Acquisition

of stock.

Violations, legal action.

73 STAT. 692. 73 STAT. 693.

Restrictions.

"(1) to acquire the control of more than one insured institution; or

"(2) to acquire the control of an insured institution when it holds the control of any other insured institution.

"(d) Any company may, without regard to subsection (c), acquire stock pursuant to a pledge or hypothecation to secure a loan or in connection with the liquidation of a loan, but it shall be unlawful for any such company to retain for more than one year any control the acquisition of which by such company would, except for this subsection, have been unlawful under subsection (c).

"(e) If, in the opinion of the Federal Home Loan Bank Board, any company holds control of an institution and such control was acquired in violation of subsection (c) or retained in violation of subsection (d), it shall give such company notice that if it does not divest itself of such control within thirty days an action will be brought to force the divestiture thereof. Notice given to such institution shall constitute notice to such company for purposes of the preceding sentence. If such company does not dispose of so much of the stock of such institution, or take such other action, or both, as may be necessary to divest itself of such control within thirty days after the receipt of such notice, the Board shall, without regard to any statute of limitation, institute in the United States district court for the district in which the principal office of such institution is located, and prosecute to final satisfaction, an action to require divestiture of such control. Process in any such action may be served in any district in which such company transacts business or wherever it may be found. The United States district courts shall have jurisdiction of all actions brought under this subsection and, in view of the fact that the questions involved are of general public importance, shall hear and determine such actions with all reasonable promptness. Any such action shall be brought by the Federal Home Loan Bank Board in its own name and may, in the discretion of the Board, be prosecuted through its own attorneys. All expenses of the Board under this subsection shall be considered as nonadministrative expenses.

"(f) It shall be unlawful, on or after the date of the enactment of this section, for any insured institution which is controlled by a company

(1) to invest any of its funds in the stock, bonds, debentures, or other obligations of such company or of any other organization controlled by such company;

"(2) to accept the stock, bonds, debentures, or other obligations of such company, or of any other organization controlled by such company, as collateral security for advances made to such company or organization or to any other person; except that such institution may accept, and hold for a period not exceeding two years, such stock, bonds, debentures, or other obligations as security for debts contracted prior to the acquisition of such control;

(3) to purchase securities or other assets or obligations under repurchase agreement from such company or from any other organization controlled by such company; and

(4) to make any loan, discount, or extension of credit to such company or to any other organization controlled by such company. Except as otherwise provided by regulation by the Federal Home Loan Bank Board, a non-interest-bearing deposit with a bank, to the credit of an insured institution, shall not be deemed to be a loan, discount, or extension of credit to such bank for purposes of this subsection. As used in this subsection, the term 'organization' means a corporation, business trust, association, partnership, or similar organization.

(g) (1) This section shall terminate May 31, 1961.

8

73 STAT, 693,

66 The Federal Home Loan Bank Board shall make a full and complete survey of all aspects of savings and loan holding companies,

Termination.

and shall submit a report to the Committees on Banking and Cur- Report to rency of the Senate and the House of Representatives not later than Congress. May 31, 1960. This survey shall include studies of the nature, growth, effects and future prospects of savings and loan holding companies, including particularly the extent to which they may have become, or may in the future become, injurious or detrimental to free competition in the field of mortgage lending or in any related field. The report on this survey shall contain a full statement on these matters, together with recommendations for further legislation on this subject. In particular, the report shall review and make recommendations on the legislative proposals submitted at the hearings of the Committees on Banking and Currency on H.R. 7244, Eighty-sixth Congress, including particularly the need for and feasibility of requiring divestment of part or all of the savings and loan associations already acquired or part or all of the other interests of such holding companies, the need for and feasibility of requiring such holding companies to limit their activities or their future acquisitions to a specified distance from their principal offices, and the desirability and feasibility of regulating and controlling further acquisitions of such holding companies, as compared with prohibiting further acquisitions by such holding companies."

Approved September 23, 1959.

21-137 O-68-21

Public Law 86-619 86th Congress, S. 1965 July 12, 1960

AN ACT

To make uniform provisions of law with respect to the terms of office of the members of certain regulatory agencies.

Terms of office

of members.
46 Stat. 797.

Be it enacted by the Senate and Ilouse of Representatives of the United States of America in Congress assembled, That the second Regulatory agensentence of the first section of the Federal Power Act (16 U.S.C. 792) cies. is amended to read as follows: "Their successors shall be appointed each for a term of five years from the date of the expiration of the term for which his predecessor was appointed and until his successor is appointed and has qualified, except that he shall not so continue to serve beyond the expiration of the next session of Congress subsequent to the expiration of said fixed term of office, and except that any person appointed to fill a vacancy occurring prior to the expiration of the term for which his predecessor was appointed shall be appointed only for the unexpired term."

SEC. 2. The first sentence of subsection (c) of section 4 of the Communications Act of 1934 (47 U.S.C. 154(b)) is amended to read as 48 Stat. 1067. follows: "The Commissioners first appointed under this Act shall continue in office for the terms of one, two, three, four, five, six, and seven years, respectively, from the date of the taking effect of this Act, the term of each to be designated by the President, but their successors shall be appointed for terms of seven years and until their successors are appointed and have qualified, except that they shall not continue to serve beyond the expiration of the next session of Congress subsequent to the expiration of said fixed term of office; except that any person chosen to fill a vacancy shall be appointed only for the un-14 STAT. 408. expired term of the Commissioner whom he succeeds."

74 STAT. 407.

SEC. 3. The fourth sentence of subsection (a) of section 4 of the 48 Stat. 885. Securities Exchange Act of 1934 (15 U.S.C. 78 (d)) is amended to read as follows: "Each Commissioner shall receive a salary at the rate of $20,000 a year and shall hold office for a term of five years and until his successor is appointed and has qualified, except that he shall not so continue to serve beyond the expiration of the next session of Congress subsequent to the expiration of said fixed term of office, and except (1) any Commissioner appointed to fill a vacancy occurring prior to the expiration of the term for which his predecessor was appointed shall be appointed for the remainder of such term, and (2) the terms of office of the Commissioners first taking office after the enactment of this title shall expire as designated by the President at the time of nomination, one at the end of one year, one at the end of two years, one at the end of three years, one at the end of four years, and one at the end of five years, after the date of the enactment of this title."

Approved July 12, 1960.

(298)

Public Law 86-750 86th Congress, S. 3773 September 13, 1960

AN ACT

To amend certain provisions of the Investment Advisers Act of 1940, as amended.

Be it enacted by the Senate and House of Representatives of the

74 STAT, 885,

United States of America in Congress assembled, That (a) paragraph Investment Advis 12 of subsection (a) of section 202 of the Investment Advisers Act ers Act of 1940, of 1940, as amended, is amended to read as follows:

amendment.
54 Stat. 847.

"(12) 'Investment company', affiliated person, and ‘insurance company' have the same meanings as in the Investment Company Act 15 USC 80b-2. of 1940. 'Control' means the power to exercise a controlling influence over the management or policies of a company, unless such power is solely the result of an official position with such company."

(b) Paragraph (18) of section 202(a) of the Investment Advisers Act of 1940, as amended, is amended by striking out "the Philippine Islands,".

SEC. 2. Clause (F) of paragraph (1) of section 203(c) of the In

vestment Advisers Act of 1940, as amended, is amended to read as 15 USC 80b-3. follows:

"(F) whether such investment adviser, or any partner, officer, di- Registration rector thereof, or any person performing similar functions, or any application. person directly or indirectly controlling or controlled by such invest- Information rement adviser, is subject to any disqualification which would be a basis quired. for denial, suspension, or revocation of registration of such investment adviser under the provisions of subsection (d), and".

SEC. 3. (a) Paragraph (2) of subsection (c) of section 203 of the Investment Advisers Act of 1940, as amended, is amended to read as follows:

"(2) a statement as to whether the principal business of such investment adviser consists or is to consist of acting as investment adviser and a statement as to whether a substantial part of the business of such investment adviser consists or is to consist of rendering investment supervisory services."

(b) Subsection (d) of section 203 of the Investment Advisers Act of 1940, as amended, is amended to read as follows:

"(d) The Commission shall, after appropriate notice and op- Denial or susportunity for hearing, by order deny registration to, or suspend for pension of regisa period not exceeding twelve months or revoke the registration of, tration.

an investment adviser, if it finds that such denial, suspension, or revocation is in the public interest and that (1) such investment adviser, whether prior or subsequent to becoming such, or (2) any partner, officer, or director thereof, or any person performing similar functions, or (3) any person directly or indirectly controlling or controlled by such investment adviser, whether prior or subsequent to becoming such, (A) has willfully made or caused to be made in any application for registration or report filed with the Commission under this title, or in any proceeding before the Commission with respect to registration, any statement which was at the time and in the light of the circumstances under which it was made false or misleading with respect to any material fact, or who has omitted to state in any such application or report any material fact which is required to be stated therein; or (B) has been convicted within ten years preceding the filing of the application or at any time thereafter of any felony or misdemeanor which the Commission finds (i) involves the purchase or sale of any security, (ii) arises out of the conduct of the business of a broker, dealer, or investment adviser, (iii) involves embezzlement, fraudulent conversion, or misappropriation of funds or securities, or (iv) involves the violation of section 1841, 1342, or 1843 of title 18, United 62 Stat. 643. States Code, as heretofore or hereafter amended; or (C) is perma

(299)

74 STAT. 886.

48 Stat. 74.
15 USC 77a.
48 Stat. 881.
15 USC 78a.

15 USC 80b-3. Commencement of proceedings.

Withdrawal from registration.

15 USC 80b-4.

Records and reports.

15 USC 80b-3.

of

nently or temporarily enjoined by order, judgment, or decree of any court of competent jurisdiction from acting as an investment adviser, underwriter, broker, or dealer, or as an affiliated person or employee any investment company, bank, or insurance company, or from engaging in or continuing any conduct or practice in connection with any such activity, or in connection with the purchase or sale of any security; or (D) has willfully violated any provision of the Securities Act of 1933, or of the Securities Exchange Act of 1934, or of this title, as any of such statutes heretofore have been or hereafter may be amended, or of any rule or regulation under any of such statutes; or (E) has aided, abetted, counseled, commanded, induced, or procured the violation by any other person of the Securities Act of 1933, or the Securities Exchange Act of 1934, or of this title, as any of such statutes heretofore have been or hereafter may be amended, or of any rule or regulation under any of such statutes."

SEC. 4. Subsection (e) of section 203 of the Investment Advisers Act of 1940, as amended, is amended to read as follows:

"(e) The commencement of a proceeding to deny registration under this section shall operate to postpone the effective date of registration for a period of ninety days, or until final determination whether such registration shall be denied if that determination is made within such ninety-day period; but if, after appropriate notice and opportunity for hearing, it shall appear to the Commission to be necessary or appropriate in the public interest or for the protection of investors to postpone the effective date of such registration beyond such ninety-day period and until final determination of whether such registration shall be denied, the Commission shall so order. Upon request of any interested party, made more than ninety days after the effective date of such order, the Commission shall consider whether such postponement should continue, and shall take such action, if any, with respect thereto as in its discretion is necessary or appropriate in the public interest or for the protection of investors."

SEC. 5. Subsection (g) of section 203 of the Investment Advisers Act of 1940, as amended, is amended to read as follows:

"(g) Any person registered under this section may, upon such terms and conditions as the Commission finds necessary in the public interest or for the protection of investors, withdraw from registration by filing a written notice of withdrawal with the Commission. If the Commission finds that any person registered under this section, or who has pending an application for registration filed under this section, is no longer in existence or is not engaged in business as an investment adviser, the Commission shall by order cancel the registration of such person."

SEC. 6. Section 204 of the Investment Advisers Act of 1940, as amended, is amended to read as follows:

"SEC. 204. Every investment adviser who makes use of the mails or of any means or instrumentality of interstate commerce in connection with his or its business as an investment adviser (other than one specifically exempted from registration pursuant to section 203(b)), shall make, keep, and preserve for such periods, such accounts, correspondence, memorandums, papers, books, and other records, and make such reports, as the Commission by its rules and regulations may prescribe as necessary or appropriate in the public interest or for the protection of investors. Such accounts, correspondence, memorandums, papers, books, and other records shall be subject at any time or from time to time to such reasonable periodic, special, or other examinations by examiners or other representatives of the Commission as the Commission may deem necessary or appropriate in the public interest or for the protection of investors."