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SECURITIES REGULATIONS FOR THE DISTRICT OF

COLUMBIA

MONDAY, MAY 21, 1962

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON COMMERCE AND FINANCE OF THE
COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

Washington, D.C. The subcommittee met at 10:30 a.m., pursuant to call, in room 1334, New House Office Building, Hon. Peter F. Mack, Jr. (chairman of the subcommittee), presiding.

Mr. Mack. The subcommittee will come to order.

This morning we have scheduled a hearing on the securities regulations in the District of Columbia. It has been called to the attention of this committee that there has been an unusual amount of questionable activity here in the District of Columbia.

The Securities and Exchange Commission and the National Association of Securities Dealers have taken certain action in recent months to correct the situation.

This committee feels that whatever action is necessary to solve the problem in the District should be taken. We recognize that the Securities and Exchange Commission has authority over vast areas, primarily interested in the regulation of securities on an interstate basis. But there does not seem to be any justification for having a situation existing right here in the Nation's Capital that is not regulated, to have an area which is not regulated, and to have situations existing here that are worse or as bad as any other areas of the country.

For that reason, we have scheduled the hearings today to determine what action should be taken to solve this problem.

Our first witness today will be Mr. William L. Cary, Chairman, Securities and Exchange Commission.

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE

OREN HARRIS, Arkansas, Chairman JOHN BELL WILLIAMS, Mississippi

JOHN B. BENNETT, Michigan PETER F. MACK, JR., Ilinois

WILLIAM L. SPRINGER, Ilinois KENNETH A. ROBERTS, Alabama

PAUL F. SCHENCK, Ohio MORGAN M. MOULDER, Missouri

J. ARTHUR YOUNGER, California HARLEY O. STAGGERS, West Virginia HAROLD R. COLLIER, Illinois WALTER ROGERS, Texas

MILTON W. GLENN, New Jersey SAMUEL N. FRIEDEL, Maryland

SAMUEL L. DEVINE, Ohio TORBERT H. MACDONALD, Massachusetts ANCHER NELSEN, Minnesota GEORGE M. RHODES, Pennsylvania

HASTINGS KEITH, Massachusetts JOHN JARMAN, Oklahoma

WILLARD S. CURTIN, Pennsylvania LEO W. O'BRIEN, New York

ABNER W. SIBAL, Connecticut JOHN E. MOSS, California

VERNON W. THOMSON, Wisconsin JOHN D. DINGELL, Michigan

PETER H. DOMINICK, Colorado
JOE M. KILGORE, Texas
PAUL G. ROGERS, Florida
ROBERT W. HEMPHILL, South Carolina
DAN ROSTENKOWSKI, Nlinois
JAMES HEALEY, New York
HORACE R. KORNEGAY, North Carolina

W. E. WILLIAMSON, Clerk
KENNETH J. PAINTER, Assistant Clerk

Professional Staff
ANDREW STEVENSON

SAM G. SPAL
KURT BORCHARDT

MARTIN W. CUNNINGHAM

SUBCOMMITTEE ON COMMERCE AND FINANCE

PETER F. MACK, JR., Ilinois, Chairman JOHN D. DINGELL, Michigan

MILTON W. GLENN, New Jersey JOE M. KILGORE, Texas

HASTINGS KEITH, Massachusetts ROBERT W. HEMPHILL, South Carolina WILLARD S. CURTIN, Pennsylvania JAMES O. HEALEY, New York

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CONTENTS

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Statement of

Page Brown, Alexander J., Jr., Acting Regional Administrator, Washington regional office, Securities and Exchange Commission..

2 Bryan, Irving, Chief, Legislation and Opinions Division, Office of Corporation Counsel, District of Columbia.

26 Cary, William L., Chairman, Securities and Exchange Commission.- 2 Cohen, Manuel F., Commissioner, Securities and Exchange Commission...

2 Fleischer, Arthur, legal assistant to the Chairman, Securities and Exchange Commission..

2 Fulton, Wallace H., executive director, National Association of Securities Dealers, Inc.-

20 Ilgenfritz, Joseph J., Director of Licenses and Inspections, District of Columbia

26 Kneipp, Robert F., Assistant Chief, Legislation and Opinions Division, Office of Corporation Counsel, District of Columbia..

26 Korman, Milton D., Principal Assistant Corporation Counsel, District

of Columbia Law, Stuart, attorney, Division of Trading and Exchanges, Securities and Exchange Commission..

2 Loomis, Philip A., Director, Division of Trading and Exchanges, Securities and Exchange Commission.-

2 Nottingham, C. T., Superintendent, License and Permit Division,

Department of Licenses and Inspections, District of Columbia--- 26 Peters, Richard, secretary, district No. 10, National Association of Securities Dealers, Inc.

20 White, Marc A., counsel, National Association of Securities Dealers, Inc...

20 Additional information submitted for the record:

Gray, Chester H., Corporation Counsel, District of Columbia, letter

from, transmitting draft of proposed regulations, April 20, 1962.. 30 “Investors Beware,” series of articles by Miriam Ottenberg-

49-59

26

SECURITIES REGULATIONS FOR THE DISTRICT OF

COLUMBIA

MONDAY, MAY 21, 1962

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON COMMERCE AND FINANCE OF THE
COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

Washington, D.C. The subcommittee met at 10:30 a.m., pursuant to call, in room 1334, New House Office Building, Hon. Peter F. Mack, Jr. (chairman of the subcommittee), presiding.

Mr. Mack. The subcommittee will come to order.

This morning we have scheduled a hearing on the securities regulations in the District of Columbia. It has been called to the attention of this committee that there has been an unusual amount of questionable activity here in the District of Columbia.

The Securities and Exchange Commission and the National Association of Securities Dealers have taken certain action in recent months to correct the situation.

This committee feels that whatever action is necessary to solve the problem in the District should be taken. We recognize that the Securities and Exchange Commission has authority over vast areas, primarily interested in the regulation of securities on an interstate basis. But there does not seem to be any justification for having a situation existing right here in the Nation's Capital that is not regulated, to have an area which is not regulated, and to have situations existing here that are worse or as bad as any other areas of the country:

For that reason, we have scheduled the hearings today to determine what action should be taken to solve this problem.

Our first witness today will be Mr. William L. Cary, Chairman, Securities and Exchange Commission.

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