INVESTMENT COMPANIES HEARINGS BEFORE A SUBCOMMITTEE OF THE UNITED STATES SENATE SEVENTY-SIXTH CONGRESS THIRD SESSION ON S. 3580 A BILL TO PROVIDE FOR THE REGISTRATION AND OTHER PURPOSES PART 1 APRIL 2, 3, 4, 5, 8, 9, AND 10, 1940 Printed for the use of the Committee on Banking and Currency COMMITTEE ON BANKING AND CURRENCY ROBERT F. WAGNER, New York, Chairman CARTER GLASS, Virginia JOHN G. TOWNSEND, JR., Delaware ALBEN W. BARKLEY, Kentucky LYNN J. FRAZIER, North Dakota JAMES F. BYRNES, South Carolina CHARLES W. TOBEY, New Hampshire JOHN H. BANKHEAD, Alabama JOHN A. DANAHER, Connecticut ROBERT A. TAFT, Ohio PHILIP LEVY, ('lerk SUBCOMMITTEE ON SECURITIES AND EXCHANGE ROBERT F. WAGNER, New York, Chairman CARTER GLASS, Virginia JOHN G. TOWNSEND, JR., Delaware JAMES F. BYRNES, South Carolina LYNN J. FRAZIER, North Dakota ROBERT A. TAFT, Ohio II BRARY OF CONGRESS DIVISION OF DOOUMENTS 2666114 HG4497 U Bane, Baldwin B., Director, Registration Division, Securities and Boland, John, attorney, Securities and Exchange Commission.. 162 Cook, Alfred A., trustee for the Continental Securities Corporation, Fulton, Hugh, assistant United States attorney, southern district of Healy, Robert E., Commissioner, Securities and Exchange Commis- 32, 161, 306 Hollands, John H., attorney, Securities and Exchange Commission. 280 Mathews, George C., Commissioner, Securities and Exchange Com- Schenker, David, Chief Counsel, Securities and Exchange Commis- sion, investment-trust study.. 47, 121, 174, 193, 225, 245, 308 Smith, L. M. C., associate counsel, investment-trust study, Securi- Stern, Carl S., attorney, Securities and Exchange Commission. 36 Chart submitted by Securities and Exchange Commission entitled “North American Companies and Subsidiaries”. Chart submitted by Mr. Cook on Continental Securities Corporation. Chart submitted by Securities and Exchange Commission entitled “Per- formance and Control of the Principal Companies of the United Founders Chart submitted by Securities and Exchange Commission entitled "Inter- company Transactions in International Securities Corporation of America Class B Common Stock”. Chart Submitted by Securities and Exchange Commission entitled “Inter- company Transactions in United States Electric Power Corporation Opinion of Securities and Exchange Commission in matter of H. M. Chart submitted by Securities and Exchange Commission entitled "Equity Opinion of the Securities and Exchange Commission in the matter of T. I. S. Chart submitted by Securities and Exchange Commission entitled “The Goldman Sachs Trading Corporation 1929”. Chart submitted by Securities and Exchange Commission entitled “J. & Memorandum submitted by Securities and Exchange Commission on cost of study and description of work completed by the investment-trust INVESTMENT TRUSTS AND INVESTMENT COMPANIES TUESDAY, APRIL 2, 1940 UNITED STATES SENATE, Washington, D. C. The subcommittee met, pursuant to call, at 10:30 a. m., in room 301, Senate Office Building, Senator Robert F. Wagner presiding. Present: Senators Wagner (chairman of the subcommittee), Maloney, Hughes, Miller, Downey, Townsend, and Taft. Senator WAGNER. The subcommittee will come to order. Senators Miller and Hughes have authorized the chairman to vote them for a quorum, and they will be here presently. This subcommittee is called to begin hearings on S. 3580, introduced by the chairman, to provide for the registration and regulation of investment companies and investment advisers, and for other purposes. The full text of the bill will be made a part of the record at this point. (S. 3580 is printed in full, as follows:) [S. 3580, 76th Cong., 3d sess.) A BILL To provide for the registration and regulation of investment companies and investment advisers, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, TITLE I-INVESTMENT COMPANIES FINDINGS SECTION 1. Upon the basis of facts disclosed by the record and reports of the Securities and Exchange Commission made pursuant to section 30 of the Public Utility Holding Company Act of 1935, and facts otherwise disclosed and ascertained, it is hereby found that investment companies are affected with a national public interest in that, among other things (1) the securities issued by such companies, which constitute a substantial part of all securities publicly offered, are distributed, exchanged, transferred, redeemed, and repurchased by use of the mails and means and instrumentalities of interstate commerce, and in the case of the numerous companies which issue redeemable securities this process of distribution and redemption is continuous and constant; (2) the principal activities of such companies-investing, reinvesting, and trading in securities issued by other companies-are conducted by use of the mails and means and instrumentalities of interstate commerce, including the facilities of national securities exchanges, and constitute a substantial part of all transactions effected in the securities markets of the Nation; (3) such companies customarily invest and trade in securities issued by, and may dominate and control or otherwise affect the policies and management of, companies engaged in business in interstate commerce; (4) such companies are media for the investment in the national economy of a substantial part of the national savings and may have a vital effect upon the flow of such savings into the capital markets; and |