PURPOSE

STOP ORDER PROCEEDINGS-Continued

The purpose of a stop order under Section 8 (d) of the Act is not solely to prevent the sale of securities on the basis of false and misleading statements, but is also to apprise existing and potential security holders of the actual facts and the falsity of statements included in the registration statement . . . Page 172.

STIPULATION AND CONSENT TO ENTRY OF STOP ORDER

Public Interest

Where registrant admitted the existence of numerous deficiencies and consented to the entry of a stop order, held to be in the public interest, however, to discuss certain of the admitted deficiencies . . . Page 635.

UNDERTAKING BY REGISTRANT TO PUBLICIZE PROCEEDINGS AS A CONDITION TO GRANTING WITHDRAWAL

Where the issuer undertakes to deliver a copy of the opinion of the Commission granting application to withdraw a registration statement after institution of stop order proceedings to each stockholder of record of the issuer and its predecessor and, further, to deliver to every person other than a stockholder of the aforesaid corporations a copy of such opinion prior to an offer to sell to such person by the issuer or anyone under its control or prior to the acceptance of an offer to buy from any such person, adequate publicity to the proceedings will be given and the application may be granted . . . Page 172.

WITHDRAWAL OF REGISTRATION STATEMENT

After the effective date of a registration statement, and after stop order proceedings have been instituted, a petition to withdraw the registration statement may be granted or denied in the public interest and for the protection of investors pursuant to Rule 960 of the General Rules and Regulations issued under the Act... Page 172.

Considerations in Public Interest

Where the issuer, after the effective date of the registration statement, has not sold any of its stock publicly, and proposes to withdraw its registration statement and to offer, pursuant to an authorization by a state securities commission, a block of stock exempt from the registration requirements of the Act, and where the issuer undertakes to employ the proceeds of such sales in retaining a mining engineer satisfactory to the state securities commission to supervise further exploratory work to determine the value of the mine, the granting of the application will be consistent with the public interest if the opinion of the Commission granting the application is given adequate publicity . . . Page 172.

UNTRUE OR MISLEADING STATEMENTS OR OMISSIONS

A failure to disclose information concerning difficulties in marketing potential products constitutes a deficiency . . . Page 116.

...

Overstating the estimate of ore reserves by approximately 50 percent and a failure to disclose that these products can only have commercial value if substantial additional ore bodies are encountered, constitute deficiencies... Page

116.

Where statements regarding the samples of ore dumps fail to disclose that the reported assay of the ore dumps is only applicable to about 6 or 7 tons of material selected from about 1,000 tons of material extracted from the mine, there is a deficiency. . . Page 116.

UNTRUE OR MISLEADING STATEMENTS OR OMISSIONS—Con.

A failure to disclose, in connection with the comparison between registrant's properties and another mine, that there is no established significant geologic relationship between the registrant's properties and the other mine, constitutes a deficiency... Page 116.

In describing certain drifting in a mineralized zone of 40 feet as being above the better grade material, it is misleading not to disclose that the entire zone of 40 feet of mineralized material is not commercial in character . . . Page 116.

A failure to disclose that certain mill tests, although incomplete, indicate that the zinc content of the lead-copper concentrates of the registrant's properties would involve a penalty by custom smelters, constitutes a deficiency . . . Page 116.

A failure to disclose, with reference to registrant's mining properties, that the interests of the registrant in the base metal rights to a certain property is limited to an agreement which is, in effect, an option to acquire such rights upon payment of the balance of the purchase price, is misleading . . . Page 116.

Failure to disclose whether the offering price is stated in Canadian or United States currency and of the disposition to be made of the differential constitutes a deficiency. . . Page 116.

In answer to an item calling for information concerning the voting rights, preferences, conversion, exchange rights, dividend rights, profits and rights on liquidation of the securities of the registrant, it is a deficiency in two respects to omit to disclose in connection with the description of the voting rights, that, under its bylaws, registrant's president is given unusually broad powers with respect to its properties, and to omit information regarding the effect of present Canadian laws relating to the control of foreign exchange and the transfer of funds to the United States . . . Page 116.

Registration statement and prospectus held to include untrue and misleading statements and material omissions with respect to statements regarding registrant's interest in the property underlying the securities being offered, registrant's connection with the drilling operations on this property, the use of the proceeds of the sale of the securities being registered, the status of drilling operations, the details of any future drilling program, oil and gas possibilities on the tract, the character of the leases involved, and the possible charges, encumbrances and liabilities to which the leases may be subject . . . Page 635.

CHARACTER OF BUSINESS

Inadequate Description of Character of Registrant's Business

Statement as to the character of the investment business to be conducted by registrant held materially deficient where it fails to disclose that investments will be restricted solely to the petroleum industry . . . Page 238.

EXPERTS' REPORTS

Misuse of Reports

A statement of the existence of proved and probable ore on mining property is misleading and false when based upon supporting data analyzing the mineral content of the land as quartz ... Page 172.

STATEMENT AS TO COMPENSATION TO BE RECEIVED BY TRUSTEES

Response to item 47 held materially deficient where it fails to reveal that the trustees of registrant who are also its officers may receive compensation in both capacities and that it is intended that their aggregate remuneration in both capacities may exceed the sum stated in the response as the maximum compensation for trustees, officers, or employees . . . Page 238.

PART II

SECURITIES EXCHANGE ACT* OF 1934

ACCOUNTING

ACCOUNTANT

Independence of

Where registrant, engaged primarily in the business of curing, dressing, and dyeing fur skins, fails to disclose, in its balance sheets, its participation in a joint merchandising venture involving an initial capital outlay of $600,000 and a total loss on the venture of $148,746.76, such omission held to be a concealment of a material item that may be indicative of lack of independence on the part of the accountant certifying to the financial statement of which the balance sheet was a part... Page 586.

In determining whether an independent relationship exists between a public accountant and his client, the Commission will not only consider misrepresentations and omissions of material facts involved in the preparation of the financial statements to which the accountant certifies, but will also apply objective standards. . . Page 586.

Where accountants certifying financial statements to Commission, together with their immediate families, own securities of registrant of a substantial aggregate value and amounting to from 11⁄2 to 9 percent of their combined approximate net worth, accountants held not independent with respect to registrant . . . Page 586.

The fact that registrant's president, over a period of years, used the accountant's name as a false caption for an account on the books of an affiliated company, and that the accountant procured a letter of indemnification in connection with such use, held to constitute evidence of lack of independence on the part of the accountant ... Page 586.

Both loans to, and loans from, registrant's officers and directors made by accountant, held to constitute evidence of lack of accountant's independence with respect to registrant . . . Page 586.

BALANCE SHEET

Assets-Concealment of Material Items by Improper Classification

"Loans Receivable"

Where registrant's principal business is the curing, dressing, and dyeing of fur skins, the inclusion of $200,000 advanced by registrant in a joint merchandising venture in which it participated among "Loans Receivable" is, in the absence of adequate qualifying statements, a concealment of a material item in the financial statement... Page 586.

"The term "Act" as used in Part II of this Digest refers to the Securities Exchange Act of 1934, as amended.

ACCOUNTING-Continued

"Notes Receivable (Trade)"

Where registrant's principal business is the curing, dressing, and dyeing of fur skins, the inclusion, without further segregation, of $150,000 advanced by registrant in a joint merchandising venture in which it participated among "Notes Receivable (trade)” is an improper classification, resulting in the concealment of a material item in the financial statement . . . Page 586. Assets-Cost of Acquiring Business Good Will, Processes and Formulae

Where registrant in 1925 acquired the good will, processes, and formulae of a business for $460,000, and in 1931, in consideration of the payment of $75,000 to it, entered into an agreement permitting the former owner of such business to reenter the dressing and dyeing business and, as part of such transaction, registrant agreed that its subsidiary would refrain from using the name of such person, held that the $75,000 which registrant received under the 1931 agreement was in effect consideration for the reconveyance of at least some of the rights which registrant had acquired under the 1925 contract and should have been credited to the original $460,000 cost of acquiring the business... Page 586. Assets-Description of Amounts Due from Officers and Directors

Where loans are made to officers and directors of registrant from a trust fund of fluctuating amount under the control of registrant's management, held that the balance sheet should, pursuant to Commission's accounting instructions, carry some indication of that fact... Page 586.

BROKER-DEALER REGISTRATION

GROUNDS FOR REFUSAL, SUSPENSION OR REVOCATION

Conviction of a Felony Involving the Purchase or Sale of Securities or Arising Out of the Conduct of the Business of a Broker-Dealer

Where registrant was convicted of a felony involving the purchase and sale of securities and arising out of the conduct of its business as a broker-dealer, and where registrant consented to an order of revocation, held that it is in the public interest to revoke registration . . . Pages 681, 683.

GROUNDS FOR REVOCATION, SUSPENSION AND DENIAL

Convictions for Crimes Involving the Purchase or Sale of Securities

Registration revoked on consent of registrant on grounds that registrant and its president are permanently enjoined, that president of registrant has been convicted, that registrant has willfully violated Rule X-15B-2 and that revocation is in the public interest . . . Pages 142, 144, 146.

Injunction Against the Purchase or Sale of Securities

It appearing that the registrant was enjoined from dealing in securities by a federal court and the registrant had admitted having employed devices, schemes and artifices to defraud persons purchasing securities from him, held revocation of registration is in the public interest . . . Page 158.

Where registrant was permanently enjoined by order of a United States District Court from engaging in and continuing certain practices in connection with the sale of securities, and where it appeared that registrant had willfully violated Rule X-17A-3, held that it is in the public interest to revoke registration . . . Page 195.

BROKER-DEALER REGISTRATION-Continued

Untrue or Misleading Statements or Omissions in Application

Registration revoked on consent of registrant on ground that registrant willfully violated Rule X-15B-2 in failing to report revocation of state license and on ground that revocation is in the public interest . . . Page 140.

REVOCATION PROCEEDINGS

Dismissal

Where broker-dealer bought outstanding securities of building and loan associations and resold to associations pursuant to an arrangement with state superintendent and boards of directors of associations, held evidence did not support a finding that broker-dealer had in the course of such transactions violated Section 15 (c) (1) of the Securities Exchange Act or Section 17 (a) of the Securities Act and, therefore, revocation proceeding should be dismissed with respect to such charges... Page 310.

Injunction Against Engaging in Conduct or Practice in Connection with Purchase or Sale of Securities

Where registrant was convicted of felonies involving the purchase or sale of securities while acting as a broker-dealer and was permanently enjoined from engaging in the securities business, held that, in the absence of actual receipt of notice by registered mail, it is appropriate in the public interest to suspend registration... Page 479.

Lack of Personal Service

Where notice of hearing in broker-dealer revocation proceedings was sent by registered mail to the registrant's business address and residence as set forth in the registration statement and was returned with the notation "unclaimed," and where further notice was given by publication in the Federal Register, held that it is appropriate in the public interest to suspend registration until final disposition of the question of permanent revocation if and when the registrant applies to be heard... Page 479.

Violation of Regulation T

Where extensions of credit in violation of Section 7 (c) (2) of the Act and Rule 3 (c) of Regulation T adopted thereunder occurred in only a few scattered cases, held revocation of registration not in public interest . . . Page 310.

Violation of Reporting Requirements

Where failure to notify Commission, as required by Rule X-15B-2 of the General Rules and Regulations under the Act, of revocation of registration as securities dealer by state authorities appears to have been inadvertent and where such revocation had been annulled by order of state court, held revocation of registration not in public interest . . . Page 310.

VIOLATION OF SECURITIES ACT AND SECURITIES EXCHANGE ACT Conviction of President of Registrant of a Felony Arising Out of the Conduct of the Business of a Broker-Dealer

Where it appears that the registrant's president was convicted of a felony arising out of the conduct of the business of a broker-dealer, where the registrant engaged in the sale of securities through the mails and in interstate commerce by means of false and misleading statements of material facts and willfully violated Section 17 (a) of the Securities Act of 1933 and Section 15 (c) (1) of the Securities Exchange Act of 1934, and where registrant consented to an order of revocation, held that it is in the public interest to revoke registration . . . Page 629.

8 S. E. C.