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American Bankers Association:

Bevan, Robert L., assistant Federal legislative counsel.
Landau, Robert I., member, corporate trust activities committee, trust

Milburn, William G.
Pingree, Charles A.

Theobald, Thomas C. American Insurance Association:

Jones, T. Lawrence, president.

Vinyard, Walter D., Jr., counsel, Washington office. American Life Insurance Association.:

Bigler, Harold E., Jr.

Mason, Paul, associate general counsel.
American Stock Exchange, Inc.:

Kolton, Paul, chairman of the board.
Nash, Gordon, counsel.

Poser, Norman S., senior vice president, policy planning.
Association of Investment Brokers:

Chapman, Merrill J., president.

Whitten, Stanley, Washington area representative. Auerbach, Pollak & Richardson, Inc.:

Arachtingi, M. James, chairman of the board and president.

Rasweiler, Donald J., senior vice president and treasurer. Banking & Securities Industry Committee (BASIC):

Bevis, Herman W., member.

Potter, Hamilton F., Jr., counsel.
Bradford Computer & Systems Inc.:

Del Col, Peter, president.
McKay, Peter H., executive officer.

Young, Llewellyn P., vice president and counsel.
California, State of, William E. Payne, executive officer, Public Employees'

Retirement System.
Committee of Publicly Owned Companies:

Fortas, Abe, general counsel.
O'Neilí, James J., executive director.
Siegel, Barry, staff.
Stephenson, Revis, member, executive committee.
Wood, C. V., Jr., chairman.

Zeder, Fred M., member, executive committee.
Committee for the Martin Report:

Bayless, James L., president, Rauscher Pierce Securities Corp.
Morin, Charles H., counsel.
Refsnes, Joseph L., executive vice president, Rauscher Pierce Securities Corp.

Shepheard, Eugene P., Rauscher Pierce Securities Corp.
Connecticut, State of, Irwin F. Smith, deputy treasurer-investments.
Donaldson, Lufkin & Jenrette, Inc.:

Boyd, Michael, vice president and associate general counsel.

Donaldson, William, chairman. Federal Reserve System, Frederic Solomon, Director, Division of Supervision

and Regulation, Board of Governors. Federal Trade Commission, Hon. A. Everette MacIntyre, Commissioner. Independent Broker-Dealers Trade Association:

Cocchi, Raymond W., president.

Kimsey, James V., member.
Investment Counsel Association of America, Inc.:

Casey, John L., president.

Potts, Ramsay D., counsel.
Justice Department:
Antitrust Division:

Baker, Donald I., Director of Policy Planning.

Kauper, Thomas E., Assistant Attorney General.
Office of the Solicitor General:

Friedman, Daniel M., First Deputy Solicitor General.

Griswold, Erwin N., Solicitor General.
Merrill Lynch & Co., Donald T. Regan, chairman of the board.

Midwest Stock Exchange, Inc.:

Becker, George R., chairman:
Tobin, Michael E., president.

Weithers, John G., executive vice president.
National Association of Investment Clubs, Thomas E. O'Hara, chairman, board

of trustees.
National Association of Securities Dealers, Inc.:

Derrickson, Lloyd J:, senior vice president and general counsel.
Macklin, Gordon S., president.
Peake, Junius W., member, board of governors.

Sommer, A. A., Jr., member, board of governors.
National Coordinating Group for Comprehensive Securities Depositories:

Coriaci, Joseph P., chairman, working committee.

Stewart, Samuel B., member.
National Shareholders Association, Hans R. Reinisch, president.
National Stock Exchange:

Gilligan, Pat, exchange specialist.
Girard, John D., president.

Smidt, Seymour, public governor.
New York City Teachers' Retirement Board, William T. Scott, executive director.
New York Clearing House Association:

Lee, John F., executive vice president.

Thomas, Walter F., chairman, steering committee.
New York Stock Exchange:

Berl, Warren H., industry director.
Calvin, Donald L., vice president.
Frank, Walter N., industry director.
Kreps, Ms. Juanita M., Ph. D., public director.
Needham, James J., chairman, board of directors.
Roche, James M., public director.

Saul, Ralph S., industry director.
Oppenheimer & Co., Bernard H. Garil, assistant to the managing partner.
Oregon, State of, James A. Redden, Treasurer.
PBW Stock Exchange, Inc.:

Hender, George s., vice president.
Schneider, Carl W., special counsel.

Wetherill, Elkins, president.
Rauscher Pierce Securities Corp. of Texas:

Bayless, James L., president.
Refsnes, Joseph L., executive vice president.

Shepheard, Eugene P.
Schapiro, M. A., & Co., Inc.:

Reycraft, George D., counsel.
Russo, Thomas A., cou el.

Schapiro, Morris A., president.
Securities and Exchange Commission:

Blanchard, Alan, Acting Executive Director-Designate.
Donaty, Frank, Comptroller.
Evans, John R., Commissioner.
Levenson, Alan, Director, Division of Corporation Finance.
Liftin, John, Associate Director, Division of Market Regulation.
Loomis, Philip_A., Jr., Commissioner.
Owens, Hugh F., Senior Commissioner.
Pickard, Lee A., Director, Division of Market Regulation.
Pitt, Harvey L., Chief Counsel, Division of Market Regulation.

Rappaport, Sheldon, Associate Director, Division of Market Regulation. Securities Industry Association:

Chalmers, Jay L., chairman, operations committee.
Gardiner, Robert M., chairman, governing council and chairman, ad hoc

securities processing committee.
Kendall, Leon T., president.
Scribner, Richard O., general counsel.

Whitehead, John C., chairman.
Weeden & Co.:

Weeden, Donald E., chairman of the board.
Weeden, John D., executive vice president.




Washington, D.C. The subcommittee met at 10 a.m., pursuant to notice, in room 2322, Rayburn House Office Building, Hon. John E. Moss, chairman, presiding.

Mr. Moss. The subcommittee will be in order.

This morning the Subcommittee on Commerce and Finance begins the final stage of its hearings on H.R. 5050, the Securities Exchange Act Amendments of 1973. Our first witness this morning was to have been Hon. Emanuel Celler, who, for 21 years, chaired the House Judiciary Committee. Unhappily, a recent illness prevents Mr. Celler from appearing here this morning. He has, however, filed a statement for the record and without objection that statement will be inserted in the record at this point as though read.



Mr. CELLER. Mr. Chairman and members of the subcommittee, 22 months ago, as chairman of the House Committee on the Judiciary, I appeared before this distinguished and energetic panel because I believed its ambitious study of the securities industry was of monumental importance to the future of our economic system. That the work products emanating from the study to date the report issued last August and the bill, H.R. 5050, introduced in this Congress—are such valuable and constructive documents is splendid evidence that the enormity of your task is ably matched by the breadth of your wisdom.

I am delighted, therefore, to have this second opportunity to make a contribution to your efforts as you reach the crucial legislative stages of your undertaking.

For many years, as you know, I have been concerned with the antitrust implications of many activities of the national stock exchanges and with those of the New York Stock Exchange in particular. In November 1971, I urged upon this subcommittee the central point essential to a healthy market: That the securities industry is governed most consistently with the public interest by competitive principles, not by exchange rules such as those that restrict trading and fix commission rates. And I warned most emphatically that any grant of antitrust immunity to the activities of the exchange would be a "great leap backward," an unwise capitulation to a history of anticompetitive practices that have continued under a guise of self-regulation which in reality is designed to preserve Wall Street for the Wall Streeters.

20-306 O - 74 - 2 - pt. 5

Let me begin this morning by expressing support for the major thrust of H.R. 5050, the subcommittee bill. I believe it effectively aims toward a viable, responsible, and open market subject at the same time to both strengthened regulatory tools and broadened competitive forces. Most happily, the bill does not grant to the exchange the sought-after blanket immunity from the antitrust laws. It does not do so, very simply, because as this subcommittee recognized in its own report, “it would not be in the public interest to do so.'

Mr. Chairman, I am often amused by the attitude of industry spokesmen regarding the question of exchange immunity; it has always struck me as a masterpiece of doubletalk. On the one hand, the exchange tell us, and argues to the court, that the regulatory scheme of the 1934 act confers upon their practices immunity from antitrust attack.

"Our practices are insulated from the antitrust laws" goes the argument; “therefore they do not violate them.”

And yet in the Halls of Congress, and indeed in the very chambers of this committee, these same gentlemen continually petition for what is claimed to be "long needed” antitrust immunity for their protective practices. They cannot have it both ways, and it is my firm belief that it is the law and it is the public weal that they do not have it either way. I am convinced, as are the courts, that the national stock exchanges are afforded no pervasive immunity from antitrust liability by existing law. In addition, I wholeheartedly endorse the policy of H.R. 5050 not to grant such immunity in the future.

Permit me one additional comment on the immunity question before moving on. In recent years, the exchange argument for immunity has taken on a subtle new twist. We are told there is a new urgency because court decisions on the immunity issue are “unclear” and the exchanges are left with the untenable choice of regulating at their peril or not at all. These arguments, gentlemen, are hogwash. They were hogwash when I cited the Silver and Thill cases 2 years ago to dispel them, and they are even less tenable today after last month's Federal district court decision in Zuckerman v. Yount.

But even before Zuckerman, and I surely do not quote this to toot my own horn, this subcommittee in its report stated:

“The subcommittee's review, however, leads it to agree with the chairman of the Judiciary Committee who stated that 'the court decicisions are in fact much more clear than the exchanges suggest.”

And, as the subcommittee also noted, they are clear in this central holding: that actions taken by an exchange to effectuate self regulation are subject to antitrust challenge and cannot stand unless unequiv

ly "necessary” to make the 1934 act work. It is true that under the act, Congress delegated its regulatory responsibility, and clothed the SEC with broad supervisory and regulatory powers over the registered exchanges; but as every court considering the issue has pointed out, though the act specifically contemplates corrective action by exchanges and their members in establishing and enforcing rules, no express exemption from the antitrust laws is provided. Thus any implied exemption is only allowable where absolutely "necessary" to the work

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