(4) A rule of the Commission declaring that any registration statement may be withdrawn "if the Commission consents" and that such consent shall be given "with due regard to the public interest and the protection of investors" implies that withdrawal of a statement not as yet effective is of right if no prejudice will result to the public or to investors. P. 21. (5) The filing of a registration statement under the Securities Act is in effect an ex parte application for a license to use the mails and the facilities of interstate commerce for the purposes recognized by the Act. Withdrawal of the application before it has become effective can not affect any right of the general public, nor can it be said to prejudice investors, when, as in this case, no step towards the issuance of the securities sought to be registered has been taken and no investor, actual or potential, in such securities, is shown to exist. P. 22. (6) The registrant's right to withdraw his statement was unqualified; and the Commission's proceeding, limited to the purpose of determining whether the effectiveness of the statement should be suspended, was terminated by the withdrawal. P. 23. (7) After the withdrawal, no authority for the enforcement of the subpoena could be exercised by court order under § 22 (b) of the Act. P. 23. (8) The stop order proceeding, having been ended by the withdrawal, could afford no basis for continuing the inquisition under a general power claimed by the Commission under § 19 (b). P. 25. 2. After a defendant has been notified of the pendency of a suit seeking an injunction against him, even though a temporary injunction be not granted, he acts at his peril and subject to the power of the court to restore the status quo ante, wholly irrespective of the merits as they may be ultimately adjudged. P. 15. 3. In the federal tribunals a plaintiff has the unqualified right, unless otherwise provided by a specific rule of court, to dismiss his complaint at law or bill in equity, if no plain legal prejudice will result to the defendant other than the mere prospect of a second litigation upon the same subject matter. P. 19. 4. To the extent that the mere will of an official or of an official body is permitted to take the place of allowable official discretion, or to supplant the standing law as a rule of conduct, the Government ceases to be one of laws and becomes an autocracy. The courts, in the performance of their duties, must be ever vigilant to detect and turn aside this danger at its beginnings. P. 23. 1 Argument for Respondent. 5. Arbitrary power and the rule of the Constitution can not both exist. Our institutions must be kept free from all assumptions of such power, whether by the three primary departments of the Government or by lesser agencies. P. 24. 6. An official inquisition to compel disclosures of fact is not an end, but a means to an end; and it is a mere truism to say that the end must be a legitimate one to justify the means. P. 25. 7. A citizen, when interrogated about his private affairs, has a right before answering to know why the inquiry is made; and if the purpose disclosed is not a legitimate one, he may not be compelled to answer. P. 25. 8. An investigation not based upon specified grounds is quite as objectionable as a search warrant not based upon specific statements of fact. Such an investigation, or such a search, is unlawful in its inception and can not be made lawful by what it might bring, or by what it actually brings, to light. P. 27. 9. The philosophy that constitutional limitations and legal restraints may be brushed aside upon the plea that good, perchance, may follow, finds no countenance in the American system of government. P. 27. 10. The constitutionality of the Securities Act of 1933 is not considered in this case. P. 28. 79 F. (2d) 617, reversed. CERTIORARI, 297 U. S. 699, to review the affirmance of an order of the District Court, 12 F. Supp. 210, requiring the present petitioner to appear and testify before the Securities & Exchange Commission. Messrs. Harry O, Glasser and James M. Beck, with whom Messrs. Bainbridge Colby, J. N. Saye, and H. I. Fishbach were on the brief, for petitioner. Mr. John J. Burns, General Counsel, Securities & Exchange Commission, and Solicitor General Reed, with whom Messrs. Charles E. Wyzanski, Jr., and Alger Hiss were on the brief, for respondent. The registration statement filed by the petitioner became effective by operation of law despite petitioner's attempts to withdraw it. The Commission properly Argument for Respondent. 298 U.S. refused to permit withdrawal pursuant to a valid regulation which is authorized both by § 19 (a) of the Act and by the inherent power of the Commission, as a quasijudicial tribunal, to limit the right of petitioner to terminate the proceedings before the Commission. In effect, the regulation merely imposes a reasonable condition upon the right of the registrant to terminate the orderly procedure which he has set in motion by the filing of his registration statement. Analogous rules regulating the voluntary dismissal of bills of complaint have long been familiar in courts of equity. In the federal practice, the complainant must move for an order of dismissal and let the court fix the terms. American Zylonite Co. v. Celluloid Manufacturing Co., 32 Fed. 809. And a local equity rule which allows the court to refuse a plaintiff permission to discontinue his action where justice so requires, even though the defendant can not have affirmative relief under the pleadings and though his only prejudice is a possible second suit, has been adjudged valid. Bronx Brass Foundry v. Irving Trust Co., 297 U. S. 230; Young v. Southern Pacific Co., 25 F. (2d) 630. Irrespective of the rule which may be applicable if no regulation of the complainant's right to withdraw exists (see Ex parte Skinner & Eddy Corp., 265 U. S. 86), a regulation limiting that right is procedural and within the power of a quasijudicial tribunal such as the respondent. The standard applied in this regulation-"with due regard for the public interest and the protection of investors"-is consonant with the spirit and purpose of the whole Act, and some limitation on the right of a registrant to withdraw is necessary for the effective administration. of the Act. It is obvious that a registration statement ceases to be effective upon withdrawal, and can thus be no longer the subject of a stop order hearing, which can only result in an order suspending the effectiveness of the statement. 1 Argument for Respondent. To allow a registrant an unqualified privilege of withdrawal, with the consequent ability to terminate any stop order hearing or to prevent such a hearing, would seriously embarrass the work of the Commission. Such a broad privilege would permit the registrant to avoid, in large part, the registration requirements of the Act, by filing a registration statement with such limited information as he chose to give, withdrawing it when its deficiencies were detected, and repeating the process ad infinitum in the hope that by perseverance he might escape the vigilance of the examiner. Of even greater significance is the fact that stop order hearings in regard to particular registration statements, and the final orders and opinions based thereon, constitute the most effective of the methods by which the Commission is to insure the accuracy and completeness of registration statements in general. The Commission may, it is true, investigate pursuant to § 19 (b), and if it finds that the matters set out in the registration statement are false or incomplete, it may enjoin the continuance of this violation, or recommend criminal prosecution if the violation be willful. These, however, are extraordinary remedies requiring resort to the courts; they are not to be lightly undertaken and are to be used only in exceptional cases. The publication of this regulation satisfied the requirements of § 19 (a) of the Act and was clearly adequate to give reasonable notice of its promulgation. Petitioner does not claim he was ignorant of the regulation. The Act does not improperly delegate legislative power to the Commission, for the power to regulate the minutiae of its own procedure may certainly be delegated to a quasijudicial tribunal. The regulation was properly applied in this case, for the Commission was not required to find that its refusal to permit withdrawal of the statement was in the public in Argument for Respondent. 298 U.S. refused to permit withdrawal pursuant to a valid regulation which is authorized both by § 19 (a) of the Act and by the inherent power of the Commission, as a quasijudicial tribunal, to limit the right of petitioner to terminate the proceedings before the Commission. In effect, the regulation merely imposes a reasonable condition upon the right of the registrant to terminate the orderly procedure which he has set in motion by the filing of his registration statement. Analogous rules regulating the voluntary dismissal of bills of complaint have long been familiar in courts of equity. In the federal practice, the complainant must move for an order of dismissal and let the court fix the terms. American Zylonite Co. v. Celluloid Manufacturing Co., 32 Fed. 809. And a local equity rule which allows the court to refuse a plaintiff permission to discontinue his action where justice so requires, even though the defendant can not have affirmative relief under the pleadings and though his only prejudice is a possible second suit, has been adjudged valid. Bronx Brass Foundry v. Irving Trust Co., 297 U. S. 230; Young v. Southern Pacific Co., 25 F. (2d) 630. Irrespective of the rule which may be applicable if no regulation of the complainant's right to withdraw exists (see Ex parte Skinner & Eddy Corp., 265 U. S. 86), a regulation limiting that right is procedural and within the power of a quasijudicial tribunal such as the respondent. The standard applied in this regulation-"with due regard for the public interest and the protection of investors"-is consonant with the spirit and purpose of the whole Act, and some limitation on the right of a registrant to withdraw is necessary for the effective administration of the Act. It is obvious that a registration statement ceases to be effective upon withdrawal, and can thus be no longer the subject of a stop order hearing, which can only result in an order suspending the effectiveness of the statement. |