Date re-
moved

Issues removed during 1960

Issue

LISTED ON NEW YORK STOCK EXCHANGE

McKee (Arthur G.) & Co. (common)1.
Great Western Financial Corp. (capital)1.

American Photocopy Equipment Co. (common)1.
Standard Financial Corp. (common)1.
Armstrong Rubber Co. (A common)1.
Raymond International, Inc. (common).
International Resistance Co. (common)1.
Singer Manufacturing Co. (capital).

Holt, Rinehart & Winston, Inc. (common)1.
Aro Equipment Corp. (common)1.
Hoover Ball & Bearing Co. (common)1.
Mays (J. W.), Inc. (common)1.
Basic, Inc. (common)1.

Avnet Electronics Corp. (common)1.

Total, 14 issues.

REDEEMED (PREFERRED STOCKS)

LIQUIDATED, EXPIRED, WORTHLESS LIMITED NUMBER OF SHARES OUTSTANDING

19,516, 952

Mar. 27

REDEEMED (PREFERRED STOCKS)

Fajardo Eastern Sugar Associates ($2 preferred shares beneficial interest) 1_

MERGED INTO OR ACQUIRED BY OTHER CORPORATIONS

* 50,000 2 600,000 29, 353

$ 1,798, 854

2,458, 207

47, 604

1 Removed from listing; all other issues removed from unlisted trading.

2 Limited number of outstanding shares.

Inability to supply financial statements.
Assets acquired by other corporations.

• Merged.

Mr. MACK. Unlike the New York Stock Exchange, your annual report this year did not have any comment about disciplinary action taken by the American Stock Exchange, but you have made that information available to me this morning?

Mr. MCCORMICK. Oh, yes, as a matter of fact, it is made available to the SEC by the 10th day following the month in which any disciplinary action has been taken. They have a complete record of it. Of course, we are submitting to you here not only the overall statistics, but name by name every disciplinary action we have taken and the reason for it.

Mr. MACK. The information has been made available for our file? Mr. McCORMICK. Certainly; there is no secret about the disciplinary action.

Mr. MACK. How many inspectors or policemen do you have to observe continuously the operation of your exchange?

Mr. McCORMICK. Of our staff, there are about 100 that are engaged in one form or another of policing and surveillance. You are particularly interested in the auditing, I gather, of member firms? Mr. MACK. I had that in mind.

Mr. McCORMICK. That is a very simple situation. Eighty-eight percent of all of our members are members of the New York Stock Exchange. As to that 88 percent, they are audited by the staff of the New York Stock Exchange. We do not audit them because there is no reason why we should examine into Merrill Lynch, Pierce, Fenner & Smith and the rest of them and duplicate the work of the New York Stock Exchange. That means that we must check a 12 percent group that are members of our exchange and not of the New York Exchange.

Mr. MACK. Then, if I understand you correctly, you rely on the New York Stock Exchange for auditing of the 88 percent?

Mr. McCORMICK. Eighty-eight percent of the members, that is correct. As to the 12 percent, that involves 75 member firms. Those 75 are covered by three expert auditors. To make two investigations a year, they must make 150 investigations. That means that each of the three auditors must make one examination a week, and they are competent to do that. I don't think any other exchange or any other securities agency checks all of the people in their own area twice a year.

Mr. MOONEY. In that context, Mr. Chairman, if I may, I would like to present a statement that we prepared concerning our examination procedures, the number of examinations, and the details of the examination itself. May I submit that for the record?

Mr. MACK. Yes; we will receive that for our files.

Mr. DINGELL. Mr. Chairman, if you would yield, the function of these audits is to do what? Does it have to do with the handling of accounts by the brokers, and specialists, and so forth, or does it actually go into the management practices and so forth of the firms which are listed?

Mr. McCORMICK. It basically involves meeting the capital requirements and compliance with the requirements of the statute.

Mr. DINGELL. Meeting the capital requirements?

Mr. McCORMICK. Capital requirements, regulations, marginal requirements, and regulations of that type.

Mr. DINGELL. Does it have anything to do with a situation as was pointed out in this Canadian Javelin case?

Mr. McCORMICK. We do not audit listed companies and no other exchange audits them.

Mr. DINGELL. Do you have any procedure that you go into when matters of this sort involved in this Canadian Javelin come to the attention of your exchange?

Mr. McCORMICK. The annual reports are filed with us and they are reviewed.

Mr. DINGELL. What action do you take, referring particularly to flagrant violations of your rules, by firms which you list? Can you list them?

Mr. McCORMICK. We certainly can and do.

Mr. DINGELL. Have you ever done so?

Mr. MCCORMICK. Yes; we have.

Mr. DINGELL. What criterion do you have for delisting some of these firms?