III. Add the following proviso to section 2(a) of the act by adding the following section 2(7) to S. 693 (beginning at line 5 on p. 7) and renumbering present section 2(7) of S. 693 (at line 5 on p. 7) as section 2(8):

"(7) Subsection (a) is further amended by substituting a semicolon for the period at the end of subsection (a) (11) and adding the following proviso at the end of subsection 2 (a):

"Provided, That a person acting as an agent of a foreign principal, other than the government of a foreign country or a foreign political party, in furtherance of the bona fide trade or commerce of such foreign principal may file a registration statement including only the following, which shall be regarded as material for the purposes of this subchapter:

"(i) Registrant's name, principal business address, and all other business addresses in the United States or elsewhere, and all residence addresses, if any;

"(ii) Status of the registrant: if an individual, nationality; if a partnership, name, residence addresses, and nationality of each partner; if an association, corporation, organization, or any other combination of individuals, the name, residence, addresses and nationality of each director and officer and of each person performing the functions of a director or officer; a general statement of its ownership and control; and a general statement of the nature of the registrant's business;

"(iii) The name and address of every foreign principal for whom the registrant is acting or assuming or purporting to act, or has agreed to act, and a general statement of the nature of the business or other activities of such foreign principal, of the extent of such foreign principal's business or other activities in the United States and a general statement of its ownership and control;

"(iv) A general statement of the circumstances by reason of which the registrant is an agent of such foreign principal, and of the existing and proposed activity or activities engaged in or to be engaged in by the registrant on behalf of such foreign principal which require his registration hereunder; and

"(v) Such further statements and such documents as are necessary to make the statements made in the registration statement and supplements thereto, and the copies of documents, if any, furnished therewith, not misleading;

and such registration statement shall fully satisfy the registration requirements of this section 2(a) with respect to such person except that if, following the filing of such a registration statement, the Attorney General, having due regard for the national security and public interest, shall mail a request to such person, at the address set forth in such registration statement (or other more recent address, if any, filed by such person for such purpose with the Attorney General), requiring additional statements, information or documents pertinent to the purposes of this subchapter, such person shall be obliged to file such additional statements, information or documents with the Attorney General within ten days following the mailing of such request."

IV. Add a new section 2(g) to the act, by amending section 2(7) of S. 693 (beginning at line 5 on p. 7) as follows:

"(7) Such section_is further amended by adding at the end thereof [a new subsection as follows] the following new subsections:

"(f) The Attorney General may, by regulation, provide for the exemption—

"(1) from registration, or from the requirement of furnishing any of the information required by this section, of any person who is listed as a partner, officer, director, or employee in the registration statement filed by an agent of a foreign principal under this Act, and

"(2) from the requirement of furnishing any of the information required by this section of any agent of a foreign principal,

where by reason of the nature of the functions or activities of such person the Attorney General, having due regard for the national security and the public interest, determines that such registration, or the furnishing of such informamation, as the case may be, is not necessary to carry out the purposes of this Act.["]

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'(g) A person who believes in good faith that such person has ceased to be, or is not, an agent of a foreign principal, or that such person is exempt from

the requirements of section 2(a) hereof, may file an application with the Attorney General for a determination by the Attorney General of such person's status under this subchapter. The filing of an application in good faith shall exempt the applicant from the provisions of this subchapter until the Attorney General has acted on such application. Within a reasonable time after the receipt of such an application, the Attorney General shall pass upon the merits of such application, and enter an order granting, or, after notice and opportunity for hearing, denying or otherwise disposing of such application. The Attorney General may require such additional statements, information, or documents as he may deem necessary for purposes of passing upon the merits of such application. A person shall be liable to prosecution for a willful false statement of a material fact in any such application or the willful omission of a material fact or copy of a material document necessary to make the statements made in such applica tion not misleading to the same extent that such person would be subject to prosecution under this subchapter for such a willful false statement or willful omission in a registration statement filed under Section 2 (a) hereof.”

V. Revise section 3(g) of S. 693 (lines 12 through 19 on p. 8), which would add a new subsection (g) to section 3 of the act, as follows:

"(b) Section 3 of such act is further amended by substituting a semicolon for the period at the end of subsection (f) and adding a new subsection as follows: ["(g) Any attorney whose activities are confined to openly representing, as an attorney of record, the interests of a disclosed foreign principal before any court or administrative agency of the United States, or of any State or political subdivision thereof.]

"(g) Any person qualified to practice law engaging or agreeing to engage only in the legal representation of a foreign principal before any court of law or any agency or official of the Government of the United States (other than a Member or committee of either House of Congress), provided that in representing the interests of such foreign principal before any such agency or official the fact of such representation and the identity of such foreign principal shall be disclosed to the agency or official concerned."

Changes Suggested by the Chamber of Commerce of the United States in S. 693, To Amend the Foreign Agents Registration Act of 1938

Amend section 1(1) of S. 693 (which sets forth the definition of the term "foreign principal") by changing the period at the end thereof (line 9, p. 2) to a semicolon, and adding thereafter the following:

"Provided, however, That the term 'foreign principal' does not include any bona fide business corporation or other similar association or organization engaged in bona fide trade or commerce if either ·

(i) such person is directly or indirectly owned or controlled by one or more corporations organized under or created by the laws of the United States or of any state or other place subject to the jurisdiction of the United States, having its or their principal places of business within the United States, and regularly engaged in substantial bona fide commercial, industrial or financial activities within the United States, or

(ii) such person directly or indirectly owns or controls one or more corporations organized under or created by the laws of the United States or of any state or other place subject to the jurisdiction of the United States, having its or their principal places of business within the United States, and regularly engaged in substantial bona fide commercial, industrial or financial activities within the United States, and no substantial portion of the activities of such person are directly or indirectly supervised, directed, controlled, financed or subsidized in whole or in major part by a government of a foreign country or a foreign political party,

and the voting stock of such person, or of the corporation or corporations owning or controlling such person, is registered under the Securities Exchange Act of 1934 or traded on a national securities exchange registered thereunder, or regularly quoted in an over-the-counter market by two or more members of a national or affiliated securities association registered thereunder.

Mr. WILLIS. Thank you very much Mr. Dean, for your very enlightening statement. May I say that I understand your position com

pletely and viewing your proposal as it would apply to the Arthur Deans of this country, I am in complete sympathy with it.

I notice throughout your statement-and I compliment you for ityou stress and reiterate such words as "bona fide" and "honest relationship between lawyer and client." It was for these reasons that I was careful in my opening statement not to confuse my positions as chairman of this subcommittee of the House Committee on the Judiciary and as chairman of the House Committee on Un-American Activities. Subversion is not the primary target of this legislation as I understood from the very beginning and as you have stressed so clearly in your statement.

About the only thing that I can tell you right now is that I am sympathetic with your approach and we will do the best that we can.

Of necessity we have to recognize by we I mean the members of the Committee on the Judiciary—that it would be awfully difficult to eliminate from this bill general language, if you please, that would be there if needed. Of course, that is what causes the trouble, where do you draw the dividing line?

Let me relate an experience. On the other committee I serve we had some appropriate hearings within the jurisdiction of that committee having to do with unlawful travel to Čuba. These unlawful travelers—and there were many of them-had counsel. I happen to know also—and that is a matter of record that the advice given went beyond protecting clients in a possible criminal prosecution under another statute but had to do also with the actions of their clients in respect to going to Cuba, coming back, and applauding the Castro regime. Of course, the Internal Security Act also comes into play. I do not know whether I am making myself clear.

Mr. DEAN. Yes.

Mr. WILLIS. But personally, I have studied this proposal. I have made it a point to do it. I am particularly interested and will be in Mr. Yeagley's appearance. I have not talked to him or anybody else in Justice personally, as to what his ideas would be on whether the Justice Department can find a way to administer the act in such a way as to protect or exempt, treat fairly aboveboard, with complete respect for their integrity, the Arthur Deans and some others.

I am not being critical. I have nobody particularly in mind. I will do the best I can to study this act and to come out with the best we can get.

I am impressed with some of your suggestions, frankly. I have not studied your language but as to short-form registration there may be merit to that approach.

Mr. DEAN. Yes, sir.

Mr. WILLIS. Maybe that is one approach, a short-form registration. Maybe the use of language like that used in the security field would be helpful.

Mr. DEAN. Public Utility Holding Company Act, 1935.

Mr. WILLIS. Maybe we can do something with that. We will do the best we can. I highly appreciate your attendance. Maybe there are

some questions.

Mr. Tuck. I have no questions.

Mr. POFF. Mr. Chairman, first may I join the chairman in welcoming such a distinguished witness to our hearing and echo what he has

already said about the value of the contribution he has made to our deliberations.

Specifically, I have a question with reference to your proposal of an application for an exemption patterned after that authorized in the Securities and Exchange Act.

Your proposal proceeds on the premise that the applicant is acting in good faith?

Mr. DEAN. Yes, sir. If he is not acting in good faith he does not get the exemption.

Mr. PoFF. That brings me precisely to my question.

The proposal which you make on page 6 of the appendix requires that the Attorney General act upon that application within “a reasonable time after the receipt of such an application." I think lawyers have no difficulty in interpreting the words reasonable time. But at least that clause is subject to discretionary interpretation.

My question, sir, is: How long might a reasonable time be within which the Attorney General might decide, first of all, the question of whether the applicant was acting in good faith?

Mr. DEAN. Well, you have the advantage, Mr. Poff, of a number of cases interpreting this same language that have arisen in connection with the interpretation of the Public Utility Holding Company Act of 1935. That is why I use that precise statutory language. Then I thought that the Department of Justice would have the advantage of the SEC's interpretive regulations and also the cases that have arisen under that statute. It varies with the facts.

In the absence of extenuating circumstances, unless the people do not respond to information that the Attorney General asks from them in supplementing the application, I should think in the normal case the Attorney General ought to respond somewhere within 90 to 120 days after the application is filed. By stipulation between the parties they could extend the time.

Mr. POFF. In that 90- to 120-day period, as I understand your proposal, the applicant would be exempt simply by the sterile, naked act of filing the application?

Mr. DEAN. He is exempt if he files it bona fide and he did not withhold any essential information from the Attorney General. That is, he cannot withhold his essential relationship. If he is actually acting as a foreign agent of a foreign government and ought to be covered by it, I do not see how he could then file a bona fide application. If there is a doubt he would be exempt until the Attorney General acted on it.

If the Attorney General, of course, within a reasonable period of time-whatever the burden was on the Attorney General's Officedecided he wanted more information they could hold up the exemption by simply saying that, "We want more information."

Mr. POFF. I found nothing, sir, in that language which suspends the exemption during the period in which the Attorney General is seeking a firm determination of the question first of good faith. Mr. DEAN. Under (g) on page 6 of the appendix:

*** the filing of an application in good faith shall exempt the applicant from the provisions of this subchapter until the Attorney General has acted on such application.

It only suspends it until the Attorney General acts on it:

Within a reasonable time after the receipt of such an application, the Attorney General shall pass upon the merits of such an application, and enter an order granting, or after notice and opportunity for hearing, denying, or otherwise dis posing of such application.

Mr. POFF. I understand that. I say again, I understood you to make the point that if the Attorney General doubts good faith he may somehow suspend the operation of the exemption?

Mr. DEAN. He could pass upon it or enter an order granting or after notice and opportunity for hearing deny the application. He could immediately, if he has any doubts about it, immediately set it down for hearing.

Mr. POFF. But assuming that he has no doubts within a reasonable time of 90 days, the applicant would continue to enjoy the exemption? Mr. DEAN. That is correct. Except that he bona fide would have to set forth what his precise relationships were.

Mr. PoFF. Suppose the Attorney General asks for additional information and the applicant withheld information or supplied misleading information. Would that come within any criminal sanction in any criminal statute?

Mr. DEAN. I put on here at the top of page 7, under (g):

The Attorney General may require such additional statements, information, or documents as he may deem necessary for purposes of passing upon the merits of such application. A person shall be liable to prosecution for a willful false statement of a material fact in any such application or the willful omission of a material fact or copy of a material document necessary to make the statements made in such application not misleading to the same extent that such person would be subject to prosecution under this subchapter for such a willful false statement or willful omission in a registration statement filed under section 2(a) hereof.

Mr. PoFF. I ask the witness to pardon me. I had not read the proposal that far. I think it is well that you have included that sentence. I am frankly concerned about what the status of the applicant may be in the so-called reasonable time period preceding the Attorney General's firm determination, and what harm he may do if, in fact, he is an agent of a foreign government bent upon subversive activities.

You must understand that in reaching a decision on this point, this committee must consider the fact that all those who avail themselves of the opportunity your proposal would give them may not be acting in good faith. We must look at the problem from all angles.

Mr. DEAN. Yes, sir; that would be a problem for your committee's decision.

Let me also submit to you this happened in the very beginning of the Securities Act where the registration provisions were so burdensome that the Securities and Exchange Commission just was not able to process them. At the end of a year we had to amend the act making it much simpler. You might also accomplish something on that in the public interest to have the registration statement so burdensome and so full of detail you might have several hundred of them filed with the Department of Justice and the Department of Justice would not be able to discover the omissions or misstatements by reason of the very burdensome nature of the volume of the applications and the tremendous amount of information in these.

If you read the requirements for one of these registration statements, I think you will find it is terribly burdensome.