Page:United States Statutes at Large Volume 54 Part 1.djvu/850

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PUBLIC LAWS-CH. 686-AUG. 22, 1940 Joint transaction contravening rules, etc. Agent. Compensation re- striction. Broker. Commission, etc.. restriction. Custody of securi- ties, etc. 48 Stat. 882. 15 U.S. . 78c (1). Earmarking, etc., of securities. Inspections. Custodian, restric- tion. Bonding of certain personnel. (d) It shall be unlawful for any affiliated person of or principal underwriter for a registered investment company (other than a com- pany of the character described in section 12 (d) (3) (A) and (B)), or any affiliated person of such a person or principal underwriter, acting as principal to effect any transaction in which such registered company, or a company controlled by such registered company, is a joint or a joint and several participant with such person, principal underwriter, or affiliated person, in contravention of such rules and regulations as the Commission may prescribe for the purpose of limit- ing or preventing participation by such registered or controlled com- pany on a basis different from or less advantageous than that of such other participant. Nothing contained in this subsection shall be deemed to preclude any affiliated person from acting as manager of any underwriting syndicate or other group in which such registered or controlled company is a participant and receiving compensation therefor. (e) It shall be unlawful for any affiliated person of a registered investment company, or any affiliated person of such person- (1) acting as agent, to accept from any source any compensation (other than a regular salary or wages from such registered com- pany) for the purchase or sale of any property to or for such registered company or any controlled company thereof, except in the course of such person's business as an underwriter or broker; or (2) acting as broker, in connection with the sale of securities to or by such registered company or any controlled company thereof, to receive from any source a commission, fee, or other remuneration for effecting such transaction which exceeds (A) the usual and customary broker's commission if the sale is effected on a securities exchange, or (B) 2 per centum of the sales price if the sale is effected in connection with a secondary distribution of such securities, or (C) 1 per centum of the purchase or sale price of such securities if the sale is otherwise effected unless the Com- mission shall, by rules and regulations or order in the public interest and consistent with the protection of investors, permit a larger commission. (f) Every registered management company shall place and main- tain its securities and similar investments in the custody of (1) a bank having the qualifications prescribed in paragraph (1) of sec- tion 26 (a) for the trustees of unit investment trusts; or (2) a com- pany which is a member of a national securities exchange as defined in the Securities Exchange Act of 1934, subject to such rules and regulations as the Commission may from time to time prescribe for the protection of investors, or (3) such registered company, but only in accordance with such rules and regulations or orders as the Commission may from time to time prescribe for the protection of investors. Rules, regulations, and orders of the Commission under this subsection, among other things, may make appropriate provision with respect to such matters as the earmarking, segregation, and hypothecation of such securities and investments, and may provide for or require periodic or other inspections by any or all of the following: Independent public accountants, employees and agents of the Commission, and such other persons as the Commission may designate. No such member which trades in securities for its own account may act as custodian except in accordance with rules and regulations prescribed by the Commission for the protection of investors. (g) The Commission is authorized to require by rules and regula- tions or orders for the protection of investors that any officer and 816 [54 STAT.