(f) A statement showing the price at which such security is proposed to be sold, together with the maximum amount of commission or other form of remuneration to be paid in cash or otherwise, directly or indirectly, for or in connection with the sale or offering for sale of such securities.

(g) A detailed statement showing the items of cash, property, services, patents, good will, and any other consideration for which such securities have been or are to be issued in payment.

(h) The amount of capital stock which is to be set aside and disposed of as promotion stock, and a statement of all stock issued from time to time as promotion stock.

(i) If the issuer is a corporation, there shall be filed with the application a certified copy of its articles of incorporation with all amendments and of its existing by-laws, if not already on file in the office of the commission or of the recorder of deeds of the District of Columbia. If the issuer is a trustee there shall be filed with the application a copy of all instruments by which the trust is created or declared and in which it is accepted and acknowledged. If the issuer is a partnership or an unincorporated association, or joint-stock company, or any other form of organization whatsoever, there shall be filed with the application a copy of its articles of partnership or association and all other papers pertaining to its organization, if not already on file in the office of the commission or of the recorder of deeds of the District of Columbia.

All of the statements, exhibits, and documents of every kind required by the commission under this section, except properly certified public documents, shall be verified by the oath of the applicant or of the issuer in such manner and form as may be required by the commission.

With respect to securities required to be registered by qualification under the provisions of this section, the commission may by order duly recorded fix the maximum amount of commission or other form of remuneration to be paid in cash or otherwise, directly or indirectly, for or in connection with the sale or offering for sale of such securities in the District of Columbia.

At the time of filing the information, as hereinbefore prescribed in this section, the applicant shall pay to the commission a fee of one-tenth of 1 per centum of the aggregate par value of the securities to be sold in the District of Columbia for which the applicant is seeking registration, but in no case shall such fee be less than $20 or more than $500. In case of stock having no par value the price at which such stock is to be offered to the public shall be deemed to be the par value of such stock.

If upon examination of any application the commission shall find that the sale of the security referred to therein would not be fraudulent and would not work or tend to work a fraud upon the purchaser, and that the enterprise or business of the issuer is not based upon unsound business principles, it shall record the registration of such security in the register of securities, and thereupon such security so registered may be sold by the issuer or by any registered dealer who has notified the commission of his intention so to do, in the manner hereinafter provided in section 11, subject, however, to the further order of the commission as hereinafter provided.

CONSENT TO SERVICE

SEC. 9. Upon any application for registration by notification under section 7 made by an issuer, and upon any application for registration by qualification under section 8, whether made by an issuer or registered dealer, where the issuer is not domiciled in the District of Columbia, there shall be filed with such application the irrevocable written consent of the issuer that in suits, proceedings, and actions growing cut of the violation of any provision of this act, the service on the secretary of the commission of any notice process or pleading therein authorized by the laws of the District of Columbia. shall be as valid and binding as if due service had been made on the issuer. Any such action shall be brought either in the county of the plaintiff's residence or in the District of Columbia. Said written consent shall be authenticated by the seal of said issuer, if it has a seal, and by the acknowledged signa ure of a member of the copartnership or company, or by the acknowledged signature of any officer of the incorporated or unincorporated association, if it be an incorporated or unincorporated association, duly authorized by resolution of the board of directors, trustees, or managers of the corporation or association, and shall in such case be accompanied by a duly certified copy of the resolution of

the board of directors, trustees, or managers of the corporation or association, authorizing the officers to execute the same. In case any process or pleadings mentioned in this ac are served upon the commission it shall be by duplicate copies, one of which shall be filed in the office of the commission and another immediately forwarded by the secretary of the commission by registered mail to the principal office of the issuer against which said process or pleadings are directed.

REVOCATION OF REGISTRATION OF SECURITIES

SEC. 10. The commission may revoke the registration of any security by entering an order to that effect, with its findings in respect thereto, if upon examination into the affairs of the issuer of such security it shall appear that the issuer

(1) Is insolvent; or

(2) Has violated any of the provisions of this act or any order of the commission of which such issuer has notice; or

or

(3) Has been or is engaged or is about to engage in fraudulent transactions;

(4) Is in any other way dishonest or has made any fraudulent representations in any prospectus or in any circular or other literature that has been distributed concerning the issuer or its securities; or

(5) Is of bad business repute; or

(6) Does not conduct its business in accordance with law; or

(7) That its affairs are in an unsound condition; or

(8) That the enterprise or business of the issuer or the security is not based upon sound business principles.

In making such examination the commission shall have access to and may compel the production of all the books and papers of such issuer, and may administer oaths to and examine the officers of such issuer or any other person connected therewith as to its business and affairs and may also require a balance sheet exhibiting the assets and liabilities of any such issuer or his income statement, or both, to be certified to by a public accountant either of the District of Columbia, or of any State where the issuer's business is located, approved by the commission.

Whenever the commission may deem it necessary, it may also require such balance sheet or income statement, or both, to be made more specific in such particulars as the commission shall point out or to be brought down to the latest practicable date.

If any issuer shall refuse to permit an examination to be made by the com mission it shall be proper ground for revocation of registration.

If the commission shall deem it necessary it may enter an order suspending the right to sell securities pending any investigation, provided that the order shall state the commission's grounds for taking such action.

Notice of the entry of such order shall be given by mail, or personally, or by telephone, confirmed in writing, or by telegraph, to the issuer and every registered dealer who shall have notified the commission of an intention to sell such security.

Before such order is made final, the issuer or dealer applying for registration shall on application be entitled to a hearing.

REGISTRATION OF DEALERS AND SALESMEN

SEC. 11. No dealer or salesman shall engage in business in the District of Columbia as such dealer or salesman or sell any securities, including securities exempted in section 4 of this act, except in transactions exempt under section 5 of this act, unless he has been registered as a dealer or salesman in the office of the commission pursuant tothe provisions of this section.

An application for registration in writing shall be filed in the office of the commission in such form as the commission may prescribe, duly verified by oath, which shall state the principal office of the applicant, wherever situated, and the location of the principal office and all branch offices in the District of Columbia, if any, the name or style of doing business, the names, residence, and business addresses of all persons interested in the business as principals, copartners, officers, and directors, specifying as to each his capacity and title, the general plan and character of business and the length of time the dealer has been engaged in business. The commission may also require such addi

L

tional information as to applicant's previous history, record, and association, as it may deem necessary to establish the good repute in business of the applicant.

There shall be filed with such application an irrevocable written consent to the service of process upon the executive secretary of the commission in actions against such dealer in manner and form as hereinabove provided in section 9. If the commission shall find that the applicant is of good repute and has complied with the provisions of this section, including the payment of the fee hereinafter provided, it shall register such applicant as a dealer upon his filing a bond in the sum of $5,000 running in favor of the United States conditioned upon the faithful compliance with the provisions of this Act by said dealer and by all salesmen registered by him while acting for him. Such bond shall be executed as surety by a surety company authorized to do business in the District of Columbia.

Upon the written application of a registered dealer and general satisfactory showing as to good character and the payment of the proper fee the commission shall register as salesmen of such dealer such natural persons as the dealer may request. Such registration shall cease upon the determination of the employment of such salesman by such dealer.

The names and addresses of all persons approved for registration as dealers or salesmen and all orders with respect thereto shall be recorded in a register of dealers and salesmen kept in the office of the commission, which shall be open to public inspection. Every registration under this section shall expire on the 31st day of December in each year, but new registrations for the succeeding year shall be issued upon written application and upon payment of the fee as hereinafter provided, without filing of further statements or furnishing any further information unless specifically required by the commission. Applications for renewals must be made not less than thirty nor more than sixty days before the first day of the ensuing year, otherwise they shall be treated as: original applications. The fee for such registration and for each annual renewal shall be $25 in the case of dealers and $5 in the case of salesmen.

Changes in registration occasioned by changes in the personnel of a partnership or in the principals, copartners, officers, or directors of any dealer may be made from time to time by written application setting forth the facts with respect to such change.

Every registered dealer who intends to offer any security of any issue,. registered or to be registered, shall notify the commission in writing of his intention so to do. The notice shall contain the name of the dealer and shall state the name of the security to be offered for sale, and whenever a dealer shall have prepared such notice and shall have forwarded the same by registered mail, postage prepaid, and properly addressed to the commission, such dealer, as to the contents of such notice and the filing thereof, shall be deemed to have complied with the requirements of this paragraph. Any issuer of a security required to be registered under the provisions of this act selling such securities, except in exempt transactions as defined in section 5 hereof, shall be deemed a dealer within the meaning of this section 11 and required to comply with all the provision bersof.

REVOCATION OF DEALERS AND SALES MEN'S REGISTRATION

SEC. 12. Registration under section 11 may be refused or any registration granted may be revoked by the commission if after a reasonable notice and a hearing the commission determines that such applicant or registrant so registered:

(1) Has violated any provision of this act or any regulation made hereunder; or

(2) Has made a material falso statement in the application for registration; or

(3) Has been guilty of a fraudulent act in connection with any sale of securities, or has been or is engaged or is about to engage in making fictitious or pretended sales or purchases of any of such securities or has been or is engaged or is about to engage in any practice or sale of securities which is fraudulent or in violation of the law; or

(4) Has demonstrated his unworthiness to transact the business of dealer or salesman.

In cases of charges again. dealer employing such sa

Jesman notice thereof shall also be given the

Pending the hearing the commission shall have the power to order the suspension of such dealer's or salesman's registration: Provided, That such order shall state the cause for such suspension.

Until the entry of a final order the suspension of such dealer's registration, though binding upon the persons notified thereof, shall be deemed confidential, and shall not be published, unless it shall appear that the order of suspension has been violated after notice.

In the event the commission determines to refuse or revoke a registration as hereinabove provided, it shall enter a final order herein with its findings on the register of dealers and salesmen; and suspension or revocation of the registration of a dealer shall also suspend or revoke the registration of all his salesmen.

It shall be sufficient cause for refusal or cancellation of registration in case of a partnership or corporation or any unincorporated association, if any member of a partnership or any officer or director of the corporation or association has been guilty of any act or omission which would be cause for refusing or revoking the registration of an individual dealer or salesman.

BURDEN OF PROOF

SEC. 13. It shall not be necessary to negative any of the exemptions in this act provided in any complaints, information. indictment, or any other writ or proceedings laid or brought under this act, and the burden of establishing the right to any such exemption shall be upon the party claiming the benefit of such exemption, and any person claiming the right to register any securities by notification under section 7 of this act shall also have the burden of establishing the right so to register such securities.

ESCROW AGRFEMENT

SEC. 14. If the statement containing information as to securities to be registered, as provided for in section 8 of this act, shall disclose that any such securities or any securities senior thereto shall have been or shall be intended to be issued for any patent right, copyright, trade-mark, process, formula, or good will, or for organization or promotion fees or expenses or for good will or going-concern value or other intangible assets, the amount and nature thereof shall be fully set forth and the commission may require that such securities so issued in payment of such patent right, copyright, trade-mark, process, formula, or good will, or for organization or promotion fees or expenses, or for other intangible assets, shall be delivered in escrow to the commission or other depository satisfactory to the commission under an escrow agreement that the owners of such securities shall not be entitled to withdraw such securities from escrow until all other stockholders who have paid for their stock in cash shall have been paid a dividend or dividends aggregating not less than 6 per centum shown to the satisfaction of said commission to have been actually earned on the investment in any common stock so held; and in case of dissolution or insolvency during the time such securities are held in escrow, that the owners of such securities shall not participate in the assets until after the owners of all other securities shall have been paid in full.

INJUNCTIONS

SEC. 15. Whenever it shall appear to the commission, either upon complaint or otherwise, that in the issuance, sale, promotion, negotiation, advertisement, or distribution of any securit'es in the District of Columbia, including any security exempted under the provisions of section 4, and including any transaction exempted under the provisions of section 5, any person, as defined in this act, shall have employed or employs, or is about to employ any device, scheme, or artifice to defraud or for obtaining money or property by means of any false pretense, representation, or promise, or that any such person shall have made, makes, or attempts to make in the District of Columbia fictitious or pretended purchases or sales of securities or shall have engaged in or engages in or is about to engage in any practice or transaction or course of business relating to the purchase or sale of securities which is in violation of law or which is fraudulent or which has operated or which would operate as a fraud upon the purchaser, any one or all of which devices, schemes, artifices, fictitious, or pretended purchases or sales of securities, practices,

transactions, and courses of business are hereby declared to be and are hereinafter referred to as fraudulent practices, or that any person is acting as dealer or salesman in the District of Columbia without being duly registered as such dealer or salesman as provided in this act; the commission may investigate, and whenever it shall believe from evidence satisfactory to it that any such person has engaged in, is engaged or is about to engage in any of the practices or transactions hereinbefore referred to as and declared to be fraudulent practices, or is selling or offering for sale any securities in violation of this act or is acting as a dealer or salesman without being duly registered as provided in this act, the commission may, in addition to any other remedies, bring action in the name and on behalf of the commission against such person and any other person or persons concerned in or in any way participating in or about to participate in such fraudulent practices or acting in violation of this act, to enjoin such person and such other person or persons from continuing such fraudulent practices or engaging therein or doing any act or acts in furtherance thereof or in violation of this act. In any such court proceedings the commission may apply for and on due showing be entitled to have issued the court's subpoena requiring forthwith the appearance of any defendant and his employees, salesmen, or agents, and the production of documents, books, and records as may appear necessary for the hearing of such petition, to testify and give evidence concerning the acts or conduct or things complained of in such application for injunction. In such action the equity courts shall have jurisdiction of the subject matter, and a judgment may be entered awarding such injunction as may be proper.

REMEDIES

SEC. 16. (1) Every sale made in violation of any of the provisions of this act shall be voidable at the election of the purchaser; and the person making such sale and every director, officer, or agent of or for such seller, if such director, officer, or agent shall have personally participated or aided in any way in making such sale shall be jointly and severally liable to such purchaser in an action at law in any court of competent jurisdiction upon tender of the securities sold or of the contract made for the full amount paid by such purchaser, with interest, together with all taxable court costs and reasonable attorney's fees: Provided. That no action shall be brought for the recovery of the purchase price after two years from the date of such sale: And provided further, That no purchaser otherwise entitled shall claim or have the benefit of this section who shall have refused or failed within thirty days from the date thereof to accept an offer in writing of the seller to take back the security in question and to refund the full amount paid by such purchaser, together with interest on such amount for the period from the date of payment by such purchaser down to the date of repayment, such interest to be computed—

(a) In case such securities consist of interest-bearing obligations, at the same rate as provided in such obligations; and

(b) In case such securities consist of other than interest-bearing obligations, at the rate of 6 per centum per annum, less, in every case, the amount of any income from said securities that may have been received by such purchaser.

(2) Any person having a right of action against a dealer or salesman under this section shall have a right of action under the bond provided in section 11. (3) A registration by notification made in good faith and after the commission, on application, shall have given tentative consent to such registration, shall not, as to sales made prior to revocation of such registration, result in the liabilities prescribed in this section, although the securities may not be entitled to such registration.

PENALTY

SEC. 17. Whoever violates any provision of this Act shall be punished by a fine of not more than $10,000 or by imprisonment for not more than five years, or by both such fine and imprisonment; but an affirmative showing that an act or omission which constituted a violation occurred in good faith, and on reasonable grounds for believing it not to be a violation shall relieve from the penalty prescribed in this section.