not indispensable, for the proper disposition of this vital segment of court business according to the Congressional intent. The Commission affords the necessary expert knowledge, the skill, and the uniform approach which individual judges cannot have; and to the district judges in particular, the assistance is unique in its usefulness, and not otherwise to be obtained." 21st Annual Report, p. 89. More recently, a district court judge made the following comment on the role of the Commission following a hearing on fee allowances in which the Commission had objected to allowances in the requested amounts exceeding $4 million and where the Court approved allowances of $2,068,000, some $250,000 above that recommended by the Commission: "Though I have been forced to differ from the recommendations of the SEC in many of the instances, I wish to pay tribute to the careful and helpful analysis that the Commission made of the claims. Indeed, I take this opportunity to express my gratitude for the active and intimate participation of the Commission and its counsel in the reorganization proceedings. If any proof were needed of the wisdom of Congress in providing for representation of the public by the Securities and Exchange Commission in reorganization proceedings, it has been furnished in this case. I would have felt helpless without the aid given unstintingly by counsel for the Commission. Each has cheerfully rendered, at the usual modest salary of a public servant, services equal in value to those of any to whom awards are made by this decision." In the Matter of Third Avenue Transit Corporation, S.D.N.Y. Nos. 85851, 86410, 86412, 86413, 86537, unreported, (1958). Upon appeal, the allowances were further reduced to a figure only $30,000 more than the Commission initially recommended, or an ultimate saving to the debtor estate and its security holders of nearly $214 million. This report began with a discussion of "investor confidence." As indicated herein, all available signs would seem to bear out the fact that investor confidence has been largely restored. In fact, it may be noted that recent estimates place the number of public investors today at 12,500,000, nearly double the 1952 total. The record volume of securities successfully offered for public sale, taken together with the recent rise in the volume of trading on the New York Stock Exchange to the highest level in the Commission's history, is adequate evidence of the restoration of investor confidence. But the impact of the Federal securities laws and their administration has been felt no less by financial institutions, corporate executives, professional people, and other elements in the financial community than by investors. It can reasonably be said that these acts and their administration have generally fostered improved standards of business conduct among all groups in their relationship to stockholders and investors. While this no doubt has been dictated in part by enlightened self-interest, it nonetheless has contributed substantially to investor confidence. This, as we have seen, has had its desired effect, for the capital formation processes have successfully served their purpose of being a conduit for the flow of investors' savings into industry in ever increasing volume. While the Commission can view with pardonable pride the record of its contribution to the interests of the investing public, it cannot rest on the record of its past accomplishments. In a dynamic economy such as this nation is experiencing, new problems of investor protection are constantly arising. The very fact that securities are being offered for public sale in record volume and that exchange trading in securities has reached a high level, plus the fact that more and more people have surplus savings, some of which is being used for investment and speculation in securities, are in and of themselves adequate reasons for the Commission not to become complacent. A boiling stock market not only attracts new investors, some of whom have neither the resources nor the knowledge and skill to speculate in the stock market, but also attracts a fringe element, ever ready to take unfair advantage of the innocent and unsuspecting investor. A substantially increased record of law enforcement actions by the Commission within the past year leaves no doubt of this latter fact. Nor would we suggest that the investing public might reasonably become complacent. It cannot be overemphasized that nothing in the securities laws or their administration can keep the market price of securities from fluctuating, down as well as up. No reasonable person would wish it otherwise. It is, therefore, incumbent upon individual investors and their advisers to exercise care and even restraint in their analysis, evaluation and purchase of securities. It is most essential that investors exercise extreme care in their dealings with unknown brokerage firms and their salesmen, particularly those who telephone long-distance with "pie-in-the-sky" promises that the investor can double or triple his money overnight, without risk of loss, through the purchase of stock of a particular company. Common sense would dictate that such a promise is utterly fantastic and ridiculous. Unfortunately, foresight is never quite so good as hindsight, particularly when the promise of quick and easy profits is dangled before one's eyes, as many investors have learned to their sorrow. The Commission would like to take this occasion to express its thanks and appreciation to a capable, industrious, and efficient staff, both past and present. In the 1949 Task Force Report on "Regulatory Commissions" by the first "Hoover Commission," the Commission was characterized as "an outstanding example of the independent commission at its best.” [Italics supplied.] The statement, of course, applied to the Commission and its work more than 10 years ago and was surely well-deserved. However, it is no less applicable, we submit, to the excellent work of a most competent staff during the past 10 years. The volume of Commission business in recent years, in nearly all phases of its activities, has been on the increase. An example of this is to be found in the record of Securities Act registration statements filed with and examined by the Commission. In the 26-year administration of that act, a total of 15,930 registration statements were filed which proposed offerings of securities aggregating $167 billion in amount. The past 6 years alone accounted for 5,561 of the filings and $81 billion of the total amount. That the staff has been able to carry on effectively under a tremendous increase in the volume of Commission business is a tribute to its ability and conscientious devotion to duty. ORIGINAL COMMISSION (As of July 2, 1934) JOSEPH P. KENNEDY, Chairman *JAMES M. LANDIS GEORGE C. MATHEWS** ROBERT E. HEALY** FERDINAND PECORA Other former members of the Commission, in order of their appointment: *Served as Chairman. **Deceased. J. D. Ross** *WILLIAM O. DOUGLAS *JEROME N. FRANK** *EDWARD C. EICHER** LEON HENDERSON SUMNER T. PIKE *GANSON PURCELL EDMUND BURKE, Jr. ROBERT H. O'BRIEN ROBERT K. MCCONNAUGHEY *JAMES J. CAFFREY RICHARD B. MCENTIRE** *EDMOND M. HANRAHAN *HARRY A. MCDONALD PAUL R. ROWEN *DONALD C. COOK EDWARD T. MCCORMICK ROBERT I. MILLONZI J. HOWARD ROSSBACH ALBERT K. SCHEIDEN HELM, Executive Director. CHARLES T. KAPPLER, Associate Executive Director. BYRON D. WOODSIDE, Director, Division of Corporation Finance. JOSEPH C. WOODLE, Director, Division of Corporate Regulation. W. ALLEN JOHNSON,1 Associate Director. PHILIP A. LOOMIS, Jr., Director, Division of Trading and Exchanges. THOMAS G. MEEKER, General Counsel. WALTER P. NORTH,' Associate General Counsel. ANDREW BARR, Chief Accountant. LEONARD HELFENSTEIN, Director, Office of Opinion Writing. W. VICTOR RODIN, Associate Director. MANUEL F. COHEN," Adviser to the Commission. 1 Designated October 5, 1959. * Designated August 31, 1959. Formerly Chief Counsel, Division of Corporation Finance. XLI |