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28 Geo. Wash. L. Rev. 86 (1959-1960)
Effect of Federal Regulation on Distribution of and Trading in Securities

handle is hein.journals/gwlr28 and id is 88 raw text is: EFFECT OF FEDERAL REGULATION ON DISTRIBUTION OF AND TRADING IN SECURITIES Thomas A. Halleraf and Jobn N. Calderwood Cravath, S'waine & o.1'oore, New York 1. IN I'RODUCTION Prior to 1933, the regulation of securities markets -wvas left almost entirely to the states. The state laws were, of course, not uniform and in many cases were either non-existent or completely inadequate, either because of limited scope or perfunctory enforcement. The speculative excesses and market manipulation of the late 1920's, followed by the great depression and the coming of the New Deal' led to a new series of investigations of the securities industry' and ultimately to the enactment of the various federal statutes affecting the securities markets directly or indirectly.' This article deals * A.B., 1923, Amherst College; LL.B., 1931, Columbia Law School. Member of the New York Bar. ** A.B., 1938, Grove City College; LL.B., 1941, Harvard Law School. Member of the Pennsylvania and New York Bars Coldly Pecora made his witnesses recollect the gilded past-the stupendous bonuses they had received and the taxes they had avoided, the stock market pools they had rigged, the holding companies they had launched, the bad in- vestments they had palmed off on a trusting nation. From their reluctant testimony emerged the portrait of a world of insiders where for years business- men had greedily stuffed their own pockets at the expense of the innocent and dumb American citizen. SCHLESINGER, THE COInNG OF THE NEW DEAL 437 (1959). 2 The securities markets had been subjected to governmental scrutiny prior to the depression years. For a summary of the earlier and the New Deal investigations see United States v. Morgan, 118 F. Supp. 621, 645-46 (S.D.N.Y. 1953). 3 Securities Act of 1933, 48 Stat. 74, as amended, 15 U.S.C. §§ 77a-aa (1958); Banking Act of 1933, 48 Stat. 162 (codified in scattered sections of 12 U.S.C.); Securities Exchange Act of 1934, 48 Stat. 881, as amended, 15 U.S.C. §§ 78a-jj (1958) ; Public Utility Holding Company Act of 1935, 49 Stat. 803, as amended, 15 U.S.C. §§ 79-z-6 (1958); Trust Indenture Act of 1939, 53 Stat. 1149, as amended, 15 U.S.C. §§ 77aaa-bbbb (1958) ; Investment Company Act of 1940, 54 Stat. 789, as amended, 15 U.S.C. §§ 80a-1 -80a-52 (1958); Investment Advisers Act of 1940, 54 Stat. 847, as amended, 15 U.S.C. §§ 80b-1-80b-21 (1958). The authors throughout this article cite sections of the Securities Act of 1933 and the Securities Exchange Act of 1934. The following are the parallel citations to the Statutes at Large and the U. S. Code. Securities Act of 1933: Section 2, 48 Stat. 74, as amended, 15 U.S.C. § 77b (1958). Section 4, 48 Stat. 77, as amended, 15 U.S.C. § 77d (1958). Section 11, 48 Stat. 86, as amended, 15 U.S.C. S 77v (1958). [86 1

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