HEARING BEFORE A SUBCOMMITTEE OF THE UNITED STATES SENATE SEVENTY-FIFTH CONGRESS FIRST SESSION ON S. 2344 A BILL TO PROVIDE FOR THE REGULATION OF THE SALE ARE ISSUED, AND FOR OTHER PURPOSES JUNE 9, 15, 22, and 29, 1937 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 FREDERICK STEIWER, Oregon ROBERT J. BULKLEY, Ohio LYNN J. FRAZIER, North Dakota ROBERT R. REYNOLDS, North Carolina HENRY CABOT LODGE, JR., Massachusetts JAMES F. BYRNES, South Carolina JOHN H. BANKHEAD, Alabama WILLIAM GIBBS MCADOO, California ALVA B. ADAMS, Colorado FRANCIS T. MALONEY, Connecticut GEORGE L. RADCLIFFE, Maryland PRENTISS M. BROWN, Michigan HERBERT E. HITCHCOCK, South Dakota JAMES H. HUGHES, Delaware CLYDE L, HERRING, Iowa WILLIAM H. SMATHERS, New Jersey LEON H. KEYSERLING, Clerk SUBCOMMITTEE ON SECURITIES AND EXCHANGE ROBERT F. WAGNER, New York, Chairman CARTER GLASS, Virginia JOHN G. TOWNSEND, JR., Delaware LYNN J. FRAZIER, North Dakota II Eutti foe, 17 Barkley, Hon. Alben W., senior Senator from Kentucky. Bradley, Charles B., general solicitor, Prudential Insurance Co. of Brown, Edward E., president, First National Bank, Chicago, Ill.. 122 Burke, Edmund, Jr., member of the staff of the Securities and Exchange Commission, Washington, D. C.. Buttenwieser, Benjamin J., chairman, Investment Bankers Associa- tion of America Special Committee on Trust Indentures, New York Canright, G. S., counsel for the corporate trust division, Continental Illinois National Bank & Trust Co. of Chicago, Ill. Douglas, William O., commissioner, Securities and Exchange Com- mission, Washington, D. C.--- president of the Wachovia 87 Loeb, Howard A., chairman, Tradesmen's National Bank & Trust Co., McCollom, H. C., New York City.. Oliver, Fred N., general counsel, National Association of Mutual Savings Banks, 60 East Forty-second Street, New York City -- 148 Page, R. G., vice president, Bankers Trust Co., New York City- Posner, Louis S., member of the Mortgage Commission of the State Ransom, Ronald, vice chairman, Board of Governors of the Federal Reserve System, Washington, D. C--- Tilney, A. A., chairman of the board of directors, Bankers Trust Co., Untermyer, Samuel, New York City - 94 Letter from the President of the United States... 15 42 III REGULATION OF SALE OF SECURITIES WEDNESDAY, JUNE 9, 1937 UNITED STATES SENATE, Washington, D. C. The subcommittee met, pursuant to call, at 10:30 a. m., in the room of the Senate Committee on Banking and Currency, Senate Office Building, Senator Robert F. Wagner (chairman) presiding. Present: Senators Wagner (chairman), Bulkley, McAdoo, Maloney, Hughes, Herring, and Frazier. Present also: Senators Alben W. Barkley and William H. Smathers. The CHAIRMAN. We will come to order. This is the subcommittee which meets to hear witnesses in reference to Senate bill 2344, introduced by Senator Barkley. I wish to have printed here as a part of the record, a copy of Committee Print No. 2 of the bill, and a letter I have received from the President in regard to the proposed legislation, as follows: [S. 2344, 75th Cong., 1st sess., Committee Print No. 2, June 10, 1937.) [Omit the part enclosed in black brackets and insert the part printed in italic) A BILL To provide for the regulation of the sale of certain securities in interstate and foreign commerce, and the trust indentures under which the same are issued, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the “Trust Indenture Act of 1937”. NECESSITY FOR REGULATION SECTION 1. (a) Upon the basis of facts disclosed by the reports of the Securities and Exchange Commission made to the Congress pursuant to section 211 of the Securities Exchange Act of 1934 and otherwise disclosed and ascertained, it is hereby declared that the national public interest and the interest of investors in notes, bonds, debentures and evidences of indebtedness publicly offered by the use of means and instruments of transportation and communication in interstate commerce and of the mails are adversely affected [(1) when the obtaining of adequate current information with respect to the financial condition of the obligor and its performance of its obligations with respect to such securities, and the enforcement of such obligations, is. impeded through the failure to provide a trustee to protect and enforce the: rights and to represent the interests of such investors; when the trustee: designated does not have resources commensurate with its responsibilities, or has any relationship to or connection with the obligor or any underwriter of any securities of the obligor, or holds, beneficially or otherwise, any interest in the obligor or any such underwriter, which relationship, connection or interest involves a material conflict, actual or potential, with the interests of such investors; [(2) when the trustee does not have adequate rights and powers, or adequate duties and responsibilities, in connection with matters relating to the protection and enforcement of the rights of such investors; when, by reason of provisions exculpating the trustee from liability for its failure to exercise its rights and powers or to discharge its duties and obligations, the protection afforded to such investors is rendered illusory; or 1 |
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