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THE COMMITTEE ON
HOUSE OF REPRESENTATIVES
AND THE SUPERVISION OF TRAFFIC IN
INVESTMENT SECURITIES IN
MARCH 31, APRIL 1, 4, 5, 1933
Printed for the use of the
WASHINGTON : 1933
Covente en ESTERNE OPICE
COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE
SAM RAYBURN, Texas, Chairman GEORGE HUDDLESTON, Alabama
JAMES S. PARKER, New York CLARENCE F. LEA, California
JOHN G. COOPER, Ohio ROBERT CROSSER, Ohio
CARL E. MAPES, Michigan PARKER CORNING, New York
CHARLES A. WOLVERTON, New Jersey JACOB L. MILLIGAN, Missouri
JAMES WOLFENDEN, Pennsylvania ALFRED L, BULWINKLE, North Carolina PEHR G. HOLMES, Massachusetts VIRGIL CHAPMAN, Kentucky
SCHUYLER MERRITT, Connecticut PAUL H. MALONEY, Louisiana
B. CARROLL REECE, Tennessee
ELTON J. LAYTON, Clerk
FEDERAL SECURITIES ACT
FRIDAY, MARCH 31, 1933
HOUSE OF REPRESENTATIVES,
Washington, D.C. The committee met in the committee room, no. 226, House Office Building, at 10 o'clock a.m., Hon. Sam Rayburn (chairman) presiding.
The CHAIRMAN. The committee will come to order.
THE WHITE HOUSE, March 29, 1933. TO THE CONGRESS: I recommend to the Congress legislation for Federal supervision of traffic in investment securities in interstate commerce.
In spite of many State statutes the public in the past has sustained severe losses through practices neither ethical nor honest on the part of many persons and corporations selling securities.
Of course, the Federal Government cannot and should not take any action which might be construed as approving or guaranteeing that newly issued securities are sound in the sense that their value will be maintained or that the properties which they represent will earn profit.
There is, however, an obligation upon us to insist that every issue of new securities to be sold in interstate commerce shall be accompanied by full publicity and information, and that no essentially important element attending the issue shall be concealed from the buying public.
This proposal adds to the ancient rule of caveat emptor, the further doctrine "let the seller also beware.” It puts the burden of telling the whole truth on the *seller. It should give impetus to honest dealing in securities and thereby bring back public confidence.
The purpose of the legislation I suggest is to protect the public with the least possible interference to honest business.
This is but one step in our broad purpose of protecting investors and depositors. It should be followed by legislation relating to the better supervision of the purchase and sale of all property dealt in on exchanges, and by legislation to correct unethical and unsafe practices on the part of officers and directors of banks and other corporations.
What we seek is a return to a clearer understanding of the ancient truth that those who manage banks, corporations, and other agencies handling or using other people's money are trustees acting for others.
FRANKLIN D. ROOSEVELT. We have before us this morning for consideration H. R. 4314, a bill to provide for the furnishing of information and the supervision of traffic in investment securities in interstate commerce.
(The bill referred to is here printed in full as follows:)
(H.R. 4314, 73d Cong., 1st sess.) A BILL To provide for the furnishing of information and the supervision of traffic in investment securities
in interstate commerce Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act shall be known as the “Federal Securities Act.”
SEC. 2. That when used in this Act the following terms shall, unless the text otherwise indicates, have the following respective meanings: