued against outstanding The Securities and Exchange Commission (SEC) was

foreign securities (17 CFR 239.19). created by the Congress in 1934 to protect the public and

Form S-13, registration statement for voting trust investors against malpractices in the securities and finan

certificates (17 CFR 239.25). cial market. SEC administers the following acts:

Form N-5, registration statement for a small business

investment company under the Securities Act of Securities Act of 1933 (15 U.S.C. 778.)

1933 and the Investment Company Act of 1940 Securities Exchange Act of 1934 (15 U.S.C. 78a.)

(17 CFR 239.24). Public Utility Holding Company Act of 1935 (15 Form 1-A, application for exemption from regisU.S.C. 79.)

tration under the act (17 CFR 239.90). Trust Indenture Act of 1939 (15 U.S.C. 77aaa.)

Form 1-E, application for exemptions from regisInvestment Company Act of 1940 (15 U.S.C. 80a-1.) stration for securities of small business investment

Investment Advisers Act of 1940 (15 U.S.C. 806–1.) companies (17 CFR 239.200). Each of the above acts requires any organization or

Schedule A-Contents of Offering Circular, under firm that offers securities to the public to provide such

Regulation E, for Producing Landowners' Royalty information to SEC as SEC may require, including pro

Interests (17 CFR 230.605 and 230.610a). prietary ownership; subsidiary, parent, and other control

Schedule B-Contents of Offering Circular, for Noninformation; officers and directors; and long-term and

Producing Landowners' Royalty Interests, by short-term debt. The information required by SEC under

Foreign Governments (17 °CFR 230.490' and each of the foregoing acts is presented below.

230.491).

These forms are the source of most information received Securities Act of 1933

pursuant to the Securities Act of 1933 concerning proprieThe Securities Act of 1933 (15 U.S.C. 77a) provides that tary ownership; subsidiary, parent, and other control; issuers of securities through public offerings in interstate officers and directors; and long-term and short-term commerce or through the mails, directly or by others on

debts. The information reviewed on the aforementioned their behalf, are required to file with the SEC registra- applications and reports is discussed below in the same tion statements containing financial and other pertinent sequence as the information requested in Senator Metcalf's data concerning the issuer and the securities being offered.

letter of February 9, 1973, except for the evaluation of The act prescribes the information which must be con

the enforcement and effectiveness of the rules and regutained in registration statements and grants SEC the

lations which will be covered in the Comptroller General's authority to make such rules and regulations and to

formal response to Senator Metcalf.' prescribe the various forms the SEC deems necessary to carry out the provisions of the act.

1. Information on Proprietary (Voting) Ownership Pursuant to this authority, SEC regulations (17 CFR 239) prescribe the following forms:

Forms 1-A, and 1-E require the registrants to list the

name of each individual who owns, either directly or inForm C-3, registration statement for American directly, 10 percent or more of any class of securities of the certificates against foreign issues and for the under

registrant. lying securities (17 CFR 239.5).

There are several forms--S-2, S-3, S-8, S-10, 8-11 and Form D-1, registration statement for certificates of N-5—which require information on any individual who is deposit (17 CFR 239.6).

the owner of record or beneficial owner of more than 10 perForm D-1A, registration statement for certificates of cent of any class of securities of the registrant. The infor

deposit issued by issuer of securities called for mation to be submitted includes the name and address of deposit (17 CFR 239.7).

the owner, the class of stock, the amount owned, type of Form S-1, registration statement under the Securities ownership (record or beneficial or both), and percent of Act of 1933 (17 CFR 239.11).

each class of stock owned. Form N-5 also requires the Form S-2, registration statement for shares of certain registrant to name each individual with beneficial owner

corporations in the development stage (17 CFR ship of 5 percent or more of the voting securities and 239.12).

Form D-1 requires the registrant to list the names of each Form S-3, registration statement for shares of mining individual associated with the registrant who holds secur

corporations in the development stage (17 CFR ties of the original issuer. 239.13).

Forms S-1 and S-13 require the registrant to name Form S-4, registration statement for securities of each individual with beneficial ownership of more than

closed-end management investment companies 10 percent of the voting securities of the registrant. registered on Form N-8B-1 (17 CFR 239.14).

See p. 197.

Form C-3 requires the registrant to name each person, the registrant, whose aggregate direct remuneration exor class of persons (other than underwriters, sub-under- ceeds $30,000. In addition, the aggregate of all options held writers, or dealers) to whom American Certificates have by officers and directors must be given. Forms S-10, S-12, been sold within 6 months, or will be sold for consideration C-3, D-1, and D-1A only require the name of each director varying from that at which the certificates are offered to and officer of the company. the general public.

Form S-13 requires the registrant to name each voting Forms D-1A and S-12 do not require proprietary trustee and indicate the percentage of each class of the ownership information.

following securities owned directly or beneficially by each Forms S-2 and S-11 also require the registrant to name trustee: voting trust securities; all securities of issuer not each individual who holds options to purchase the securi- deposited under the voting trust agreement; and all secuties of the registrants.

rities of the issuer's parents and subsidiaries. In addition, Forms S-4 and S-5 require the same ownership informa- the registrant is required to supply detailed information as tion as required by Form N-8B-1 under the Investment to those instances, such as the election of directors, in Company Act of 1940.

which the voting trustees are empowered to vote the de

posited securities. If the voting trustees are directors, of2. Information on Subsidiary, Parent, or any Other Com- ficers, partners, or trustees of another business, the regis

pany or Firm Having Control Over the Subject trant must supply the name of the trustee, the other busiOrganization

ness, and the nature of the other business. Forms 1-A and 1-E require the registrants to list the

Forms S 4 and S-5 require the same information on name of each affiliate and describe the nature of the

officers and directors as required by Form N-8B-1, under affiliation.

the Investment Company Act of 1940. Forms N-5, S-1, and S-11 require a registrant to name its parent company and the percentage of the voting 4. Information on Long-Term and Short-Term Debt stock which the parent company controls. The registrant Schedules A and B require information as to whether must also furnish information as to the nature of any other the royalty interests offered will, at the time of delivery, control which the parent company exerts over the regis- be subject to any mortgage, deed of trust or any other trant. In addition, Form S-1 requires the registrant to encumbrance or lien except current taxes not yet delinlist the subsidiaries over which it exerts control and indi- quent. The nature of the encumbrance or lien, the amount cate the percentage of voting securities it owns, and of the obligation, the date of the obligation, how and when Form N-5 requires the registrant to list the names of the obligation is payable, and whether the obligation is those companies in which the registrant controls or has the delinquent must be furnished. potential to control, 5 percent or more of the voting

Many of the registration forms require information on securities.

the long-term and short-term debts of the registrants. The Forms C-3 and S-10 require the registrant to name the underwriter of the registrants' securities. Form C-3 also indebtedness and the aggregate amount of each type. A

information, however, is limited to indicating the type of requires the registrant state whether the underwriter is a depositor of the registrant or an affiliate of any depositors balance sheet and other financial statements as exhibits.

majority of the forms require the registrant to subinit a of the registrant.

From these, the SEC is able to extract the information it Forms S 4 and S-5 require the same information on

needs. However, none of the forms require the details of subsidiary, parent, or other company control over the

the debts or the creditors. subject organization as required by Form N-8B-1, under the Investment Company Act of 1940.

5. Enforcement and Effectiveness of Laws, Rules, and

Regulations 3. Information on Officers and Directors

See Comptroller General's letter, p. 197. Forms 1-A and 1-E require the registrant to furnish a complete listing of the names and addresses of all of its 6. Availability and Cost of Information to the Public executive officers and members of the board of directors. The forms also require the registrant to indicate all the All forms and reports described above are available to various positions and/or offices each officer has held with the public in the SEC's Public Reference Section. Any the registrant.

individual desiring information may personally make Forms S-1, S-2, S-3, S-11, and N-5 require the regis- copies of such information, at the SEC, at a cost of 10 trant to list the names of each director and executive cents per page. Such individuals may also receive copies officer and the principal occupation of each executive of any desired information through an SEC contractor. officer over the past 5 years.

Forms S-1, S-2, S-3, and S-11 also require the aggregate 7. Proposals of New Legislation or Authority amount and percentage of each class of equity securities of the registrant or any of its parent or subsidiaries owned

We were informed by an agency official that no legislaby officers and directors, but do not require identification

tion which the SEC has proposed or supported concerning of the directors or officers owning the securities. In addi- information gathering within the last 10 years, has failed tion, Form S-1 requires the registrant to list the name of

to be enacted. each officer or director whose options to purchase securities of the registrant or of any of its parents or subsidiaries,

Securities Exchange Act of 1934 exceeds $10,000 for each individual, or $30,000 for any The Securities Exchange Act of 1934 (15 U.S.C. 78a) group of individuals. Form S-8 requires the registrant to provide the material tions, annual and other reports by companies whose

requires the filing with the SEC of registration applicaprovisions of all options to purchase securities of the regis- securities are listed on national securities exchanges. The trant or its subsidiaries held by each director or officer of

act also requires similar registration and reporting by ship of

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companies whose securities are traded over-the-counter, the evaluation of the enforcement and effectiveness of when such companies have $1,000,000 of assets and 500 the rules and regulations which will be covered in the or more stockholders. In addition, the act also provides Comptroller General's formal response to Senator Metcalf.' for the registration with and regulation by the SEC of national securities exchanges, brokers and dealers engaged 1. Information on Proprietary (Voting) Ownership in over-the-counter securities business, and national associations of such brokers and dealers. The act granted

Form 10-K requires the registrant to name each inSEC the authority to prescribe the form or forms on

dividual who owns of record or is known by the regiswhich such information should be filed as well as to

trant to own beneficially, more than 10 percent of any prescribe rules or regulations as necessary for the pro

class of securities of the registrant. The registrant must tection of the investor.

also show the name; address; class of stock owned; whether Pursuant to this authority the SEC regulations (17

owned of record, beneficially or both; amount owned and CFR 249) prescribed the following forms to be used for the percentage of securities held by each of the individuals. the purposes of this act:

Voting trusts filing annual reports on Form 16K must list

the names of each individual who owns, directly or inForm 1, for application for, or exemption from, directly, more than 10 percent of the voting certificates

registration as a national securities exchange. (17 of the following groups; the voting trust certificates; all CFR 249.1).

securities of the issuer not deposited under the voting trust Form 3, initial statement of beneficial ow

agreement; and all securities of the issuer's parent and securities. (17 CFR 249.103).

subsidiaries. Form 4, statement of changes in beneficial ownership Forms N-1R, N-5R, N-30A-2, N-30A-3 require the of securities. (17 CFR 249.104).

registrants to list the name, address, class of security Form 10, general form for registration of securities owned, whether owned of record, beneficially or both, (17 CFR 249.210).

amount owned, and percent of each class owned for each Form 8-K, form for reporting current changes. (17 individual who owns, controls, or holds with the power to CFR 249.308).

vote 5 percent or more of the voting securities of the regisForm 10-K, general annual report. (17 CFR 249.310). trant. Forms N-1R and N-5R also require the above Form 14-K, annual report for certificates of deposit information for each individual who owns more than 10 issued by a committee. (17 CFR 249.314).

percent of any class of securities of the registrant. Form 16-K, annual report relating to voting trust certificates. (17 CFR 249.316).

Form U5S, used by public utility holding companies, Form 20-K, annual report of foreign private issuers. requires the registrant to furnish ownership information (17 CFR 249.320).

on each individual known to the registrant to own benefiForm N-1R, annual report of registered management registered holding company in the system. The

form also

cially 1 percent or more of the voting securities of any investment company under the Investment Company Act of 1940 and the Securities Exchange Act requires the registrant to list the names of those individuals of 1934. (17 CFR 249.330).

beneficially owning 5 percent or more of the total voting

securities of any other company in the system. The inforForm N-5R, annual report of small business invest

mation required includes the name of the issuer, class of ment companies. (17 CFR 249.332).

stock owned, name and address of the beneficial owner, Form 2-MD, annual report for investment trusts having securities registered on Form C-1. (17 CFR

number of shares owned, and the percent owned. 249.402).

SEC regulations (17 CFR 249) prescribe the use of other Form N-30A-2, annual report for unit investment forms, which also provide the SEC with proprietary (vot

trusts currently issuing securities. (17 CFR ing) ownership. Persons owning beneficially 10 percent of 249.442).

the equity securities of a company must file Form 3 which Form N-30A-3, annual report for unincorporated shows the title of the security, the amount owned directly management investment companies currently issu

or indirectly, and the nature of the beneficial ownership. ing periodic payment plan certificates. (17 CFR Form 4 is used to report changes in beneficial ownership 249.443).

once the initial Form 3 has been filed. Form U5S, annual report of registered public utility Form 10 requires the name and address; class of security holding companies. (17 CFR 249.450).

owned; whether owned of record, beneficially or both; Form BD, application for registration as a broker and amount owned, and percent owned for each individual who

dealer or to amend or supplement such an applica- owns or is known by the registrant to own beneficially tion. (17 CFR 249.501).

more than 10 percent of any class of voting securities of Form X-17A-10, annual report of income and ex- the registrant.

penses to be filed by Exchange members, brokers, Form BD, requires that the applicant identify each and dealers. (17 CFR 249.618.)

person who owns 1 percent or more of the registrants Form X-17A-12(1), notification required to be equity securities, the class of stock owned, and the percent

filed by certain broker-dealer market makers. (17

CFR 249.619.) These forms are the source of most information received 2. Information on Subsidiary, Parent and Any Other Company pursuant to the Securities Exchange Act of 1934, con

or Firm Having Control Over the Subject Organization cerning proprietary ownership, subsidiary, parent and

Form 10-K requires the registrant to list, or diagram, other control information; officers and directors; and long- all of its parent and subsidiary companies and to indicate term and short-term debts. The information received in the aforementioned registrations and reports is discussed

the percentage of voting securities owned by each of the below in the same sequence as the information requested

immediate parent companies. in Senator Metcalf's letter of February 9, 1973, except for 1 See p. 197.

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Form 14-K, submitted by committees that have been tute 5 percent or more of the voting securities of the established to issue certificates of deposits for securities company, if converted. turned in by security holders in bankrupt companies, In addition, the registrant must furnish a list of all pershows the names of any committee member, committee sons, or companies, directly or indirectly controlling, consecretary or counsel for the committee, who owns directly trolled by, or under common control with the registrant. or beneficially, any certificates of deposits or other secu- The percentage of voting securities owned or other basis rities of the original issuer, or parents or subsidiaries of of such control must also be indicated. the original issuer, the name of the issuer, title of the issue Form U5S, used by registered public holding companies, owned, amount owned of record and amount owned requires the registrant to list the name of the top registered beneficially.

holding company and all subsidiaries in the registrant's Form 16-K requires the registrant to name each voting system. The percentage of the registrant's voting securities trustee and each person who owns of record or is known owned by each of these companies must be furnished as to own beneficially more than 10 percent of the voting well as a list showing the names of the companies within trust certificates, and to show for all voting securities of the registrant's system which own securities of other systhe issuer not deposited under the voting trust agreement, tem companies, and the extent of such ownership. trust certificates, and all securities of the issuer's parents Form X-17A-10 used by exchange members, brokers or and subsidiaries the name and address of the owner, the dealers, requires the registrant to list the names of all subissuer's name and class of security owned; whether owned sidiaries which are exchange members or registered broker of record, beneficially, or both; amount owned; and the dealers. percentage owned. The form also requires disclosure of the Form 1, used by exchanges registering, or requesting voting trustees' activities as directors, officers, employees exemption from such registration, as a national securities or partners in any other business or profession. If a voting exchange, requires the exchange to furnish information on trustee represents any individual who owns any voting all of the companies which are affiliated with, or subsidiary securities of the issuer or its affiliates the details of the to the exchange. The nature of such affiliation, such as affiliation must be disclosed on the form.

security ownership, joint membership, etc., must be exForm 20-K, submitted by foreign private issuers, re- plained. quires the registrant to list the names of any individual or Form 10, requires the registrant to list all of its parent government that, directly or indirectly, controls the regis- and subsidiary companies and indicate the percentage of trant. A brief description of the control exerted must also voting securities owned, or other control exerted, by the be furnished.

immediate parent. Form N-1R requires the registrant to list the names Form BD requires the registrant to give the name of any and principal business of each company in whose securities person that exerts any type of control over the registrant, the registrant has invested more than 5 percent of its total and a description of the agreement or other basis through assets. The registrant must also report the actual percent- which control is exercised. age of its assets invested in each company. In those instances where the registrant owns, controls, or holds with

Form 8-K requires the registrant to report any changes

in control of the registrant including a description of the the power to vote, 5 percent or more of the voting securi

transaction, the name of the parent, the percentage of ties of any company, the name of each company and the

voting securities owned by the parent or other basis for percentage of securities held must be reported. In addition

control, and the name of any person ceasing to be a parent Form N-IR requires the registrant to supply the same

of the registrant. parent and subsidiary information, as required on Form 10-K above.

3. Information on Officers and Directors Form N-30A-3, filed by unincorporated management investment companies requires the registrant to furnish Form 10-K requires the registrant to list the names of the same information concerning the percentage of the

all officers and directors of the registrant and describe each registrant's total assets invested in the securities of other position and office held by them. In addition, the regiscompanies as required by the annual report Form N-IR. trant must furnish information on each officer and direcThe registrant must also list the names of those companies tor who (1) owns directly or beneficially any security of in which it owns more than 10 percent of the voting secu- the registrant or its subsidiaries; (2) holds options, exrities and those companies which own, control, or hold with ceeding $10,000 to purchase such securities, and (3) owes the power to vote, 5 percent or more of the voting secu- debts to the registrant or its subsidiaries in excess of rities of the registrant. Form N-30A-2, submitted by $10,000 or 1 percent of the registrant's total assets, which

, investment trusts issuing securities, requires the trustee ever is less. to list the names of any other investment companies with Form 20-K, used by foreign issuers of private securities, which the trustee had dealings while administering the requires the name and address of each officer and director. trust. The trustee must describe his activities with the

Form N-1R, used by registered management investother companies and any relationship between such

ment companies, requires the name of each director, companies and the trust. In addition, the trustee is required to furnish the names of any individuals exerting registrant and their principal occupations during the

officer and any member of an advisory board of the direct or indirect control over the registrant, with a brief past 5 years. The form also requires the registrant to description of the basis of such control.

fist the names of each of its legal and policy making Form N-5R, filed by small business investment com- employees who are connected in any manner with any panies, requires the name of any company in which the underwriter, investment adviser or broker of the regisregistrant owns 5 percent or more of the voting securities trant. Those directors of the registrant or of any adtogether with the title of the securities held and the per- visory board of the registrant who were also directors, centage owned, controlled or held. Form N-5R also re

officers, or employees of any broker or dealer must be quires the registrant to list the names of those companies reported together with the name of the director and the in which it owns convertible securities that would consti- firm.

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