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MUTUAL FUND LEGISLATION OF 1967

HEARING

BEFORE THE

COMMITTEE ON BANKING AND CURRENCY UNITED STATES SENATE

NINETIETH CONGRESS

FIRST SESSION

ON

Amendment No. 438 to S. 1659

TO AUTHORIZE FEDERAL RESERVE MEMBER BANKS TO
OPERATE AND TO ESTABLISH COMMINGLED MANAGE-
MENT AGENCY ACCOUNTS REGISTERED UNDER THE
SECURITIES ACT, AND FOR OTHER PURPOSES

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COMMITTEE ON BANKING AND CURRENCY

JOHN SPARKMAN, Alabama, Chairman

WILLIAM PROXMIRE, Wisconsin

WALLACE F. BENNETT, Utah

HARRISON A. WILLIAMS, JR., New Jersey JOHN G. TOWER, Texas

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CONTENTS

Page

Amendment No. 438 to S. 1659__.

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Summary of proposed amendments dealing with bank collective investment funds

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Section-by-section analysis

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Report from the Federal Reserve System_.

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WITNESSES

Robert L. Augenblick, president, Investment Co. Institute; accompanied
by Francis Williams, chairman of the board of governors..
Manuel F. Cohen, Chairman, The Securities and Exchange Commission;
accompanied by Philip A. Loomis, Jr., General Counsel..
Robert D. Ferguson, executive vice president of Pittsburgh National
Bank; accompanied by Cecil P. Bronston, vice president, Continental
Illinois National Bank and Trust Co. of Chicago; Edwin R. MacKethan,
senior vice president, Virginia National Bank of Norfolk; and Leo
Herzel, special counsel__

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Dean E. Miller, Deputy Comptroller for Trusts, Office of the Comptroller of the Currency; accompanied by Robert Bloom, Chief Counsel Phil E. Pearce, National Association of Securities Dealers; accompanied by Lloyd J. Derrickson, general counsel and secretary; and W. R. Moulten, director of the Investment Companies Department--. Francis R. Schanck, first vice president, Investment Bankers Association of America; accompanied by W. Bruce McConnel, Jr., chairman of securities committee; Franklin Johnson, chairman of investment committee, and Gordon L. Calvert, executive secretary and general counsel__ 1272

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American Life Convention and Life Insurance Association of America, statement of..

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Camp, William B., Comptroller of the Currency, defendant, U.S. District
Court for the District of Columbia, civil action No. 1083-66-
irst National City Bank, Investment Company Act release No. 4538..
orbes magazine, article entitled: "Mutual Prudence".

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Civil action No. 1083-66, U.S. Court for the District of Columbia,
Comptroller of the Currency, defendant....

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Supplemental memorandum__

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nvestment Bankers Association of America:

Calvert, Gordon L., executive director and general counsel, letter to committee___

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Schanck, Francis R., first vice president, statement of

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ational Association of Securities Dealers:

Pearce, Phil E., statement of.........

Derrickson, Lloyd J., general counsel, letter to committee..

Memorandum to committee___

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IV

New York Times, article entitled, "Funds Ask Banks To Help Kill
Bill:***

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Opinion of Judge McGarragh in Investment Company Institute v. Camp__
Rostow, Eugene V., statement of..

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Comparative draft of changes recommended by.

First National City Bank, Investment Company Act release No. 4538
Form S-15___

Memorandum received by the committee___

U.S. District Court for the District of Columbia, civil action No. 1083–66.

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MUTUAL FUND LEGISLATION OF 1967

THURSDAY, NOVEMBER 16, 1967

U.S. SENATE,

COMMITTEE ON BANKING AND CURRENCY,

Washington, D.C.

The committee met at 9 a.m. in room 5302, New Senate Office Building, Thomas J. McIntyre presiding.

Present: Senators McIntyre and Williams.

Senator MCINTYRE. The Committee on Banking and Currency will come to order.

This morning the committee will conduct hearings on amendment No. 438, which I intend to propose to S. 1659. The full committee held hearings on S. 1659 in July and August of this year.

At this time I would like to express my own personal appreciation and thanks to the chairman of our committee, Senator Sparkman, for his willingness to authorize this hearing.

I would like to state for the benefit of those who may be interested that this amendment represents the work of myself and my own staff and the legislative counsel of the Senate. We have consulted with representatives of various Federal agencies and industry groups, some of which have suggested technical language which was used to a partial extent. It is my feeling, and I speak only for myself on this point, that this amendment represents a substantial compromise among the various parties. I think that it represents a clear move in the public interest.

At my request the SEC has prepared a section by section analysis and explanation of this Amendment 438. Without objection the amendments and summary will be placed in the record at this point. Also a letter from the Board of Governors of the Federal Reserve System. (Amendment No. 438, the letter, the analysis of amendments, and summary follows:)

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