to administrative controls of the executive branch. The SEC seems to look more to the directives of the President than to freely performing its regulatory functions.

Executive control and dominance, whether Republican or Democratic, can only compromise the Commission's independence. If we agree that the original intent of the legislation was to insulate the SEC as much as possible from partisan politics and political influence, and if we agree that a significant portion of this insulation has been stripped away, then there can be no doubt that it is time. to restore it.

Second, by providing for the independence of the SEC in performing its regulatory functions, we can better insure the investing public of strong and viable securities markets. The erosion of public confidence in the ability of the SEC to regulate fairly is another factor in the lack of public confidence in the securities markets.

If this trend is not reversed, it will, in turn, further restrict the liquidity of our equity markets on which companies are dependent for much of their investment capital. Ultimately, continued erosion of confidence will adversely affect the entire economy. In my opinion, there can be no more compelling reasons to insure the SEC's independence than the possibility of these economic consequences and the need to carry out the original intent of Congress.

If we concur that maximum possible independence is desirable, then how can that end be best accomplished? In the light of the 1950 Reorganization Act, which concentrates many important functions in the office of the SEC Chairman, we must strive more than ever to eliminate the political factor in the selection procedure. Providing for separate Senate confirmation of the President's nominee is a step in this direction. [Section 4(4).]

Equally important in this provision is the directive that the Senate, in considering any nomination for the office of Chairman, give consideration to the qualifications of the nominee. Certainly there should be an additional set of criteria for qualifications of Chairman as opposed to those of a Commissioner.

The provision that the Chairman be required to serve the full term for which he is appointed goes further toward restoring SEC insulation from the executive branch. Again, this is not a partisan issue; it goes to the fundamental issue of independence. The adjunct provision, setting forth the reasons for which a Commissioner may be removed, I feel, brings the SEC closer to this goal. [Section 4(a).]

pos

I would hope that during these hearings we might discuss other sible amendments to the 1934 act. For example, would lengthening the Chairman's term of office from 4 to 6 years provide an additional measure of insulation? I would be very interested in hearing all suggestions which could further preclude politics from entering the selection process.

In addition to the insulation provided by these new provisions dealing with the procedure for selecting the Chairman and the procedure for removal of Commissioners, there seems to be a need for improving the means of legislative investigation and oversight. Title I sets forth three possibilities which I think we should consider carefully. The first of these, section 4 (d) (2), is crucial to the goal of greater independence. If Congress is to provide for compliance with the 1934 act, then we

have an obligation to appropriate sufficient funds to enable the SEC to perform its regulatory functions. Therefore, Congress should receive SEC's original budget request as does OMB. In order to accurately determine SEC's appropriation, we, who hold the purse strings, should include SEC's request in our deliberations.

Based on the same principle, the need for visibility of SEC requests and recommendations in Congress, I find it reasonable to provide that when the SEC transmits any legislative recommendations, testimony, or comment on legislation to the Executive, that it shall also submit a copy to Congress. [Sec. 4 (d) (3).]

Finally, continuing in the interest of independence, if we are to improve our means of legislative investigation and oversight, then I would endorse, in principle, the means of greater access to SEC documents if the House or Senate committee with jurisdiction over the Commission deems it necessary and makes a written request for such material. Clearly, we cannot perform our oversight duties without the relevant information.

I should also add that improving congressional means of fulfilling its investigative and oversight duties would further strengthen the public's confidence in the SEC. This, coupled with the insulation provided in title I, could well restore much public confidence in the ability of Congress and the SEC to insure that our securities markets function properly and serve the public interest.

The truth of the matter is that we can wait no longer to accomplish these goals.

Also, these hearings will include consideration of H.R. 340, a bill which was introduced by Mr. Broyhill. This bill proposes to set authorization levels for the next 3 fiscal years for the SEC.

[The text of H.R. 5050 and H.R. 340, together with departmental reports thereon, follow:]

93D CONGRESS 18T SESSION

H. R. 5050

IN THE HOUSE OF REPRESENTATIVES

MARCH 1, 1973

Mr. Moss (for himself, Mr. BROYHILL of North Carolina, Mr. STUCKEY, Mr. WARE, Mr. ECKHARDT, Mr. MCCOLLISTER, Mr. HELSTOSKI, Mr. Young of Illinois, and Mr. BRECKINRIDGE) introduced the following bill; which was referred to the Committee on Interstate and Foreign Commerce

A BILL

To amend the Securities Exchange Act of 1934, and for other

1

purposes.

Be it enacted by the Senate and House of Representa

2 tives of the United States of America in Congress assembled,

3 That this Act may be cited as the "Securities Exchange 4 Act Amendments of 1973".

5

TITLE I-SELECTION AND ADMINISTRATION

6

OF THE COMMISSION

7

SEC. 101. (a) Section 4 of the Securities Exchange Act

8 of 1934 (15 U.S.C. 78d) is amended to read as follows:

I

1

2

2

"SECURITIES AND EXCHANGE COMMISSION

"SEC. 4. (a) There is hereby established a Securities

3 and Exchange Commission (hereinafter referred to as the 4 'Commission') to be composed of five Commissioners to be 5 appointed by the President by and with the advice and con6 sent of the Senate. Not more than three of such Commis7 sioners shall be members of the same political party, and in 8 making appointments members of different political parties 9 shall be appointed alternately as nearly as may be practicable. 10 No Commissioner shall engage in any business, voca11 tion, or employment other than that of serving as Commis12 sioner, nor shall any Commissioner participate, directly or 13 indirectly, in any stock market operations or transactions of 14 a character subject to regulation by the Commission pur15 suant to this title. Each Commissioner shall hold office for a 16 term of five years and until his successor is appointed and 17 has qualified, except that he shall not so continue to serve 18 beyond the expiration of the session of Congress in session 19 at the time of the expiration of said fixed term of office, and 20 except (1) any Commissioner appointed to fill a vacancy 21 occurring prior to the expiration of the term for which his 22 predecessor was appointed shall be appointed for the re23 mainder of such term, and (2) any Commissioner may be 24 removed by the President for neglect of duty or malfeasance 25 in office, but for no other cause.

1

3

"(b) The President shall appoint a Chairman from

2 the Commission's membership, by and with the advice and 3 consent of the Senate; and the Commissioner so appointed 4 shall serve as Chairman until the expiration of his term as 5 Commissioner (except that he may continue to serve as 6 Chairman for so long as he remains a Commissioner and his

7

successor as Chairman has not taken office). In considering 8 any nomination to the office of Chairman, the Senate shall 9 give consideration to the qualifications of the nominee to 10 serve as Chairman of the Commission. An individual may 11 be appointed as a Commissioner at the same time he is ap12 pointed as Chairman.

13

"(c) The Commission is authorized to appoint and 14 fix the compensation of such officers, attorneys, examiners, 15 and other experts as may be necessary for carrying out its 16 functions under this Act, without regard to the provisions 17 of other laws applicable to the employment and compensa18 tion of officers and employees of the United States, and the 19 Commission may, subject to the civil service laws, appoint 20 such other officers and employees as are necessary in the 21 execution of its functions and fix their salaries in accordance 22 with title 5, United States Code, as amended.

"(d) Notwithstanding any other provision of law"(1) the Commission is authorized to conduct in

its own name and through its own attorneys litigation in