rates permitted to be charged, which rates are subject to the jurisdiction of the Connecticut Public Utilities Commission. Investors should also take into consideration the value of the assets applicable to the common stock which is discussed above. EXPENSES AND ACCOUNTING TREATMENT The expenses, exclusive of duplicate interest, are estimated at $55,000. The division of such expenses is being made by direct charge to the respective companies insofar as possible. As to the balance, they are being divided on the basis of the proceeds derived by each company from the transactions. The Connecticut commission has expressly passed on and approved this method and we see no reason why we should not concur in that action. The Cities Service Power & Light investment in the common stock of the Danbury company is carried, together with other securities acquired upon organization in 1924, at a figure of $77,210,458 described as "undistributed investment cost". Cities Service Power & Light proposes to credit the proceeds from the sale of 120,000 shares ($1,920,000) to the undistributed investment cost account. Thus, no profit or loss will be recorded on its books as a result of this sale. COMPLIANCE WITH THE ACT IN RESPECT OF THE DANBURY TRANSACTIONS The requisite authority of the Public Utilities Commission of Connecticut for the issue and sale of the bonds, preferred stock and common stock and the alterations regarding the common stock has been obtained. The proceeds of the sale of the bonds and preferred stock will be used to redeem the presently outstanding bonds and preferred stock and, as stated above, the common stock being delivered to Cities Service Power & Light Company is in satisfaction of the Danbury company's indebtedness to that company. Such issues and sales therefore are solely for the purpose of financing the business of Danbury and have been expressly authorized by the state commission of the state in which such company is organized and doing business. Consequently the provisions of Section 6 (b) of the Act are satisfied. With respect to the redemption of the preferred stock it does not appear that such redemption will adversely affect the financial integrity or working capital of Danbury and, therefore, the provisions of Section 12 (c) and applicable rules are satisfied. In respect of the changes affecting the common stock, it does not appear that such changes will result in an unfair or inequitable distribution of voting power among holders of the securities of Danbury and the requirements of Section 7 (e) are satisfied. 8 S. E. C. COMPLIANCE WITH THE ACT AS TO THE TRANSACTIONS BY CITIES SERVICE POWER & LIGHT COMPANY With respect to the acquisition by Cities Service Power & Light Company of the 24,000 shares of common stock in exchange for the debt due it, the requirements of Section 10 appear to be satisfied, and the facts do not require any of the adverse findings therein specified. Concerning the sale of the common stock, Rule U-12D-1 provides that the Commission shall approve an application concerning the sale by a registered holding company of the securities of any public utility company if it finds that the terms and conditions of such sale with respect to the consideration to be received for such sale, maintenance of competitive conditions, fees and commissions, accounts, disclosure of interest, and similar matters, are not detrimental to the public interest or the interest of investors or consumers, and will not tend to circumvent the provisions of the Act or any rules, regulations or orders of the Commission thereunder. In view of the record made in this case the Commission is of the opinion that the sale of the common stock should be approved. An appropriate order will issue subject, however, to the conditions that (1) the transactions will be effected in accordance with the terms and conditions of and for the purposes represented by such applications and declarations; (2) the exemption of the issue and sale by Danbury of the bonds, preferred stock and common stock shall immediately terminate without further order of this Commission if at any time the authorization of the Public Utilities Commission of the State of Connecticut shall be revoked or otherwise terminated; (3) that when all expenses incurred in connection with these transactions shall be actually paid, the applicants and declarants shall file a detailed statement of such expenses showing the persons to whom payments were made, the amounts thereof, the accounts charged and a detailed description of the services rendered for which such payments were made. By the Commission: Chairman Frank being absent and not participating. 8 S. E. C. [No. 1181] IN THE MATTER OF CARL E. KROG, doing business as INVESTMENT SECURITIES COMPANY, 903 Burk Burnett Building, Fort Worth, Texas File No. 8-1. Promulgated November 19, 1940 (Securities Exchange Act of 1934-Section 15 (b)) BROKER-DEALER REGISTRATION. Grounds for Revocation, Suspension, and Denial. Injunctions against the Purchase or Sale of Securities. 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. APPEARANCES: John W. Alexander, of the Fort Worth Regional Office of the Commission. James E. Whitmore, for the registrant. FINDINGS AND ORDER OF THE COMMISSION This proceeding was commenced under Section 15 (b) of the Securities Exchange Act of 1934 to determine whether the registration as a dealer of Carl E. Krog, doing business as Investment Securities Company, should be suspended or revoked. Pursuant to an order of the Commission dated September 25, 1940, and notice served upon the registrant, the hearing in this matter was held before a trial examiner in Fort Worth, Tex., on October 19, 1940. The hearing was ordered to determine, inter alia, whether the registrant is permanently enjoined by virtue of a judgment entered in February 1936 by the United States District Court for the Northern District of Texas from engaging in and continuing certain practices in connection with the sale of securities; whether registrant has made and kept current the books and records required by Rule X-17A-3 of the Commission's rules and regulations under the Securities Exchange Act of 1934; and whether it is in the public interest that his 8 S. E. C.-34-2694 registration as an over-the-counter dealer should be suspended or revoked. The registrant acknowledged notice of the hearing, admitted the existence of the facts which were the basis of the aforesaid statement of issues in the Commission's order for hearing, and consented to the entry of an order by the Commission revoking his registration as an over-the-counter broker or dealer. We find, therefore, that registrant is permanently enjoined by order of the United States District Court for the Northern District of Texas from engaging in and continuing certain practices in connection with the sale of securities; that registrant has willfully violated Rule X-17A-3 adopted by the Commission under Section 17 of the Securities Exchange Act of 1934, and that it is in the public interest that his registration be revoked. It is ordered, pursuant to Section 15 (b) of the Securities Exchange Act of 1934, that the registration of Carl E. Krog, doing business as Investment Securities Company, be and it hereby is revoked. By the Commission: (Chairman Frank, Commissioners Healy, Eicher and Pike) Commissioner Henderson being absent and not participating. 8 S. E. C. [No. 1182] IN THE MATTER OF NATIONAL GAS & ELECTRIC CORPORATION PUBLIC GAS & COKE COMPANY NATIONAL UTILITIES COMPANY OF MICHIGAN File No. 32-150. Promulgated November 19, 1940 (Public Utility Holding Company Act of 1935-Sections 6 (b), 7 and 10) ISSUE AND SALE OF SECURITIES OF REGISTERED HOLDING COMPANY OR SUBSIDIARY. Application, filed by subsidiary of registered holding company pursuant to Section 6 (b) of the Public Utility Holding Company Act of 1935, for exemption from the provisions of Section 6 (a) of the Act, of the issue and sale of bonds and common stock, the proceeds to be used to acquire certain utility assets, granted, subject to a certain condition, the issue and sale being solely for the purpose of financing the business of the subsidiary and having been authorized by the state commission. Declaration, filed by registered holding company pursuant to Section 7 of the Public Utility Holding Company Act of 1935, regarding the issue and sale of bonds secured by first mortgage bonds of subsidiary, and of common stock without par value, to security holders of registered holding company and subsidiary thereof, the properties of which subsidiary are being acquired by declarant pursuant to reorganization plan approved by United States Circuit Court of Appeals, permitted to become effective, the Commission finding that the bonds meet the requirements of Section 7 (c) (1) (B) (ii) and the stock, the requirements of Section 7 (c) (2), and no adverse finding being made under the other provisions of Section 7. ACQUISITION OF UTILITY ASSETS BY REGISTERED HOLDING COMPANY OR SUBSIDIARY. Acquisition of certain utility assets by subsidiary of registered holding company found to be exempt from the provisions of Section 9 (a) of the Public Utility Holding Company Act of 1935, the acquisition having been expressly authorized by a state commission. ACQUISITION OF SECURITIES BY REGISTERED HOLDING COMPANY OR SUBSIDIARY. Application, filed by registered holding company pursuant to Section 10 of the Public Utility Holding Company Act of 1935, regarding acquisition of 8 S. E. C.35-2385 |